Spencer and Richard own S&R Sports, a regional chain of 15 sporting goods stores

Question

Spencer and Richard own S&R Sports, a regional chain of 15 sporting goods stores. They decide to expand their business by opening three new stores. The stores will employ 90 people, most of whom will work part-time. Over the years, S&R Sports has been able to keep its employee turnover lower than the competition by having its new employees attend a three-day training seminar. The cost of training the new employees will be $45,000. Explain whether S&R Sports can deduct the cost of training the new employees in the current year.

Explanation / Answer

The cost of training is deductible for tax relief if the training cost is necessary for the business/organisation. Merely giving training would not make it eligible for deduction.

S&R Sports would provide training to new employees of the newly opened 3 stores. The deduction is based on whether the training imparted is necessary for the business or not.

The given case portrays the training cost will be incurred for retention of employees and training them for newer technology which will be used by the part-time workers. Hence it will be tax deductible.

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