Tax can be overwhelming, especially when it feels like the rules keep changing and the grey areas keep growing. In a recent episode of Business Built Freedom, Lawrence Petruzzelli from MDB Taxation & Business Advisors unpacked the most common traps and misconceptions around business tax deductions, vehicle claims, and business structures. Whether you are starting out or scaling fast, getting this stuff right can save you money, stress, and even your business.
Key Takeaways
- The ATO only allows business tax deductions that have a direct connection to generating business income, so not everything “business-related” is claimable.
- High-end vehicles and luxury claims attract serious ATO scrutiny, especially without proper Fringe Benefits Tax documentation.
- Everyday items like phones and internet still require proportionate claims and supporting records.
- Structuring your business properly from the beginning can prevent tax headaches and protect your assets.
- Late lodgements can be more damaging than late payments, with serious consequences for directors if ATO debt builds up.
Meet Lawrence Petruzzelli
Lawrence Petruzzelli is not your average accountant. With a background that spans photography, NDIS services, and digital marketing, he brings a rare blend of creativity, tech savvy, and business acumen to the world of tax and advisory. He holds a Bachelor of Business in Management and is an accredited member of the Institute of Public Accountants (AIPA).
Lawrence knows how to make tax advice practical, accessible, and results-driven. He has been featured in Yahoo Finance, HCA Magazine, Business Business Business, and Savvy SME, and shared his insights on podcasts like The Get Rich Slow Club and Evolvepreneur After Hours, as well as on Ticker News.
Whether he is simplifying business tax deductions, unpacking vehicle claims, or guiding clients through smart structuring strategies, Lawrence’s focus is always the same: helping business owners grow wealth, automate the boring stuff, and protect what matters most.
Demystifying Deductions: The Rules You Really Need to Know
The golden rule? Any business expense must directly relate to earning income. Simple enough, but as Lawrence explains, legislation adds plenty of complexity. People often try to stretch the rules by claiming everything from designer furniture to Lamborghinis, thinking they help with networking or branding.
Reality check: If it does not meet ATO standards or legislation, it will not fly. Having a solid understanding of what is genuinely deductible and what is not can save you a world of pain down the track.
Car Claims: No, You Probably Cannot Claim That Lamborghini
Business vehicles are one of the most misunderstood deduction categories. While utility vehicles used strictly for work may be fine, luxury cars raise red flags.
Thanks to big data, the ATO can now match car registrations with company and trust records. If you own a luxury car through a company or trust and have not lodged a Fringe Benefits Tax (FBT) return, expect a “please explain.”
Lawrence warns that even honest oversights, such as forgetting a vehicle was in a company’s name, can result in serious compliance issues.
EVs also come with unique rules. While some models are exempt from FBT under the luxury car tax threshold, all paperwork and reporting must still be in order.
Phones, Internet, and Getting the Basics Right
Not all business tax deductions are flashy. Everyday expenses like mobile phones and internet plans also need to be split properly between personal and business use. If it is immaterial, say, a small portion of personal use, it is usually fine to claim the full amount, but the onus of proof is always on you.
Lawrence recommends tracking usage if you use one device for both. For employees working from home, simplified methods apply. But for business owners, proper apportioning is a must.
Just like your phone and internet plans, your tech expenses need clear separation between personal and business use. If you are unsure how to track, report, or optimise your digital tools, we can help set up systems that keep you compliant and efficient.
Why Business Structure Matters More Than You Think
Starting lean as a sole trader is a sensible choice for many, especially if revenue is under $100K and risks are low. But the problems often come later, when the business starts generating real income and owners want to restructure. By that stage, shifting ownership from a person to a trust or company can trigger capital gains tax and complicate asset protection.
Lawrence often sees business owners jump into a company setup too early or set it up in their personal name without thinking long-term. Down the track, they realise they would have been better off with a trust holding the shares.
Getting it right from the start can save a lot of pain, paperwork, and tax.
Your business structure is only as strong as the technology supporting it. From setting up secure user access to protecting sensitive financial data, we help align your IT with your growth goals.
What Smart Structuring Can Really Do
Lawrence shares a compelling case: a client was able to save two cafes and protect jobs, despite COVID-related ATO debts, thanks to smart structuring.
The cafes operated under family trusts, while the employment arm was a separate entity. When one entity needed to be liquidated, the rest of the business stayed intact. Staff kept their jobs, and the business survived. f
It is not just about theory. The right structure can be the difference between saving and losing everything.
Why Timing is Everything
Even when cash is tight, lodging BAS and tax returns on time is non-negotiable. Lawrence explains that late lodgements can trigger harsher ATO penalties, like lockdown Director Penalty Notices that make directors personally liable. If you stay on top of your paperwork, the ATO is often flexible, sometimes even offering to wipe 80% of a debt through restructuring.
ATO compliance is critical and so is IT compliance. From backups to patching and endpoint protection, we help keep your systems aligned with industry standards and audit-ready.
Continuous Learning: Failures, Lessons, and Resources
For those wanting to learn from others’ missteps, Lawrence recommends Business Is War by J.T. Foxx. The book dives into real business failures and what they teach us: a refreshing take in a world obsessed with success stories.
Wrapping It All Up: Smart Moves Today Matter Tomorrow
Getting your structure and business tax deductions right is about not just playing by the rules but also building something that lasts. The businesses that thrive long-term are not always the ones making the biggest splash early on. They are the ones set up properly, with a clear plan and solid foundations. That means understanding what you can claim, how to protect your assets, and when to bring in the right advice.
If you are unsure about your setup or just want a second opinion, reach out to the team at MDB Taxation & Business Advisors.
