Home – New Forums Money matters Outsourcing to the Philippines: Business Expense?

  • This topic is empty.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • #978134
    electricblue
    Member
    • Total posts: 40
    Up
    0
    ::

    Simple question…

    Can outsourcing to the philippines be considered a business expense when it comes time to do your taxes?

    Example: using Odesk.com to manage staff in in the philippines. Or, using some other form such as time trackers and paying via bank transfers to the staff?

    Thanks,

    E

    #1104963
    AgentMail
    Member
    • Total posts: 1,741
    Up
    0
    ::

    Hi,

    In short, yes this is an expense to your business, but you cannot claim any GST on it, as it is overseas and not entitled to charge GST.

    #1104964
    electricblue
    Member
    • Total posts: 40
    Up
    0
    ::

    I grew up in the states so I’m not used to GST.

    So with your answer: is there anything we can do in terms of ‘claiming’ this? Is it any sort of expense that lowers what we pay in tax, or is the only thing that lowers what we pay in tax, those items we paid GST on?

    Thanks,

    E

    #1104965
    AgentMail
    Member
    • Total posts: 1,741
    Up
    0
    ::

    I am no accountant, so best to check with them for your exact business structure and circumstance, but…

    If you have purchased goods or services for the purpose of your business, this is an expense to your business. As such, you should treat it like any other expense, it does not make it different because it is overseas (apart from the GST part)

    So, for example, in my situation, I am set up as a sole trader. My business profit becomes my income, and is therefore taxed as income at the appropriate rate. If your business made $100,000 in sales this year, paid out $30,000 in Australian expense, plus $10,000 in overseas expenses, you would then have made a profit of $60,000. This is what you would then be taxed on.

    I hope I haven’t confused you further, but it is best to have a chat with your accountant to make sure you are claiming everything as you should be

    #1104966
    MyGreatIdea
    Member
    • Total posts: 2,278
    Up
    0
    ::
    electricblue, post: 116427 wrote:
    is there anything we can do in terms of ‘claiming’ this?

    Claim the full amount of the expense when you submit your tax return.

    Is it any sort of expense that lowers what we pay in tax

    Any legitimate business expense will lower your taxable income

    or is the only thing that lowers what we pay in tax, those items we paid GST on?

    GST has nothing to do with the amount of tax you will pay. It is merely collecting taxes on behalf of the government. If you are not registered for GST then you simply claim the total invoice amount (inc. GST) as a business expense to lower your taxable income. If you are registered for GST then you only claim the invoice amount excluding GST to lower your taxable income, and the GST itself is forwarded to/claimed from the ATO.

    Wendy :)

    #1104967
    nominal
    Member
    • Total posts: 504
    Up
    0
    ::

    Yep. Odesk, elance, paypal, ebay.

    I don’t think it matter how you pay for the services – it can still count as an expense.

    If they charge GST (in Australia) you claim the GST in your BAS.

    You still need to keep records. Probably the records have on your odesk/elance account are sufficient, but I would keep the emails as well.

    #1104968
    Brett N/Nerds Computer
    Member
    • Total posts: 76
    Up
    0
    ::

    Great question. I asked the same question in the work smarter forum. There was a post entitled asked questions about virtual assistants. :-)

    It will be interesting to see if we get the same answer.

    I wonder if I should have posted my question here instead.

Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.