Starting your own race team?

[Duncan]

Actually the way it works is pretty easy. The only trick is #1

#1/ Convince the ATO you are a business with a possibility of making a profit one day.

#2/ Best way is to set up a company but there are costs involved in creating and maintaining one. You can always run it as a sole trader (ie just coming off your tax return) but the ATO look much more closely since you will be outside their regular profile of a tax payer

#3/ Anything you spend on your business is tax deductible. Most expenses are deductible in the year you spend, some will need depreciation over a period. eg if you buy a race car you depreciate it, it you buy a set of tyres you expense it in that year. Entry fee, accomodation and transport, fuel, oil, tyres, repairs, parts etc etc all tax deductible becuase they are a cost of running a business

#4/ Anything you make must be declared as income. If for example "Bob" gets his employer to sacrifice $10k of salary a year, the $10k is deductible to the employer (and therefore tax and FBT free), and must be income to the racing business. The easiest way for the employer to gain a deduction would to be paying $10k in advertising in return for stickers on the car.

#5 When the business does its tax return (included in your personal one if it is a sole tradership) you add the income and subtract the expenses. In general a race team will break even or make a loss which has the effect of a tax deduction.

Easy.

[benm]

Certainly an interesting topic

#1 is definitely the trick.