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The Top 10 Things to Know re Tax For Virtual Assistants

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Happy New Financial Year!  for those VAs in Australia

We have an article by a guest writer to share with you relating to taxation for Virtual Assistants. As with any articles like this one, please refer to your own accountant to ensure that your circumstances have been taken into consideration for anything you do regarding your business.

THE TOP TEN THINGS TO KNOW RE TAX FOR VIRTUAL ASSISTANTS

Congratulations on becoming a Virtual Assistant, an area that is ever-growing in these days of technological mobility and employment flexibility.

Many of you have made the jump from salaried employment to the business of being a Virtual Assistant and are therefore unaware of the things that you can claim as a deduction on your Income Tax Return.

BEFORE WE START

Before we start, we need to discuss what a deduction is.

A deduction is an amount spent on by you on a business item that can used to reduce your Net Profit and, therefore, the amount of tax that you have to pay.

A deduction is only allowable if an amount was spent to derive business income and that there is evidence to prove that the amount was spent.

Now that we have determined what a deduction is, we can now touch upon the top TEN things to know when getting your tax done.

THE TEN THINGS TO KNOW

Clothing, uniforms and footwear: The purchase of clothing, uniforms and footwear is not deductible as these items don’t have the main character of money spent to gain/make income unless the clothing has your logo on it.

Should there be a logo on the clothing, you can claim the deduction; otherwise you cannot.

Conferences, seminars and training courses: A deduction can be claimed for the cost of attending conferences, seminars and training courses to maintain or increase a virtual assistant’s knowledge, ability or skills. There must be a relevant connection with the current work activities of the virtual assistant.

A deduction is allowable for travel expenses (fares, accommodation and meal expenses), registration and conference material costs, incurred in attending work-related conferences and seminars. If these costs are only incidental to a holiday, then only the costs directly attributable to the travel costs are deductible.

Depreciation of equipment: A deduction is allowable for depreciation to the extent of the work-related use of the equipment.

Should the items of equipment is used partly for work-related purposes and partly for other purposes, the depreciation should be reduced to reasonably reflect the extent to which the equipment was not used to produce assessable income.

Should the equipment used is bought part way through the year, the deduction for depreciation should be apportioned on a pro-rata basis.

Home Office Expenses: A deduction is allowable for a portion of the expenses associated with an employee’s home given that part of the home is used for income-earning activities and has the character of a ‘place of business’

There are two types of expenses associated with the home:

a)     Occupancy expenses relate to ownership or use of a home and are not affected by the taxpayer’s income-producing activities. These expenses include rent, mortgage interest, repairs to the home, municipal and water rates, property taxes and house insurance premiums; and

b)     Running expenses relate to the use of facilities in the home and may be affected by the taxpayer’s income-producing activities. These expenses include: heating/cooling and lighting expenses, cleaning costs, depreciation, leasing charges and the cost of repairs to furniture and furnishings in the home office.

Should you be renting the house that you run your business from, then you can claim both groups of expenses; should you own the house that you run your business from, then you can only claim the Running Expenses.

Motor vehicle and other transport expenses (see also Travel expenses): Transport expenses including public transport fares and the running costs associated with using motor vehicles, motor cycles, bicycles, etc., for work-related travel. They do not include accommodation, meals and incidental expenses (see Travel expenses).

Given that Virtual Assistants generally work from home, a deduction is allowable for the cost of travelling directly between two places of business, provided that the travel is undertaken for the purpose of carrying out income-earning activities.

Self-education expenses: A deduction is allowable for the cost of self-education if there is a direct link between the course of education and the virtual assistant’s current income-earning activities. Self education costs can include fee, travel, books and equipment.

Stationery: A deduction is allowable for the cost of purchasing items of stationery to the level that they are used for income-producing purposes.

Telephone, mobile phone and other telecommunications equipment expenses: A deduction is allowable for the rental cost or for depreciation on the purchase price to the extent of the work-related use of the item.

Travel expenses: A deduction is allowable for the cost of travel (fares, accommodation, meals and incidentals) incurred by a virtual assistant when travelling overnight in the course of employment, (e.g., to a sales conference in another town)

Wages: A deduction is allowable where virtual assistants incur a wage expense to provide services and assistance relating directly to their income.

However, a deduction is not allowable if the expenditure is private or domestic in nature.

BIOGRAPHY

My name is Mark Peterson, and I run an Accounting Practice called Marked Focus (www.markedfocus.com.au). The aim of this document is to help you claim the deductions that you are entitled to and, therefore, reduce the amount of tax that you have to pay.

Should you have any questions in relation to this document, you can contact me on 0438 873 668 or e-mail me at mark@markedfocus.com.au

DISCLAIMER

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.

Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives and needs.

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