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JacquiPryor
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Hi Umair

Sorry, I probably confused things more than needed.

Short answer – yes, any money your business has to pay as a part of your business – whether to someone in Australia or someone in another country you get to claim. As GST doesn’t apply to you because you are not registered, that part won’t be affected.

At the end of the financial year when you do returns etc, one of the ‘items’ for want of a better description is total of business expenses etc.

In your example (it can still be claimed)

Australian Client pays me $1000 for a website.
So – this is your income

I pay $200 to an outsourcing website like elance.com
This is a ‘cost of sale’ incurred to provide the client with their $1000 website

Can I claim $200 as an expense?
Yes, it’s still claimable.

In accounting software like MYOB though, “expenses” and “costs of sales” (whilst you get to claim both) are tracked a bit differently is all I was mentioning – my business ‘expenses’ are things like rent, power, wages, printing etc – the things needed to run the business

Cost of sales include fees that I have to pay to someone else in order to provide the invoice/service to my client.

sorry if I confused you further unnecessarily – wasn’t my intention :)