If you run a business in Australia, you’ll be pleased to know that many of the costs associated with advertising and promoting your business are tax deductible. This means you can claim these expenses on your tax return each year to reduce the amount of tax you have to pay. Advertising is considered a legitimate business expense, as long as the advertising is done with the aim of generating income for your business.
Claiming Advertising Expenses
When you run advertising for your business, you obviously have to pay various costs upfront to create things like flyers, signage, commercials, and to hire agencies or designers to help. The good news is that in the year you actually spend that money and incur the advertising expenses, you can deduct the costs from your taxable income.
For example, let’s say in June 2024 your business spent $5,000 designing a new marketing campaign. You can claim that full $5,000 amount on your 2024 tax return. The same goes for any promotional materials you print or purchase that year, like brochures, banners or giveaways. Even fees paid to an advertising agency to develop and run an advertising strategy for you are deductible.
Claimable Advertising Expenses
Most promotional, marketing and advertising expenses can be claimed, and include:
- Marketing/promotional materials – This includes things like brochures, flyers, banners, signage, posters, giveaways etc. used to promote your business.
- Print/digital advertising – Paid advertising placements in newspapers, magazines, search engines, social media.
- Radio/TV commercials – Production costs and airtime fees for radio and television ads.
- Website development/updates – Costs of designing and maintaining your business website and online presence.
- Direct mail campaigns – Costs of printing and distributing catalogues, mailers etc.
- Sponsorships/endorsements – Any sponsorships or endorsements you provide to promote your brand.
- Trade show/exhibition costs – Fees to exhibit at industry trade shows and conferences.
- Advertising agency/consultant fees – Fees paid to design, implement and manage your advertising strategy.
- Research/market testing – Costs associated with market research, test marketing new products/ads.
- Signage/billboards – Production and installation costs for signs, billboards and displays.
- Business/product naming – Costs of naming, branding and launching your business/products.
Pro Tax Tip: Make sure your claims are legitimate advertising activities to promote your business, product or service.
Personal advertising is not tax deductible
When you claim advertising expenses on your tax, it’s important that the advertising is actually promoting your business, and not anything personal. The Australian Taxation Office (ATO) only wants to help with costs that are growing your company and helping it make money. So, anything you spend on advertising needs to clearly show your business name, products or services. It can’t be for personal reasons.
For example, if you took out an ad in the paper congratulating a family member, a birthday notification or another announcement, that wouldn’t be tax deductible. But if the same ad promoted your business too, then part of the cost could be claimed. Likewise, if you had business cards made up just with your name on them rather than your company info, that wouldn’t qualify as it’s not commercial. The tax office wants to see that the advertising is genuinely to help your business make sales and income, not personal messages or vanity projects.
Claimable Digital Advertising Expenses
In today’s modern business world, more and more companies are promoting themselves online through websites, social media, search engines and other digital channels. The good news is that costs associated with digital marketing are fully tax deductible too here in Australia, just like traditional advertising.
Whether you have an online storefront, run advertising campaigns on Google and Facebook, create videos for YouTube or maintain a company blog – as long as these online activities are promoting your business and trying to get more customers, the costs can be claimed. This includes things like website design and maintenance, hiring a digital marketing agency, online advertising fees, and even content creation like taking professional photos for your products.
Some other digital expenses that make the cut include email marketing costs to reach existing customers, domain name registration fees, and the operating costs of running an e-commerce site. Essentially, any legitimate expense incurred from leveraging the internet and technology to market your business can be deducted.
Claimable Social Media Advertising Expenses
Many businesses these days use social media platforms like Facebook, Instagram and Twitter to connect with customers and promote their brand. Reasonable costs associated with maintaining a social media presence for your business are tax deductible.
For example, if you hire a social media manager or intern to post regular updates about your company, any wages paid to them are tax deductible. The same goes for paying social media influencers to mention your products – that’s seen as a legitimate advertising expense by the tax office. Even just the time you spend engaging with customers online could be claimed.
In addition, any costs for running paid social media ads or employing experts to help with advertising campaigns on sites like Facebook are deductible. This includes things like hiring a consultant to set up professional looking Facebook Business Page for your company and paying for promoted or sponsored posts.
Pro Tax Tip: As long as your social media activities are helping to grow your business through marketing and sales, you can claim associated costs.
How To Claim Your Advertising Expenses
Come tax time each year, it’s important to gather all your receipts and invoices for any money you spent promoting your business over the last financial year. Things like brochure printing costs, website maintenance bills, social media advertising – collect everything. This makes it easy to add up your total marketing costs.
Your tax accounting will deduct these amounts for you when filing your return. Don’t forget, any fees paid to your accountant can also be deducted!
Promoting your business is seen as an investment that could boost sales and profits in the future. Your small business advertising costs are tax deductible. So come tax time, make sure to get the full tax benefit from any money you put towards growing your company through advertising over the past year. If you’d like to discuss how to claim advertising costs for our business, an ITP tax agent is happy to help. Phone 1800 367 487 and chat with a professional today.