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Business strategies: Beware - allowable expenses only!

Shared from Tax Insider: Business strategies: Beware - allowable expenses only!
By Jennifer Adams, October 2023

Jennifer Adams considers whether all expenses paid for by a business are tax-deductible. 

Just because an expense is paid out of a business bank account does not necessarily mean it will be tax-deductible. The general rule for all businesses is that expenses are tax-deductible if they are incurred 'wholly and exclusively' for that business. The sole purpose must be for the trade as incurred for the benefit of the business.  

Potential confusion 

A typical situation where confusion may arise is where a business pays for a table at an annual charity quiz night for the industry; is this entertaining clients (not allowed), a donation (allowed), or advertising (allowed)? The answer is ‘not allowed’ as the split between business and non-business cannot be differentiated. 

Travel expenses can also confuse. For example, for a sole trader or

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