I have an ABN but currently I have a full-time job. over the last few years I have bought and upgraded my camera equipment but never really started doing photography commercially. I still have a few things in mind that I want to purchase but at the same time start-up a photography business. Am I eligible to claim tax on goods purchased in this financial year locally or internationally? or a portion of my house rent as I will be using one room for it.
Tax Question: Claiming Tax Deduction
[Deactivated] on 03/11/2020 - 09:32
Comments
I get the impression the full time job isn't related to photography or doesn't have a photographic component, therefore no deduction would be allowed unless he can show a relationship between the camera equipment & what he does at his FT work.
eg: My eldest daughter gets paid a few hours a week to run the social media (insta / fb / website) for the youth club she coaches. This includes taking photos as she's a gifted amateur photographer (won awards, been in exhibitions inc AGNSW). She generally claims 10% of her hardware costs (which are sporadic), 30% of her software costs and 5% internet. It's around what her costs are to do the job and a reasonable deduction.
You'll be hard pressed to claim tax deductions on all that camera gear via your ABN.
As ever, you should seek professional advice, but in broad "layman's terms" you'll need to be able to demonstrate that you are operating a genuine commercial enterprise and the costs you are claiming relate directly to that enterprise. The fact that "you have an ABN" will not be sufficient.
Some examples of things that will demonstrate you are operating a commercial enterprise include the registration of a relevant business name, the acquisition and distribution of relevant marketing materials, the existence and maintenance of a related website, the receipt of commercial income through that enterprise, the holding of relevant qualifications/experience, etc. related to that enterprise … and so on.
You don't necessarily need to be running at a profit, but you need to be able to demonstrate that you have a genuine commercial operation in play to justify the expenses relating to it. In other words, if it comes to it, you would need to be able to demonstrate that this is not simply a hobby and that all this gear you have purchased is not effectively just being used for personal purposes.
You generally can't claim deductions before you start operating your business, especially the room "will be using it" means you aren't yet, so no deduction.
But this page has some guidelines, that you'd still have to be making at least $20,000 from the business to claim a loss (if your deductions were higher than your income, which with no income they are). https://www.ato.gov.au/Business/Income-and-deductions-for-bu…
There is some more info on the following pages, but it's always easiest to get personalized advice from an accountant if you're not sure what you can or can't do.
https://www.ato.gov.au/General/property/property-used-in-run…
https://www.ato.gov.au/Business/Income-and-deductions-for-bu…No.
You need incomings before you can claim outgoings.the pub test is "are you running a legitimate business or are you monetising a hobby?"
Starting up an enterprise can take months or sometimes years. It may not generate any revenue during this period. All expenses related to the startup is tax deductible can be used to reduce future liabilities.
My accountant (huge business, well-known, probably not pulling dodgeys) suggested I claim my crypto investments under ABN. This changed the way taxation was applied, as compared to personal tax.
However I still needed an income, and to owe tax, to claim deductions.
I don't think you can just magically claim deductions and say "oh no I operated as a loss cos I bought things and charged $0 work". But get a professional opinion. At the very least you should have details of a business plan, and that those items are 100% business use only.
I don't think you can use your ABN for "negative gearing" if you hadn't earn any income from it, I would assume your ABN, you are a sole trader? This is what I recall when I check with an accountant many years ago.
Most likely you'll claim it via your current full time job, albeit less attractive with lower claim brackets and limit categories of deductions (from what I can infer from your question)
Inquire/check with your own accountant. So you don't get caught out later with the ATO.