Small Business Major Tax Deductions

Preface

Tax season can be a stressful time for Australian business owners, but it doesn’t have to be. With the right knowledge and strategies from the best tax accountants Perth, you can take advantage of various tax deductions and incentives to minimize your tax liability. It’s crucial that every business pays the right amount of tax as tax contributes to several public services. While operating the business, most income you receive may be assessable income for tax purposes. However, there are so many set tax deductions for most business expenses that you may be able to claim while filing business tax return. Furthermore, you may also be eligible for certain concessions, offsets, and rebates as become eligible from time to time.

As rights come along with the responsibilities, the business must keep accurate and complete records of their assessable income and expenses using the correct method for calculating and reporting all income and deductions to ATO at the right time, along with the timely settlement of any due amounts to them.

What can be claimed as deduction?

The business can claim a tax deduction for most expenses they incur in carrying on a business if those expenses are directly linked to earning the assessable income. These may include but not exhausted to:

• Business vehicle expenses: Expenses incurred for fuel, maintenance, insurance, registration, depreciation related to the vehicle used for business purpose (private use excluded). Appropriate logbook to be maintained if the vehicle is used for non-business purpose.
• Home-business office expenses: Portion of this household expenses such as utilities, rent, mortgage interest, internet etc. if the business is operated from a dedicated home office space.
• Business travel expenses: Expenses pertinent to business-related travel purpose such as transportation, meals, accommodation subject to keeping detailed records/receipts to substantiate this.
• Other operating expenses: General operating expenses such as advertisement, promotion, rent, insurance, repair and maintenance, office supplies, accountants fee etc.
• Staffs’ salaries, wages and super:  Wages and superannuation expenses for business employees subject to meeting timely superannuation payment obligations.
• Depreciation Expenses: Amount of depreciation of assets such as computers, furniture/fixtures, machinery etc. used in the business.
• Self-Education Expenses: Expenses incurred in undertaking courses/training pertinent to improve business skills and knowledge.

Three (3) rules of thumb to ascertain business deduction:

1. Incurred in for the business, not for private use.
2. Proportion to be made between private and business in case the expenses are of a mixed nature.
3. Have records to prove it.

What can’t be claimed as a deduction?

• Entertainment expenses
• Traffic fines/infringements
• Expenses that of private or domestic/family nature
• Expenses not related to generation of assessable business income.

Tax Rebate 2023: What You Need to Know

One of the first things every business owner should be aware of is the tax rebate for the current year, which in this case is 2023. Tax rebates are incentives offered by the government to encourage certain activities or investments. For the 2023 tax year, it’s crucial to stay updated on any new rebates or changes to existing ones. These rebates can significantly reduce your tax liability and improve your bottom line.

To find information about the latest tax rebates for 2023, visit the official website of the Australian Taxation Office (ATO) or consult with TFP as best tax Accountant Perth. Common rebates include the Research and Development (R&D) Tax Incentive, which rewards businesses for investing in innovation, and the Instant Asset Write-Off, which allows you to deduct the full cost of eligible assets.

In Crux:

Navigating the Australian tax landscape as a business owner requires a deep understanding of deductions, rebates, and compliance with tax laws. Staying informed about the latest updates for the 2023 tax year is a crucial step toward optimizing your financial position. By claiming the deductions mentioned in this guide, you can significantly reduce your taxable income and keep more of your hard-earned money in your business. However, navigating the complexities of tax deductions can be complex, and that’s where a qualified tax professional from TFP Tax Accountants Perth can provide personalized advice based on your specific business circumstances.

To find out more on how it can be tailored to your specific circumstances, please schedule an appointment with one of our experienced tax accountant /  tax agent / Tax Advisor  by calling us on 08-9386 0047 or filling in the form online here.