Example List of deductible expenses
- Accounting expenses
- Audit costs
- Bookkeeping fees
- Bank charges
- Computer expenses
- Consultation fees
- Contracting fees
- Debt Collection Fees
- Charitable donations*
- Discounts given
- Discounts taken
- Employee expenses
- Entertainment expenses*
- Equipment Rent
- Freight and delivery charges
- Interest expense (e.g. interest paid on a loan or bank overdraft)
- Internet/web hosting
- Legal Fees
- Marketing and design
- Motor vehicle expenses (such as fuel and repairs)
- Office Supplies
- Printing and photocopying
- Professional Development
- Repairs and Maintenance
- Staff amenities
- Small Tools and equipment
- Travel and accommodation
- Wages, salaries and bonuses
and Depreciation – see below under non-deductible expenses to learn
what these tax deductible expenses are calculated.
Donations – A gift of money to a registered charitable group is allowed
but they must issue the business with a receipt and the business must
keep this original receipt readily available as proof for tax purposes.
expenses – only 50% of food and beverage can be claimed, so if a
client is taken out for a meal whether lunch or dinner then only half
the cost is deductible.
Also note that if the business owner uses
personal funds to purchase a business item these can be brought into the
bookkeeping system to be included as deductible business expenses. The
receipt must be retained in the filing system.
These are items, according to accounting / taxation rules, have to be
capitalized and included in the bookkeeping system as assets.
Capitalized just means they must go on to the Balance Sheet and cannot be included in the profit or loss calculations on the Income Statement.
These types of purchases are not expected to be consumed or used up within one financial year so
they cannot be termed as ordinary expenses.
- Inventory (Items purchased for resale)
- Purchase of a vehicle and high cost equipment such as computers or machinery
- Improvements to a fixed asset
- Repayment of principal on a financial loan
- Patents and trademarks
- Personal expenses like life insurance, reading glasses
The good news is that depreciation on most fixed assets can be included as a deductible business expense.
Depreciation is the method of annually reducing the value of the fixed
asset due to wear and tear and is spread out over the expected life of
This is something the business accountant will calculate at
the end of the financial year so the bookkeeper does not need to be
concerned with depreciating anything during the course of the year.
However, if you are not using an accountant at tax time then you can
source depreciation rates from the tax department.
Here is one example of how depreciation works:-
Green Handyman brought a computer valued at $2,500.00 and the
computer's life expectancy is three years. The cost price is divided by
three which comes to $833.33 and this is the amount carried to the
profit and loss account each year for three years as a tax deductible
Further to this is amortization which is the same as depreciation but for intangible assets like patents and trademarks.
expense of purchasing inventory is only included in the profit and loss
account as cost of goods sold when the inventory is actually sold.
non-deductible expenses would be personal purchases which need to go to
the equity account called drawings if business funds are used for