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Immediate deductibility for start-up costs from 1 July 2015

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The richest people in the world once started as a small business owner. From 1 July 2015, small businesses and entities can immediately deduct the capital start-up costs from the different expenses (for example, professional services) as a tax deduction in the year of start-up. Expenses can be fully deductible in the income year if the small business claims immediately and meets the following requirements:

Advice or services:

  • Advice from a lawyer or accountant like most appropriate structural advice;
  • Preparing the legal arrangements and setting up business system for the structure;
  • Develop a business plan for the business operation;
  • Legal and accounting due diligence;
  • Professional advice of raising debt or equity capital for the proposed business operation.

Payments to Australian government agencies:

  • Costs associated with creating a new small business entity (for example ASIC fee for registering a company);
  • Costs associated with government fees such as stamp duty or trust deeds.

However, the start-up cost cannot be deductible if it is a capital cost or other costs incurred from an existing business, direct cost of capital such as interest, loan repayment or dividend, expenses used for proposed business operation such as travel cost.

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