With the internet opening up boundaries when it comes to work, more and more mums are shifting from the corporate world to working from home with their own home-based businesses. However, apart from the obvious cost savings, there are quite a number of tax implications that you should consider as well. We have put up five tax facts for a start for you:
1. Don’t forget the potential CGT implications if you run a business from home; part of the profit you make from selling your home may not be covered by the CGT exemption normally available to your main residence.
2. You can normally claim tax deductions for preparatory work such as feasibility studies, market research, business plans and taking advice on the right structure."
3. If you need to skill yourself up for your business, you may be able to claim a tax deduction for the cost of courses, training, seminars, conferences, etc – provided the cost is directly linked to your business income.
4. About 75% of self-employed women have either no superannuation savings, or savings of less than $40,000, according to the Association of Superannuation Funds of Australia – so once your business is up and running, it makes sense to put money away for your retirement as soon as your cash flow allows.
5. Don’t forget to take advantage of the small business instant asset write-off. This allows you to purchase capital items up costing up to $20,000. For new businesses, this greatly helps cash flow because you get an immediate tax benefit from purchasing essential items like office furniture, tech equipment (laptop, phone, tablet, etc) and even cars (provided the cost is less than $20,000).
ABOUT THE EXPERT
Mark Chapman is the Tax Director at H&R Block.