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Guard dogs and Xbox consoles: hot tax breaks under $20,000 for small businesses

Nassim Khadem

Guard dogs and Xbox consoles are among the items that more than 154,000 small businesses have claimed as tax breaks for equipment used in the workplace.

The deductions totalling nearly $1.25 billion towards the end of January, were claimed as part of measures unveiled in the 2015 federal budget that allow small businesses to claim an unlimited number of deductions for equipment and other items valued at less than $20,000.

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ATO: Claiming work related expenses

If you are an employee and required to use your computer, phone or other electronic device for work purposes, you may be able to claim a deduction for your costs.

The deductions for businesses turning over less than $2 million come to an end on June 30, the final day of the current financial year. 

The Australian Taxation Office told Fairfax Media that the average claim in 2015-16 for items was $8,097. This was an increase on previous years. For the 2013-14 income year, the average claim was $3,690 and for 2014-15 the average claim was $4,914.

An ATO spokeswoman said the most common industries that made claims included construction, agriculture, health care and scientific services.

No rorting, just errors

When the tax breaks were announced under then treasurer Joe Hockey's small business bonanza, there were concerns they may be rorted. The taxman had vowed to keep a close eye on claims made.

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But the ATO spokeswoman said "we have not identified significant non-compliance or fraudulent activity in respect of this concession".

"Some claims have been adjusted because of over-claiming at the general small business pool and for not taking into account private usage of the asset," she said.

H&R; Block's tax communications director Mark Chapman says as long as those items are genuinely used in the workplace, they are legitimate deductions.

The firm's national network of accountants has seen some unusual items being claimed, including:

Guard dogs Guard dog

"If used to provide security for a business premises, a guard dog is considered to be a working beast as it serves a productive function for the business," Chapman says.

"Consequently, the guard dog is a capital asset of the business and an immediate deduction can be claimed using the $20,000 instant asset write-off."

A guard dog is considered to be a working beast

Mark Chapman, H&R; Block

He says it needs to be the right breed of dog to be used as a guard dog. "A poodle is unlikely to cut it," he says. "The same logic applies to dogs used on a farm, either for security or to round up animals, such as a sheep dog."

Works of art Art

Art galleries had been hoping to get a big boost from the 2015 budget measure, and they have.

"You can claim a tax deduction for a painting or sculpture, provided it's used as part of your business," Chapman says.

"If you hang a painting in your office reception or in a meeting room, you can claim a deduction (as long as it costs less than $20,000)."

Ping-pong and pool Pool

Again it is not uncommon to find these items the workplace.

"Usually employee canteens, rest areas or staff fitness areas have one, so a deduction can be claimed if you are making such a purchase for your business," Chapman says.

Xbox and TV sets Xbox

Yes Xbox consoles used in common areas can be claimed.

As can a television switched on in the corner of a reception area for office visitors to watch while they wait.

"Television sets are often a feature of office canteens or recreational areas," Chapman says. "If you're purchasing a TV solely for the workplace, you can claim a deduction."

Office furniture Office furniture

Chapman says standard desks and filing cabinets have been popular items claimed, and people have also opted for new leather sofas and armchairs for the office reception.

Outdoor furniture for an outside area where staff members take their breaks has also been on the list.

And for those running a business from home, the cost of building a backyard office or studio has been claimed.

Music, props, costumes Music

In the music business? You can claim the cost of musical instruments and sound equipment. 

"For a business in the performing arts, such as a dance or theatre company or acting studio, you can claim the cost of props, costumes, lighting and sound gear," Chapman says.

"A claim is also available  if a business offers dance classes or acting sessions to employees and the business kits out a space with this type of equipment."

Kitchen equipment Coffee

These pieces have been among the top items claimed.

If there is a kitchen which staff use on breaks or at lunchtime, coffee machines, microwaves, fridges and dishwashers are all immediately deductible.

Solar systems Solar

Installation of a solar system to a workplace qualifies.

"The advantage there is that as well as getting an immediate deduction for the cost of the solar system, the business can also potentially reduce the cost of ongoing energy usage, which means that the initial investment pays for itself over time (on top of the initial tax deduction)," Chapman says.

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