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Level 2

Non-Deductible Expenses - Recording and Reporting


Has anyone found a better solution to show/report "net profit after tax & non-deductible expenses" than those suggested below? These appear clumsy and unnessecarily labor intensive!


Question: How are "non-deductible" expenses recorded and reported?


  • expenses incurred by a company but not allowed as deductions to calculate the taxable income (such as fines, some client or customer meals &/or entertainment, etc.) or
  • personal expenses incurred by an individual

Current Answer:

Record them with the category of "Other Expenses" then manually add them back to the Net Income reported by QB to give the actual Taxable Income.


Authority (quotes & references):


 Reference #1: GAAP Presentation

“In GAAP prepared financial statements, non-deductible expenses are not segregated from other business expenses on the Statement of Income and Expense. However, these non-deductible expenses must be added back to net income when calculating the income tax expense on taxable income.“




Reference #2:

"From a personal tracking point of view it's a good idea to reconcile the bank accounts, so you should not exclude transactions, as if you do, you can't reconcile. You can even:


  • categorize personal expenses, under "Other Expense" type accounts, and then the Operating Income in the P&L (which does not include "Other Expense" accounts) is the taxable income, before adjustments, like mileage.and


  • post business expenses as regular "Expense" type accounts"



1 Comment 1

Non-Deductible Expenses - Recording and Reporting



Thanks for posting in the Community! I can see that you've posted a similar query about non-deductible or non-allowable expenses in a different conversation. With this, I'd recommend visiting the said thread through this link for further details. 


Also, you can check this QuickBooks Blog for your reference: Guide to Tax Deductions in Australia

Feel free to post again if you have any other questions. Have a nice day!