Claiming racing costs

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Claiming racing costs

Post Number:#1  Postby aussieblackjack » Thu Aug 09, 2018 3:13 pm

I’m sure there are business owners who advertise and brand on the cars and then claim some costs incurred associated with racing. Just curious to hear any opinions on the topic before speaking to my accountant

Thanks
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Re: Claiming racing costs

Post Number:#2  Postby Steve thomas » Thu Aug 09, 2018 7:15 pm

Following.
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Re: Claiming racing costs

Post Number:#3  Postby davel » Thu Aug 09, 2018 10:07 pm

aussieblackjack wrote:I’m sure there are business owners who advertise and brand on the cars and then claim some costs incurred associated with racing. Just curious to hear any opinions on the topic before speaking to my accountant

Thanks

The answer is “it depends”.

I think you’ll find that the accountant will say something like “reasonable expenses” that provide business value can be claimed and pass an audit. Justifying business value (to the ATO) on a few grand a year is pretty easy if you are in a related industry. If you try and claim $500k a year from an unrelated industry you might have a few more questions to answer.

The other approach is to claim a shed load, take out audit insurance, get audited and pay the fines. I wouldn’t recommend the second option ;-)

Sorry if that doesn’t help much but consider how you could argue the business value (e.g equivalent advertising expenses to get similar market coverage) if the ato ever coming knocking.

What industry are you in?
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Re: Claiming racing costs

Post Number:#4  Postby aussieblackjack » Fri Aug 10, 2018 1:53 pm

I have actually claimed costs in the past, around 30k worth and my previous accountant suggested that I cannot claim because I could not prove how the advertising was helping my business in achieving more revenue.

I don’t see how any industry could measure the success of it, he just thought it was asking for an audit and then at the time I couldn’t provide receipts. I ended up redoing tax returns. This was when I was an employee of a company.

Now as a director or a company (real estate) and a new excellent accountant (sacked previous) I would have much more weight in my advertising argument.

A colleague of mine actually started a specific company that sold and manufactured racing products and ran all his racing expenses through it in order to claim
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Re: Claiming racing costs

Post Number:#5  Postby 3sgem » Fri Aug 10, 2018 2:29 pm

A guy I knew very well who raced for many years said that the only real way to do it was to setup a separate business, such as 'aussieblackjack racing. So it's a legit business that has income and expenses and shouldn't make a profit, therefore doesn't reduce the budget. Your main business pays advertising dollars to the racing business.

I'm no expert, best to be fully informed of your legal position if you spend lots.
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Re: Claiming racing costs

Post Number:#6  Postby mtpanorama » Fri Aug 10, 2018 3:38 pm

I claim all my racing expenses. Entries/membership/practice I put through as advertising. All other running costs I just put through as vehicle expenses. I don't do any other form of advertising (paid) and due to the nature of my business (Signs) and the fact a large portion of my work is involving motorsport I think I have a very legitimate claim. My accountant doesn't have a problem with it and she just always tells me "as long as you can explain it to the ATO, go for it".
The other way I have (heard it) done it is to sponsor someone you know who races that has there own business and they sponsor you. You just swap invoices.
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Re: Claiming racing costs

Post Number:#7  Postby aussieblackjack » Tue Aug 14, 2018 5:03 pm

good points and info thanks

if you run a business that is in some way shape or form involved in motorsport then no worries, otherwise very hard i think. last thing one would want is an audit :oops:
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Re: Claiming racing costs

Post Number:#8  Postby TwinTurbo » Tue Aug 14, 2018 5:24 pm

aussieblackjack wrote:good points and info thanks
if you run a business that is in some way shape or form involved in motorsport then no worries, otherwise very hard i think. last thing one would want is an audit :oops:

That's not necessary, I know a plumber who gets work as result of advertising on his race car and I don't think plumbing has much to do with motorsport (OK, I suppose fuel lines, oil lines etc is really "plumbing", but I'm sure you get where I'm coming from). As long as we can show a link between the advertising and revenue gained then the ATO should be satisfied. If we slipped, say, a $100K through as advertising and only got $10k in revenue then I'm sure they wouldn't be happy with that. Keeping it relative, as always, is important.

FWIW, if you accountant isn't giving you that sort of advice, get another accountant. :wink:

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Re: Claiming racing costs

Post Number:#9  Postby speaksgeek » Thu Aug 16, 2018 5:27 pm

http://law.ato.gov.au/atolaw/view.htm?d ... 1001000001

Particularly take note of:
For practical purposes and within the limits of reasonable human conduct, it is for the man who is carrying on the business to be the judge of what outgoings are necessarily incurred


Show that to your accountant, and get them to help you structure your business and racing correctly.
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Re: Claiming racing costs

Post Number:#10  Postby aussieblackjack » Fri Aug 17, 2018 2:17 pm

interest excerpt

i have emailed my accountant with some questions and awaiting a response.
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