When filing your taxes, you can write off any expense that is involved in the running of your business. This could include office rent, equipment and business travel.
To be a legal tax write off, an expense must have a legitimate purpose within your business. This means buying a camera is a legitimate business expense for a photographer – but not for a writer.
You can’t write off personal expenses, like groceries. But if an expense is partially personal and partially business, you can claim the business component. If you buy a new cell phone and use it for business 80% of the time, you’re allowed to deduct 80% of that cost.
Regardless of what you’re writing off, make sure you keep receipts of all your expenses. Keeping proof of your expenses will keep you out of trouble if you’re audited by ATO.
Tax write offs can save you hundreds of dollars a year – but they can be complicated. It’s worth checking with an accountant or tax agent to make sure you’re claiming the right things.
Personal services income (PSI) is income earned by an individual outside of employment. The Australian Taxation Office has rules around what determines income outside of employment. Currently if more than 50% of the income received was for labour, skills or expertise, as opposed to product, it’s classified as PSI. For tax purposes PSI is treated as your individual income.