Cost of racing

[caps 999]

thats cheap if you compare it to modern mx nationals $500 a race as a privateer and theres 8 rounds

[Rosco400]

HL
What that says to me is that the $150 entry fee is a small % of the overall costs competing.
Noel   

Thats $87.75 after tax if your on 41.5% tax rate

[evo550]

Wasp,

You don't have to generate income from it, I make all my claims as a cost incurred to me to advertise my business, it  may be dfferent for companies (I'm a sole trader)

[Rosco400]

Wasp,

You don't have to generate income from it, I make all my claims as a cost incurred to me to advertise my business, it  may be dfferent for companies (I'm a sole trader)

Make sure you read between the lines as to what the ATO is really saying, the Auditors would love to hear you make that statement to them EVO550.

Quote:Section 8-1 of the ITAA 1997 allows a deduction for all losses or outgoings to the extent that they are incurred in gaining or producing assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.

If you dont view to gain an assessable income from the sponsorship/advertising, you will be disallowed and that is straight from the rulebook

[Marc.com]

thats cheap if you compare it to modern mx nationals $500 a race as a privateer and theres 8 rounds

Modern MX nationals have a few more overheads, like the profesional riders who expect to make a living off the deal and to some extent be paid to be there by the promoters.

The promoters of Supercross and Outdoor MX are on the horns of a dilema as the good guys will not come unless the money is there and the spectators will not come if the good guys are not there. In fact the pros also won't come if too many other fast guys are there to share the pie with....its a tough balancing act.

[Mick22]

I claimed all my expenses as a professional racer for years, of course I made a loss and had huge deductions so got most of my tax back, this was pre GST and BAS statemants and was perfectly legit as I was winning and paying tax on my prize money.... but making a loss

When they re did the tax laws and brought in GST etc, I received a letter from the tax dept that basically said that from now on you must make a profit first and then you could claim the deductions but you could not claim the expenses in order to incur a loss.

I have asked several different accountants since about claiming my racing expenses and they have all said the same - not any more, you must make a profit first

[evo550]

So the bottom line is , as I guessed earlier , as long as you can proof that you are creating extra income due to sponsoring , its legitimate ?

Rossco,
Wasp asked if you needed to prove you are creating an income from the spnsorship/advertising to claim a deduction.
My point was that you don't need to generate an income from it to make a legit claim, it just needs to be seen as a legit advertising campaign, regardless of weather it's palstered on the side of a bike or a billboard on the side of the road or through the yellow pages or internet.
The intention is to create/generate income from it. Weather it does or doesn't all costs are deductable.

Claiming these kinds of deductions can sometimes be a double edged sword, as it can lower your taxable income to very small sums which can be good for a refund but ever gone to the bank for a loan, then try and explain the taxable income of $2200 for the previous year........it's not always as good as it seems.

[HL400]

Your right noel, sounds like $150. is a bargan after all the responces that have come in about tax and the cost of other racing.  So I better send in my entry and have a bash at it.  HL

[Rosco400]

So the bottom line is , as I guessed earlier , as long as you can proof that you are creating extra income due to sponsoring , its legitimate ?

Rossco,
Wasp asked if you needed to prove you are creating an income from the spnsorship/advertising to claim a deduction.
My point was that you don't need to generate an income from it to make a legit claim, it just needs to be seen as a legit advertising campaign, regardless of weather it's palstered on the side of a bike or a billboard on the side of the road or through the yellow pages or internet.
The intention is to create/generate income from it. Weather it does or doesn't all costs are deductable.

Claiming these kinds of deductions can sometimes be a double edged sword, as it can lower your taxable income to very small sums which can be good for a refund but ever gone to the bank for a loan, then try and explain the taxable income of $2200 for the previous year........it's not always as good as it seems.

Thats right and thats what I said, you must view to generate an income as per the tax act. If you dont view to gain an assessable income wether you do or not, it still must meet 8-1 ITAA 1997 guidelines. If you dont view to gain an assessable or generate an asessable income as you said its  outside the scope. if you tell the ATO you dont have to generate an income to make it a legitimate advertising deduction, you are outside the interpretation of the meaning of the act and all parts etc will be disallowed

[evo550]

So the bottom line is , as I guessed earlier , as long as you can proof that you are creating extra income due to sponsoring , its legitimate ?

Rossco,
It appears we are on the same page, perhaps we just interprete Wasps question differently.
I assumed he was asking, that before it is a legitimate deduction you need to prove that you are creating extra income from the advertising,
not just be seen to want to create income from the advertising.

[Rosco400]

In other words there must be a business plan forecasting the potential extra income due to the outlay , thats my interpretation from Ross  , and he is the expert .

No, youve read the link, its pretty well self explanatory, now your only screwing with us

Having said that , we must first have some income , before we can make deductions 

No, now you need to go and talk to your accountant i would reckon

[allan hughes]

THANKS FOR THE TIP ROSSCO
I OFF TO SEE MY ACCOUNTANT TODAY
ALSO AGREE WITH NATHAN
I RACED CARS FOR YEARS
CARS COST AT LEAST TEN FOLD