Did you pay salary and wages as a business expense?
|
No |
|
|
Yes |
Read on. |
You need to know
Salary, wages and other labour costs actually paid or payable to persons employed in your business (excluding those forming part of capital expenditure or paid for private domestic assistance) are usually deductible. However, you cannot be an employee of your business. Payments to you of salary are not allowable deductions in calculating your income or loss; treat these payments as an allocation of profits.
Include any salary and wage component of Cost of sales, such as:
- allowances
- bonuses
- casual labour
- retainers and commissions paid to people who received a retainer
- workers compensation paid through the payroll.
- Include any salary or wages paid to relatives and other related entities both here and at question P16 – label H in your schedule.
Include also:
- direct and indirect labour
- holiday pay
- locums
- long service leave
- lump sum payments
- other employee benefits
- overtime
- payments under an incentive or profit-sharing scheme
- retiring allowances
- sick pay.
Exclude:
- agency fees
- contract payments
- sub-contract payments
- service fees
- superannuation
- management fees
- consultant fees
- payments made from 1 July 2022 where you have not complied with the pay as you go (PAYG) withholding and reporting obligations for those payments.
For more information, see Removing tax deductibility of non-compliant payments.
Completing this item
Step 1 Add up total salary and wage expenses from each business.
Step 2 Enter the total at question P15 – label G on page 5 of your schedule. Do not show cents.
Step 3 Select from the following list the letter that matches the description of the expense component where the salary and wage expenses have been wholly or predominantly reported at question P8:
C All included in the expense component Cost of sales
A All included in the expense component All other expenses
B Included in the expense component of both Cost of sales and
All other expenses
O Included in expense components other than Cost of sales and
All other expenses.
Step 4 Enter the appropriate letter in the Type box at the right of the amount at label G.
Continue to: P16 Payments to associated persons