I am about to setup a Pty Ltd company (July 2017) and would like to know if my company can pay my residential rent. I can't seem to find anything online / ATO re this ?
Your company can definitely pay your rent but I think what you are more concerned with is what the company can claim.
Your company can deduct a proportion of your rent and other expenses under the home office rules according to the space used by the business and the time allocated to business tasks.
If the business pays the rent on your behalf as a form of remuneration you may be liable for fringe benefits tax so I would suggest you ask the accountant who is setting up your company to advise on the deductibility and the implications of structure.
Best of luck
Im not an accountant - however my understanding, you can only pay rent from the company if you are using the property for business purposes. You will not be able to deduct the full rent amount as company expense. You need to work out the % of the property you are using for business e.g the sqm of the office space and work out the portion as % to the overall sqm of the property.
Speak to your accountant for advice on a fair % you can expenses.
I have a home office and expense 22% of the rent towards my business.
If ATO audits your business, they will need proof you are operating business out of your home. When I was audited they came to the house to see the office setup to approve my rent expense.
Hope that helps.
Thanks for that. I know I can proportiion a percentage of my home office usage, but my question is specifically around my company paying my entire rent and if that will trigger FBT for either myself and/or my company. Additionally, how is the FBT to be calculated ? From a tax perspective, it may be beeter to pay the FBT. I would be a PAYG under my company.
I know an account can answer these questions; if I had one. I would ask them but since I dont as yet I thought I would pose the question here so an accounting could hopefully answer.
As far as I'm aware, the responses you have received so far are all "on the money" but there one other thing you should also consider.
I'm no Accountant either, but if you're going in to business, you should have a good Accountant or at least a Bookkeeper to ensure that your company is set up correctly, etc. and you are complying with all the rules and regulations you need to. Best you ask around to find someone local that others have recommended and who can confirm the answers to this question that you have already received.
Bayside Finance Group
The comments raised above are absolutely on the money. There is no hard and fast rules as to what percentage you can claim it's just a question of the facts. For example if 25% of your house is being used for your business then generally 25% of the occupancy costs including rent you could claim.
If you were to claim any more it could be argued that it is not a cost of running the business and therefore not deductible or maybe subject to FBT which essentially is a cost taxed at the highest tax marginal tax rate, so generally better to stay out of that world.
I wish you all the best with your business.