Along with the daily demands of their enterprise, small business owners are responsible for staying on top of their personal and business taxes. Remaining tax compliant is vital if you want to avoid problems with the Australian Taxation Office (ATO). And being able to correctly apply small business tax deductions is crucial if you want to avoid paying excess tax.
Of course, striking this balance between compliance and tax debt minimisation is far easier said than done. Indeed, depending on your business structure, it can be horrifically complicated. The good news is that you’re not on your own. ITP’s certified tax accountants are dedicated to making life easier for Australia’s small business community. One of the ways we do this is by providing free information to help you make informed decisions about your taxes.
To help you find your footing in the complex world of small business tax deductions, we’ve broken them down into their respective categories. Below, you’ll find a broad overview of the deduction types you may be able to claim.
Work-Related Travel Expenses
If you travel for business, there are several small business tax deductions you can claim, including the use of trains, buses, and taxis. You may also claim accommodation costs and meal expenses. However, there are rules for claiming overnight travel. You must:
- Keep written evidence of all expenses when travelling away from home for one night or more
- Keep a travel diary that records all the expenses and specifics of your business activities when you are away from home for six or more consecutive nights
Repairs and Maintenance Tax Deductions
If you have a car used strictly for business, you may be able to claim back some of your expenses on your tax return. However, the calculations can be complicated, and the way you go about them will depend on your business structure as well as how the vehicle is used. For this reason, we recommend making an appointment with one of ITP’s business tax accountants, who can advise you on the expenses you can claim. Expert guidance is important here as mistakes can put you at odds with the ATO or see you paying far more tax than you would have if you’d worked with an accountant.
You can also claim deductions for repairing and maintaining other business assets, including machinery, tools, and appliances. You don’t have to own the asset to be able to make a claim. However, you do have to be able to prove that you paid for the repairs or maintenance. There are also some subtle rules that you must adhere to. For example, you cannot claim repairs carried out immediately after purchasing an asset because, according to the ATO, the price you paid for the item must have reflected its condition of needing some repairs. Given these complications, this is, once again, an aspect of your taxes that’s best handled with the help of a professional.
READ 6 TOP TAX DEDUCTIONS FOR CONSTRUCTION WORKERS AND TRADIES
Home Office Tax Deductions
If you work from home, you can claim quite a few related small business tax deductions. These include:
- Occupancy Expenses – including council rates, home insurance, land taxes, mortgage interest, or rent.
- Running Expenses – including gas, electricity, and your phone line. You can also claim any decline in value of plant and equipment and the decline in value and cost of repairs to furniture.
Pro tax tip: If you sell your home, you may need to pay capital gains tax on the business part of your home if you were eligible to claim occupancy expenses on your tax return. To learn more about this, visit our guide to what triggers a capital gains tax event.
DOWNLOAD THIS ARTICLE: The Most Valuable Tax Deductions For Your Small Business
Small Business Tax Returns Made Easy
It’s always a good idea to broaden your understanding of the tax system and the deductions to which you’re entitled. However, you don’t have to struggle alone with the stress and endless paperwork. ITP’s small business tax accountants can ensure your tax returns always deliver the best refund possible. Our professional tax agents can guide you through the lodgement process and help you maximise your small business tax refund. We’ll make sure you’re perfectly compliant, meaning you won’t have to stress about having issues with the ATO. Drop by your nearest ITP office today or use our office locator to make a booking online.