Non-deductible expenses are expenses that the ATO will not allow to be tax deductible. These are expenses that can’t be used to reduce your taxable income in any way. This is because the money put towards these expenses was not in the furtherance of earning work-related income, or is specifically excluded by the ATO. Please keep in mind that whilst these expenses generally aren't deductible there can be situations where they can be claimed, if you believe this applies to you, contact your Tax Agent in regard to your specific circumstances.
Examples of expenses that can’t be claimed:
- Expenses incurred that are not relevant to earning assessable income
- Private or domestic expenses
- Capital expenses or of a capital nature – at the moment you can (instant asset write off) – or need advice from Tax Agent
- Expenses specified under income tax law as non-deductible
More specifically, these may include but are not limited to expenses such as:
- General household item costs (coffee, tea, milk etc.)
- Expenses that you have reimbursed on (where you don’t incur any expense)
- Fines and penalties
- Client entertainment expenses (meals, parties, concert tickets)
- Gifts unrelated to generating earnings
- GST attributable to expenses
- Personal use of business items
If you have claimed an expense which is not deductible, you may be liable to penalties and interest payable to the ATO.
To learn more about what you can claim as a business deductions:
https://www.ato.gov.au/Business/Income-and-deductions-for-business/Deductions/