Home Forums Money matters Company Tax Return – 6. Expenses (W) Non-Deductible Expenses

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  • #1000018
    alex.francis
    Member
    • Total posts: 11

    Hi, I have a question about the reporting of non-deductible expenses on a company tax return.

    Scenario:
    Company X purchases $50,000 worth of shares on the stock market during FY20 as part of a long term investment.

    Section “6. Expenses” includes (W) Non-deductible expenses. The $50,000 asset purchase should be included in this figure. Is that correct?

    Thanks,

    Alex

    #1222327
    LucasArthur
    Participant
    • Total posts: 3,158
    alex.francis, post: 268597, member: 111221 wrote:
    Hi, I have a question about the reporting of non-deductible expenses on a company tax return.

    Scenario:
    Company X purchases $50,000 worth of shares on the stock market during FY20 as part of a long term investment.

    Section “6. Expenses” includes (W) Non-deductible expenses. The $50,000 asset purchase should be included in this figure. Is that correct?

    Thanks,

    Alex

    Not an accountant here, although are shares an expense?

    #1222328
    alex.francis
    Member
    • Total posts: 11

    My instinct would say: “No, it’s a capital purchase”.

    But then I saw this published by the ATO:

    Expenses classified as non-deductible under tax law
    Income tax law classifies what expenses are non-deductible.

    These expenses are losses or outgoings that are either:

    • not incurred in earning assessable income
    • incurred in earning non-assessable income
    • capital or of a capital nature
    • of a private or domestic nature
    • incurred in earning exempt income or non-assessable, non-exempt income
    • specified under income tax law as non-deductible.
    #1222329
    JamesMillar
    Participant
    • Total posts: 1,675
    alex.francis, post: 268597, member: 111221 wrote:
    Hi, I have a question about the reporting of non-deductible expenses on a company tax return.

    Scenario:
    Company X purchases $50,000 worth of shares on the stock market during FY20 as part of a long term investment.

    Section “6. Expenses” includes (W) Non-deductible expenses. The $50,000 asset purchase should be included in this figure. Is that correct?

    Thanks,

    Alex

    I think you are actually at section 7 reconciliation items – item W.

    The reconciliation items are adjustments to the profit or loss calculated at section 6. You should not have included any investment asset purchases at section 6 profit and loss so if that was done correctly you don’t need to add anything back at 7W.

    You may have a limited budget but I highly recommend seeing an accountant. You need to track and report things like franking credits so that you don’t get double taxed when you draw money of of the company. If you have no idea it could be costly to DIY

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