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  • #988606
    Ivorb
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    Hi,

    My partner and I both setup small businesses last year (sole traders with ABN). I work for another company full time and my partner is at home most of the time.

    During last year she spent a lot of time handing out flyers, building a website and generally promoting my business. My question is – Is there any problem with me including money I paid her for this in my tax return as a business expense?

    I know a husband cannot pay his wife for household duties, but is it OK if it is payment for a business related service, as long as she declares it on her tax return?

    Any comments/advice would be most welcome. Thank you.

    #1168065
    Peter – FS Administrator
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    Hey Ivorb,
    This is not my area of expertise, but I just wanted to welcome you to the forums – thanks for joining! I’m sure a few of our money experts will be able to help with your question below.
    Cheers
    Peter

    #1168066
    NickKaro
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    Such payments are possible but need to be arm’s length.

    The main concern I would have in such a scenario is, given its a new business, has it made much revenue and/or profit? If not, the expense you are trying to claim against your other income may not be deductible in any case. There are “non-commercial loss” provisions which may apply (https://www.ato.gov.au/Business/Non-commercial-losses/).

    Given your personal circumstances, I would suggest exploring the possibility of operating these businesses as a partnership or better-yet, through a trust, which will allow you to distribute the income in a tax efficient way to the person on the lowest tax rate.

    Ivorb, post: 194644 wrote:
    Hi,

    My partner and I both setup small businesses last year (sole traders with ABN). I work for another company full time and my partner is at home most of the time.

    During last year she spent a lot of time handing out flyers, building a website and generally promoting my business. My question is – Is there any problem with me including money I paid her for this in my tax return as a business expense?

    I know a husband cannot pay his wife for household duties, but is it OK if it is payment for a business related service, as long as she declares it on her tax return?

    Any comments/advice would be most welcome. Thank you.

    #1168067
    MissSassy
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    You need to see an accountant that can take all your circumstances into account when answering these types of questions.

    #1168068
    BuddyBoy
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    If your wife is writing out an invoice for you to pay it is fine.
    I have done this in the past as I have used my wife’s business for things I would have hired another business to do.
    The only issue is your income.
    If she is a low income earner, it could be worth it to throw some income her way to keep your taxes down. Either way, what you and her earn is going to the same household anyway but if you can cut some tax then why not.

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