Is BubbaDesk tax deductible?
In short, yes!
As an individual in Australia, you may be able to claim tax deductions for desk hire expenses in a coworking space if you meet certain criteria.
How does this translate to BubbaDesk locations?
The table below shows the cost of traditional daycare with Childcare Subsidy applied, versus BubbaDesk with tax deduction applied. For household incomes $200K and above, BubbaDesk is more cost efficient than traditional daycare. Essentially, the higher the tax bracket you fall into, the more you will get back at tax time.
Pricing is based on 8 hours, at a daily rate of $160. Workings for childcare subsidy can be found here.
If your annual household income exceeds $200,000, BubbaDesk becomes a cost-effective choice due to the tax deductibility of coworking space expenses. For instance, with a $250,000 household income and a $160 daily daycare fee, your out-of-pocket cost is $101.57. However, with BubbaDesk and a tax bracket of 37% or above, your expense could be as low as $100.80. Similarly, for a $350,000 household income, the daily daycare out-of-pocket is $122, but with BubbaDesk and a 37% tax bracket, your total cost remains at $100.80.
Traditional daycare (CCS) vs BubbaDesk (tax deduction)
How is the tax deduction calculated?
To calculate the coworking space cost per day after tax deductions on a 32% tax bracket, considering a cost of $160 per day and a total of 2 days per week, follow these steps:
- Determine the annual cost: Multiply the cost per day by the number of workdays in a year. In this case, $160 x 104 (2 days per week x 52 weeks) = $16,640.
- Calculate the tax deduction: Multiply the annual cost by the tax rate to determine the tax deduction. In this case, $16,640 x 0.32 = $5,324.80.
- Determine the net cost: Subtract the tax deduction from the annual cost. $16,640 - $5,324.80 = $11,315.20.
- Divide the net cost by the total number of workdays in a year to find the cost per day after tax deductions. $11,315.20 / 104 = $108.76 (rounded to two decimal places).
Therefore, based on a cost of $160 per day, a 32% tax bracket, and a total of 2 days per week, the coworking space cost per day after tax deductions would be approximately $108.76.
Please note that this calculation is a simplified example and may not consider other variables or specific tax rules that could apply in your situation. Consult a tax professional or accountant for accurate calculations and compliance with all tax laws and regulations.
Find out what you'll be eligible for...
Traditional childcare vs BubbaDesk calculator
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Considerations
Here’s a step-by-step guide on how to claim tax deductions for desk hire in a coworking space:
- Eligibility: Ensure that you meet the eligibility criteria set by the Australian Taxation Office (ATO) for claiming deductions. Generally, you can claim deductions if the expenses are incurred in the course of producing assessable income and are not private or domestic in nature.
- Exclusive use: To claim a deduction, the desk hire expense must be for a dedicated workspace that you use exclusively for income-producing activities. It means you should not use the space for personal purposes.
Keep records: Maintain accurate records of all expenses related to desk hire in the coworking space. This includes invoices, receipts, and any other supporting documents that show the cost of the desk hire.
Apportionment: If you only use the coworking space for part of the year or part of the time, you’ll need to apportion the expenses accordingly. Calculate the proportion of time or space you use for income-producing activities versus personal use, and claim a deduction for the relevant portion.
- Other deductible expenses: In addition to desk hire, you may also be able to claim deductions for other expenses related to the use of the coworking space, such as internet fees, utilities, and cleaning costs. Keep records of these expenses as well.
Include the deduction in your tax return: When completing your tax return, include the deduction for desk hire expenses in the appropriate section. Provide accurate information and calculations to support your claim.
Seek professional advice: If you’re unsure about claiming deductions for desk hire in a coworking space or if your circumstances are more complex, it’s advisable to seek guidance from a tax professional or accountant. They can provide personalized advice based on your specific situation and ensure compliance with tax laws.
Remember to review the latest guidelines and regulations from the ATO or consult with a tax professional to ensure you meet all the requirements and are claiming the appropriate deductions for your desk hire expenses in a coworking space.
