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Goods for own use

Running your own small business can be an incredibly liberating experience to the point where many people that open their small businesses never return to the employed workforce. One of the many side perks of running a small business is the ability to use the business for private expenses, especially food. I am certain that there wouldn’t be a café, restaurant, deli or convenience store owner that doesn’t take some stock home to feed the family. This has two benefits. First, buying stock at wholesale prices saves you money and secondly it saves the time poor business owner from having to do more shopping.

Of course, the ATO worked out these benefits long ago and the term “goods for own use” came about. Every year the ATO issues a new tax ruling for deemed amounts of goods for own use with updated amounts for each type of business. Amounts are also issued for adults and generally the amount for children is half of the adult amount.

Whilst accounting for this transaction is only ever done on paper small business owners need to understand how this works. The transaction, on paper, reduces your cost of goods sold and hence increases your bottom line or taxable profit. That’s why it’s important to understand!

Now that you understand how it works be aware that you can actually use different amounts to the ATO deemed amounts. Just be cautious in doing so, as the ATO will expect you to justify why you have used a different amount, especially if it is a lower amount.

For more tips and hints on small business don’t hesitate to contact mas accountants, the original accountants for small business in Sydney and Melbourne.

 
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