Is Your Coffee Tax Deductible?

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It’s coming up on tax time and if you’re anything like most of the country’s working population, it’s likely you’re scrambling to think of items to deduct and ways to ensure you don’t get stung by the all-mighty and powerful ATO. This is especially true if you’re a small business owner.

Filing taxes as a small business, unlike filing as an employee, can often be a long, frustrating, and especially confusing affair. Even with an experienced accountant at your side, you’re often left second-guessing yourself about whether all your deductions are sound or whether you missed a deduction that could’ve resulted in you paying less tax.

Whilst we certainly can’t advise you on the finer points of the Australian tax system, we do know a thing or two about offices. More specifically, we know quite a bit about office coffee machines, and it just so happens you may be able to save some money on your taxes thanks to your 7 Grams machine.
Of course, it all depends on a few different factors.

“This great office perk keeps employees happy and caffeinated, making it a wise investment that’s also fully tax deductible at tax time,” Liz Russell, a senior tax manager for online tax return provider Etax, recently told the Sydney Morning Herald, in an article outlining different ways Australian business owners can take advantage of the government’s new $20,000 instant tax write-off for small businesses.

First things first: Russell advises, “You should always seek the advice of a tax agent before making any big ticket purchases to make sure firstly what you’re looking to purchase is claimable on your tax return, and secondly, that it actually makes financial sense for your business to make the purchase.”

Naturally, a high-quality office coffee machine makes perfect sense and it’s also likely you’ll be able to write off your coffee machine in full, provided you check certain criteria. According to Brisbane accounting firm Lee & Lee Accountants, “Depending upon the costs involved [a coffee machine] could be claimed in full or may have to be depreciated.”

Firstly, in order to claim your coffee machine as a tax write-off, you absolutely have to be a business owner. Employees can’t claim a machine even if they purchased it to make themselves a creamy, rejuvenating brew every morning. Secondly, if you are a business owner, you can’t be home-based.

The machine effectively has to be used for business purposes only, so it can’t be located on your home premises where you conduct a home-based business. If your office isn’t in the home, then you can claim the full cost of your machine, provided you’re not registered for GST. If you are, you can still make a claim, but you will not be able to claim the entire cost.

As Russell said, it’s important to clear any deductions with an accredited tax professional before you claim them on your return, but if you fall under the right criteria, that morning brew that perks you up at your desk each morning may also be your best friend come tax time.