Work related or business expense deductions can be a little trickier if purchased via an online platform such as Facebook Marketplace, Facebook Groups, Gumtree or even sites such as Airtasker. These platforms usually provide no tax invoices to substantiate the claim for goods or services. So, can you still make a claim for these? With the right amount and type of evidence, you can.
What are the requirements for claiming a deduction?
The tax legislation states that to deduct a work or business expense, you need to substantiate it. The document must have:
- The name or business name of the supplier
- The purchase amount
- The nature of the goods or service
- The date the expense was incurred
- The day the document is made out
There are some exceptions, such as for expenses that are $10 or less where you are unable to get a receipt from a supplier, as long as your total claim for small expenses is $200 or less.
In addition, if the document does not show the day the expense was incurred, you can use other evidence, such as a bank statement, to show when it was paid.
When making a peer-to-peer transaction, however, this type of documentation isn’t usual practice. Here are some tips to substantiate your deductions for items purchased from online platform such as Facebook Marketplace, Gumtree, or Airtasker.
What records do you need to claim a deduction for assets purchased via online platforms, such as Facebook Marketplace?
Online platforms usually have an electronic trail and there are ways you can substantiate your claim with the ATO.
Ensure any details you provide to the Australian Tax Office (ATO) are true to the best of your ability. Scribbling down sketchy details and using that as an “invoice” will not go down well with the ATO when they investigate the details.
Detailed below are our top 5 tips to substantiate claimable deductions sourced through peer-to-peer transactions:
- Signed document: Draw up a document with all the relevant details for the expense and transaction, then ask the vendor to sign it.
- Photo evidence: Grab your phone and take a selfie of the exchange of goods and money.
- Screenshots: Screenshot the original advertisement and any correspondence you had with the vendor.
- Related transactions: If you meet up in a public location such as a cafe, keep any receipts from the meetup, such as coffee or parking receipts.
- Bank statement: Many peer-to-peer transactions exchange goods or services for cash. Ensure you have a record of this by withdrawing as close to the agreed-upon amount as possible, as close to the time of the transaction as you can manage.
Make sure you keep all your business and work related records securely and electronically. You can use the ATO myDeductions tool to keep track of your records digitally. For more tips on how to get your business records up to date and accurate, check out our blog How to Get Your Business Records Ready for Tax Time.
If you’ve gathered all your records and ready to lodge your tax return, or if you want to get some advice to ensure you stay within the rules, contact us. We can help.