Welcome to Netrider ... Connecting Riders!

Interested in talking motorbikes with a terrific community of riders?
Signup (it's quick and free) to join the discussions and access the full suite of tools and information that Netrider has to offer.

QLD Claim Trackday costs as Advertising?

Discussion in 'Politics, Laws, Government & Insurance' started by V2, Aug 5, 2013.

  1. I'm hoping someone with Tax experience can advise. I'm sure the answer is no, but...

    I'm an engineer working as a sole trader. There is bugger all I can claim off the tax man. I'm wondering, If I get stickers with my company name made up and put them on my bike, then ride on Trackdays, can I then claim the cost of the trackday as an advertising expense?

    I see a lot of the fast guys on the track have advertising on there bikes - so assume there being sponsored (and someone is claiming something on tax). I guess I'm effectively sponsoring myself?

    My guess is you might be able to do this if your actually "racing" but probably not just for a track day?

    Thanks in advance.
  2. Nup. You can claim the stickers. You're self employed mate. There's pretty much nothing you can claim :)
  3. With stickers on the bike and all the engineering type improvements that you're using the bike as a test bed for, could you nominate it as a work vehicle and then at the least claim depreciation?
  4. There's gotta be a way, I see heaps of racers sponsored by "xxx earthmoving" or "xxx crane hire" or something. You'd almost certainly need a Pty Ltd (a few grand more in accounting and ASIC fees) but there has to be a way to do it legitimately..

    When u find out let me know!!
  5. If you can claim the track day then you could also claim every ride you ever do with a sticker on it.
  6. stickers alone is not sponsorship nor is a track day advertise fees here is your problem.
    Companies that sponsor racers look for an ROI when their doing it,
  7. The answer is yes.

    The fine print which is all available on the ATO website, provided your advertising expense was inline with wha t other business of the same type and proportional to your earnings the ATO wouldn't bat an eyelid.

    If it were me I would push it as far as signage on the bike and track time costs.

    Note that it would also be easier to justify the advertising expense if you were able to deduce, that this method of advertising reached your potential customers effectively.

    Ie. your engineering business does bike modifications or something.

    A single add in the yellow pages full colour 1/3 page can run you $15k for the year, so unless your advertising was disproportionate for your business The ATO wouldn't even ask you what you are spending it on.

    As with anything like this talk to your accountant for definitive advice.
    • Like Like x 1
  8. You can sponsor me, I'll plaster your stickers on my race bike and thank you in my speeches!!!
  9. You can also sponsor me, I will ride your bike and blame the bike when I lose.
    • Like Like x 1
  10. I tend to agree, I cant remember the case but it's up to the business owner how they spend their advertising $$. My partner disagrees and says its unlikely as there's argument that its not a true business decision (as you seek to benefit from it personally). IMO, whether the stickers are on your bike or someone elses, or everybody's, doesnt matter, it's up to you to determine if that's how you want to spend your advertising budget, but be prepared to get reamed by the ATO and document everything. Oh looky here's one or two:

    Income tax Deductions and expenses: sponsorship of motor cycle racing
    ATO ID 2005/284

    Can the taxpayer claim an income tax deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for expenses incurred in sponsoring motor cycle racing?
    Yes. The taxpayer is entitled to claim an income tax deduction for expenses incurred in sponsoring motor cycle racing under section 8-1 of the ITAA 1997.

    GILBERT v FC of T (2010 ATC ¶10-161)
    was about income tax deductions related to sidecar racing
    The taxpayer claimed significant deductions in relation to sidecar racing in the 2004/05 to 2006/07 years

    inclusive. The Commissioner issued a notice of assessment for the 2006/07 income year and amended
    notices of assessment for the 2004/05 and 2005/06 years disallowing the business deductions claimed. The
    taxpayer objected, the Commissioner disallowed the objections and the taxpayer sought review.
    The issue before the AAT was whether the taxpayer was carrying on a business. The Commissioner
    contended that the taxpayer was only engaged in the pursuit of a hobby or pastime.

    objection decision affirmed."

    Disclaimer - I dont know anything about anything and you are on your own!
  11. Thanks RichieB

    I'll check with my accountant next time I see him and see what he thinks. I don't want to stir up the tax man!

