Can’t they just buy in the name of a company, which would be a ‘business expense’, which is kind of a write off?
It doesn’t work like that. Expenses need to be “necessarily incurred in the course of producing income”. Just be cause a company pays for something doesn’t make it tax deductible.
They would have to justify how it is a part of the companies operations. In theory at least.
So a private jet to fly your execs to business meets? Ok.
A yacht? Maybe for entertaining customers? I don’t know about the US, but here in Australia entertainment expenses are written off at a lower rate than other business expenses.
here in Australia entertainment expenses are written off at a lower rate than other business expenses.
Sorry mate. Not really correct.
If an Australian company pays for entertainment expenses for staff, it’s considered a fringe benefit and fringe benefits tax is payable. It equates to almost the cost of the actual expense. So if a company pays $10k for an employee to take a holiday, they’ll have to pay almost $10k in fringe benefits tax, but they do get a deduction for the whole $20k, which will save them $5k in income tax.
