June 2022

As the end of the financial year fast approaches, it’s worth preparing in advance to get the most out of your tax return. By being aware of the deductions you can claim and the information you’ll need, you can improve your small business’s return.

Doing a little learning now could see your business enter the new financial year with a neat boost to its bank account.

What can I claim as a business owner?

Knowing which deductions you can claim is highly valuable information for all business owners.

Small business owners can generally claim deductions for the costs associated with running your business, including:

• Staff wages
• Finance/accounting
• Office supplies/ stationery
• Advertising/marketing
• Website maintenance
• Phone costs
• Motor vehicle costs
• Public relations and social media
• Waste removal and recycling

If you or your employees travel for business purposes, you can generally claim transport fares, accommodation costs and meal expenses for overnight travel.

Be aware of the tax concessions you’re eligible for

The full list of available tax concessions is longer than many business owners realise and is worth reviewing. Beyond temporary full expensing, the list includes accelerated depreciation for business investment and primary producers, and deductions for start-up expenses and prepaid expenses.

Home-based expenses you can claim

Home-based business expense deductions are also particularly important for business owners given the increasingly common remote and decentralised workplace.

If you run your business from home, you can claim deductions for the business portion and occupancy expenses. Running expenses include the costs associated with using a room, such as heating and lighting, cleaning, landline phone and internet, and repairs to your business equipment. Running expenses can be deducted using the actual cost method, the fixed rate, or the shortcut method, explained here.

Occupancy expenses include mortgage interest or rent, council rates, land taxes, and house and contents insurance. You can claim these expenses for the portion of your house clearly identifiable as a ‘place of business’ and which is used exclusively, or almost exclusively for your business.

You can also claim the depreciation of the assets you use to run your business from home using one of the ATO’s depreciation incentives, which include the fixed method, the shortcut method and pattern of use. For example, furniture and furnishings can be deducted at a fixed rate of 52 cents per hour, while furniture, furnishings, computers and other items can be deducted at a fixed rate of 80 cents per hour – inclusive of depreciation.

Documentation to have in order

It’s important to have your tax documents in order for your accountant (or for yourself) to use when preparing your tax return. Helpful documents to have on-hand include:

• All tax invoices
• Sales receipts
• Business credit card statements
• Business bank account statements and fees
• Stock take sheets
• List of all your debtors and creditors

You need records to support any claim you make on your tax return.

Knowledge is power when it comes to preparing for tax time and we recommend seeking tax and financial advice before lodging your return. Your accountant can guide you on the deductions you can claim to help improve your end of financial year return.

Should the financial advice you receive align with the decision to purchase new business assets, we, as your broker, are available to help you access tailored financing options based on your needs.