    You indicate "racing" above. I guess that would have more chance that just doing trackdays?

    ps - your links above are dead?
  12. #12 RichiB, Aug 6, 2013
    Last edited: Aug 6, 2013
    Edit 1 http://law.ato.gov.au/atolaw/view.htm?locid='AID/AID2005284'

    This one works.

    Edit 2 The key IMO would be making the connection between what you are doing there and your current business (i.e. a well thought out adverstising or sponsorship plan), and being careful to document it as the ATO would expect any business person serious about these things to do. In the case linked above, they only paid certain expenses, and handed out business cards to stimulate business interest, sounds like some potential there to tick a few of the right boxes so to speak.

    Def ask your beanie (ha ha), however I think we know what they are going to say.

    Edit 3 I am not a tax acct btw, my opinions only.
  13. If your accountant says no then you need to see a new accountant!
    • Funny Funny x 1
  14. #14 Trundler, Aug 7, 2013
    Last edited: Aug 7, 2013
    I run my own business and claim the most spurious of deductions, but this sounds like you're asking for trouble.

    (For my little online retailing business I've claimed roughly 20% of depreciation on my bike and gear as I don't own a car.)
  15. 1. As a business operator (soletrader) you don't 'claim deductions' as such you complete the business suplimenrty to your individual income tax return where you outline your operating expenses turnover - expenses = you taxable income. Advertising and depreciation of fixed assets are expenses, not deductions. It may seem like the same thing but it is not.

    2. You can 'claim' anything you like as a business expense and under our tax system the onus is on you to keep records for auditing purposes.

    3. How are you depreciating riding gear? Even if you could it it is unlikely any individual peice of kit would have been purchased for more than $1000 (old system) $6499 ( new system) if you intended to record part or all of that use as business use it would have been immediately written off in the same year it was purchased.

    4. Without knowing the specifics of your business other than it is online sales, you would be extremely hard pressed claiming 20% of your bikes use as business use, if the vehicle can't be directly connected to deriving income for your business, and if you are you would want to make sure you are keeping receipts and a log book detailing the nature of any business related trips made on the bike, along with details of how you came to the 20:80 split.

    It's really important to check with your accountant and if necessary get a ruling from the ATO.

    Business owner/operator of 8 years, I was also randomly selected for audit 2 years ago I had no problems as I play by the rules and keep meticulous records.
  16. #16 iClint, Aug 7, 2013
    Last edited: Aug 7, 2013
    If I were to use track days as a advertising expense for an engineering company this is how I would justify it.

    Printed shirts, business cards and fliers, leathers with company logo and bike clearly marked with business signage (not just a few stickers) Have a shade tent with signage outlining services.

    Dedicate some time for networking and promotions at the track.

    Justify this to the ATO with records of statistics of any jobs gained from the advertising and the value of those jobs.

    Justify how going to a track day is relevant eg. You build custom bike trailers, paddock stands, trailer ramps, welding services and bike repairs.

    If you invested $500 on signage and had an expense of $300 per month on ride days for an annual expense of less than $5k and could draw a line between new customers and or sales you would have no issue justifying the expense to the ATO.

    If on the other hand your business does nothing bike related, there is no logical reason why you would connect with potential customers at a ride day, and the advertising expense had no impact on leads for new customers/jobs the ATO is going to have a lot of questions.

    For a small business with a turnover of $250,000 $5kpa advertising expenses is nothing

    Another example for a different business could be a retailer of motorcycle related products.

    You could use yourself and your bike to demonstrate your product line and raise awareness e.g. If your fast on the track it could lend credibility to yourself and your knowledge of motorcycles and related products.

    At the end of the day there needs to be some link between your business and your customers.
  17. Sorry iClint, I'm not an accountant so my terminology is a bit shitty...

    1. Yes, as expenses under section 15 (from memory) of the tax return.
    2. Yep, always keep records of everything I claim.
    3. Again, my bad terminology, all written off using the small business rules, some partially depreciated in value as I only started using the bike for business purposes once I sold my car (when I had both I used the car as it got better deductions through c/km anyway).
    4. I don't have a car now so use the bike to carry parcels between home and the PO, and also to collect supplies. The 20% is based on logbooked business use against yearly use.

    I've got everything ready and waiting to throw at them if they audit me.