You might be thinking about seeking help from a tax accountant to prepare and lodge your tax. However, many business owners avoid seeking help from tax accountants because of extra expenses. Now the question arises: are tax return accountant fees tax deductible? Read this blog post to know the answer.
Are tax accountant fees tax deductible?
You can claim a deduction for expenses involved in managing your own tax matters, such as the cost to file through a registered tax agent. You can claim expenses by receiving advice from a renowned tax adviser (barrister, registered tax agent or solicitor). Accounting fees are deductible if they are prepared for your business, i.e. preparing a financial report showing the business expenses and income.
What other expenses can you claim?
The following are expenses you can claim:
- Expenses related to preparing and filing tax returns and activity statements, such as:
- tax return preparation courses
- purchasing tax reference material
- filing your tax return using a registered tax agent
- receiving advice from a renowned tax adviser (barrister, a registered tax agent or solicitor)
- Purchasing software that allows you to prepare and file your tax return (you are allowed to claim just a part of the cost if you also use the software for other reasons)
- Travel expenses to get tax advice – for instance, the travel expense involved in attending a meeting with a tax adviser.
- Litigation costs, including court and Administrative Review Tribunal fees, and barrister, solicitor, and other legal costs.
- Valuation cost for a deductible gift or property donation or for entering a conservation covenant.
- The expense involved in complying with your legal obligations for another person’s tax matters.
You are allowed to claim these expenses in your tax return at a certain expense category or as another deduction.
How does tax deduction work?
You can deduct certain expenses on your tax return. Most of these expenses are related to generating your income, although there are a few, like donations, that aren’t directly related to earning income. You can also receive help from the best accounting firm in Australia for your business to claim the right deductions for which you are eligible. Deductions reduce your taxable income. Here’s how it works:
- Your assessable income (the money you earn from work or investments)
- minus your allowable deductions (expenses incurred to earn your income)
- equals your taxable income (the amount you pay tax on).
What are work-related expenses?
To apply for deductions for work-related expenses:
- Your expenses weren’t reimbursed, and you must have spent yourself.
- The expenses must be related to earning your income.
- You need to have a record as evidence to prove it.
If the expenses were for both work and private purposes, you can only claim a deduction for a portion of expenses related to your work. If your employer pays for the expenses, you can’t claim a deduction.
Recording and claiming expenses
When you claim a deduction, you must have a record that shows incurred expenses. You can also use the my Deductions tool in the ATO app to monitor your:
- work-related expenses, including vehicle trips
- general expenses, including donations and gifts
You can share these records with a registered tax agent during tax time to lodge your tax return on time. For accurate record-keeping, you can choose small business bookkeeping in Melbourne. Bookkeepers are experienced in record-keeping, and these accurate records are used by tax accountants at the time of tax season. Bookkeepers and accountants work together to help businesses save money and time.
Conclusion
Now, it’s clear that businesses can claim tax accountant fees on a tax return. If you are unaware of the process involved in preparing and lodging tax returns, you can reach out to Reliable Melbourne Accountants.