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Can a sole trader claim a deduction for ingredients used to produce a product?

Newbie

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Hi ATO Community,

 

I was wondering whether or not a sole trader home-operated food business needs to either:

  • A) Only report income excluding the cost of ingredients for producing the food
  • B) Claim the ingredients for producing the food as a deduction
  • C) Neither of the above (please clarify)

 

Thanks for helping here!

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ATO Certified Response

ATO Community Support

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Hi @JovinJ,

 

The answer is B.

 

You'll need to claim all your expenses as deductions under business-related expenses.

 

In the same way as an employee must report all of their salary and wages, and then claim any work-related deductions, a business must too.

 

You can read about business deductions and completing the business section on individual tax returns, net income or loss from business, on our website.

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Most helpful response

ATO Certified Response

ATO Community Support

Replies 1

Hi @JovinJ,

 

The answer is B.

 

You'll need to claim all your expenses as deductions under business-related expenses.

 

In the same way as an employee must report all of their salary and wages, and then claim any work-related deductions, a business must too.

 

You can read about business deductions and completing the business section on individual tax returns, net income or loss from business, on our website.

Newbie

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Thanks for that @BlakeATO ! Smiley Very Happy

 

I thought that would be the case but everyone uses office supplies & technology equipment as examples online, and the last thing I want is to accidentally end up on the wrong side of the ATO!