When tax time arrives, you might be wondering: what can I claim on tax?
Because the marketing budget for any business is part of necessary operating expenses, in many cases it can be claimed as a tax deduction to reduce your taxable income.
Whether your company has invested in something as simple as a new set of business cards or something as far-reaching and effective as a brand new SEO optimised website, those costs can certainly be claimed as business expenses. Keep in mind that sole trader tax-deductible expenses work in the same way as those of businesses.
What can I claim on tax when it comes to marketing expenses?*
The Australian Tax Office (ATO) includes a huge range of expenses small businesses can claim as tax deductions.
However, it’s vital to know what counts as a legitimate marketing expense to ensure you’re minimising your tax bill, while not cheating the system by claiming for expenses that don’t count.
For example, marketing expenses and advertising costs can include:
- Social media costs (such as social media paid campaigns)
- Paying for a marketing consultant
- Investing in organic search strategies – SEO – and paid search campaigns – SEM
- Newspaper, television, magazine, and radio ads (both creation and placement)
- Digital display advertising
- Website domain registration and maintenance fees
- Directory listing fees
One common mistake to be aware of is advertising signage on a car. While you can claim the cost of having the signage made and applied to your vehicle – even though your car is acting like a mini billboard as you drive around town – you can’t claim the cost of the vehicle itself, or running fees, as a marketing cost.
However, company vehicle expenses may fall under other eligible deductions – so be sure to speak to your accountant to determine what and how much you can claim.
Keep clear records of all marketing expenses.
Any operating expenses you plan to claim on must be carefully recorded and filed away for safe-keeping.
Include the following in your records:
- What the expense was for
- How much it cost (as well as GST)
- When the purchase was made
- Any receipts or invoices connected to the expense
- Bank or credit card statements to show payment
You will need to hold these records for five years, and it’s best to back up your records in a secure location, such as on the cloud or a hard drive held off-site.
How to claim deductions at tax time.
When tax time rolls around, gather your paperwork so you have a list of all your marketing expenses for the past tax year. It’s a good idea to do this in advance so you have plenty of time to get organised ahead of the filing due date.
If you’re a sole trader managing your own tax return, you can lodge your tax with the ATO’s myTax online portal, which is the same route for individual tax lodging. Your tax return will include a section where you can input the cost of work-related expenses such as marketing costs.
If you have an accountant managing your tax return, you should simply be able to hand over these documents and let them do the rest (and don’t forget that you can also claim their fees as the cost of managing tax affairs).
Remember, the very reason marketing expenses are eligible for tax deductions is because these costs are associated with growing your business. So if you’re thinking about getting some expert digital marketing help from our team, don’t forget it’s a tax-deductible business cost.
*We endeavour to provide accurate material for Australian businesses consistent with Australian laws; however, this material is for reference only and is not designed to be, nor should it be regarded as professional advice.