Tax Tips for Small Business Owners

It’s EOFY tax time, and while it’s not as exciting as Christmas it can be just as expensive — unless you’re in the know. Here are some hot tips to keep your business expenses down, and pick up some nice little tips to keep your tax bill at a minimum.

Advertising and Sponsorships

One of the first things many small business owners quickly come to realise is that advertising makes a big difference to growing your business. After all, how are you meant to make sales if nobody knows about you.

Advertising and marketing are a cost of business. If your business has invested in a new set of business cards, an SEO optimised web site or a series of blogs to be written, these are all valid costs that can be claimed as tax deductions.

Sponsorships are classified as a financial activity used to reach business goals. Although it is not advertising, sponsorship does promote a company in association with the sponsor. Sponsorship is used to enhance your businesses’ image, change customer attitudes, increase sales and create positive publicity and heightened visibility.

Sponsorship can be claimed as a valid tax deduction if the business believes that the associated sponsor will generate future income, even if that does not happen.

Pro Tax Tip: Advertising includes paid ads to hire your employees and can be claimed as a tax deduction.

Business Travel

Although difficult with lockdowns, any travel for business purposes can be claimed. Your expenses as a business owner and those of your employees are included. The list of claimable deductions includes airfares, train, tram, bus or taxi charges, as well as accommodation and meals.

You’ll need to keep a travel diary and all of your receipts and tax invoices to back your claims. If your business is registered to collect GST, you’ll be able to claim the deduction in your income tax return of the GST exclusive amount.  Be careful to keep your private expenses separate, as these can’t be claimed. If your business trip is part business and private, you’ll need to make sure you allocate your expenses accordingly.

Pro Tax Tip: Fringe benefits tax may apply for some employee business travel expenses if you pay or reimburse your employees.


Car Expenses

Make sure your log books are up to date, your receipts are summed up and your tax invoices calculated. As a business owner, you can claim your motor vehicle expenses used in running your business.

Vehicles are categorised and will affect what you can claim and how to make your claims. A car is classified as a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers. Other vehicles include motor bikes and vehicles designed to carry over one tonne (such as a truck or some work utes) or over nine passengers.

Car expenses can add up, and include:

  • Fuel and petrol
  • Repair and maintenance
  • Interest on the loan of the motor vehicle
  • Lease payments
  • Insurance
  • Registration
  • Depreciation

Pro Tax Tip: You’ll be able to claim motor vehicle expenses provided to employees if you operate a business as a company or trust.

Fringe Benefits

Any fringe benefits you’ve paid for your employees can be claimed as a tax deduction. Fringe benefits include reimbursements made to an employee for their expense, or if you’ve paid a third party for the expense. They can be private or business in nature, but costs need to be incurred by the employee. There are strict rules governing what is classified as a fringe benefit. Fringe benefit tax is separate to income tax and is worked out on the taxable value of the benefit.

Pro Tax Tip: Employers can generally claim a tax deduction for the cost of providing the benefits as well as GST credits for the items.

Working From Home

Some business owners work from a home office or dedicated working space in their home. There are many expenses that can be claimed, including:

  • Heating and cooling
  • Phone and internet
  • Electricity and gas
  • The cost of cleaning your home office, including cleaning products
  • Depreciation of home office equipment, furnishings and computers
  • Costs of repair and maintenance of work-related assets
  • Small capital items
  • Consumables

Pro Tax Tip: The ATO has three working methods for claiming working from home deductions: shortcut method, fixed-rate and actual cost. It’s a good idea to crunch some numbers to see what will provide you with the maximum tax deductions. They are not all equal.


There are a range of insurance premiums that are classified as business costs because they are incurred as a cost of conducting business and can be claimed. There are eight types of insurance cover your small business can claim:

  • General liability cover
  • Professional liability insurance
  • Business insurance
  • Business interruption
  • Management liability insurance
  • Cyber liability insurance
  • Tax audit insurance
  • Workers compensation insurance

Pro tax tip: Most businesses need insurance but there are many types with different coverage. The most common types of insurance are general and professional liability.

Repairs, cleaning and maintenance

As well as new asset purchases, your current assets will need attention from time to time. The costs of upkeep on your machinery and assets, if they are used to generate an income and are not capital costs, can be claimed.

General upkeep includes:

  • Painting
  • Plumbing
  • Electrical
  • Mechanical
  • Upkeep on buildings, fences and guttering
  • Fixing defects

Pro tax tip: Deductible upkeep does not include improvements or work done immediately on or after acquiring an asset.

Tax-Related Expenses

You like to hire skilled staff because they’re an asset to your business. A good accountant and tax agent is also your friend. Any fees associated with hiring a tax agent or accountant, including fees, bookkeeping, preparing and lodging tax and BAS returns, objecting or appealing an assessment, auditing, tax advice and GST liability can be claimed.

ITP Accounting Professionals have helped Australian individuals and small business with their tax affairs, bookkeeping and financial advice for 50 years. That’s a lot of experience to be taken advantage of. Phone 1800 367 487 and chat with a friendly tax professional today.