Small business owners, know what you can claim this tax time!
To ensure the best tax return for your business, it pays to know all the expenses and costs you can claim. Here’s a few key areas to tap into this tax season.
As a small business, it’s important to know what you can claim this tax time. After all, every dollar you get back counts, right?
It’s important to keep good records, tracking costs and keeping proof of the expenses you incur while running your business. For example, marketing, paying your employees and eligible expenses.
What you can claim can change from year to year – this list is by no means exhaustive – so be sure to consult with CMA Accounting and Taxation Services to avoid missing out on maximising your tax return.
When you travel to promote your business, present at tradeshows, or meet with clients, you incur costs. So, as a business owner, if you or any of your staff travel for work, you are entitled to claim for the work-related portion of any travel, excluding the commute to and from work.
Business travel expenses you can claim:
- Public transport – trains, planes and automobiles, bus fares, cab fares, ride share.
- Private transport if you use your car between clients or to travel away from home.
- Accommodation – the cost of overnight stays related to the work portion of your trip. Should you tack on an extra week to your work holiday to sight-see, the personal portion of your travel is not deductible.
- Meal allowance.
Purchases of assets
If you have purchased equipment for your business, you can immediately claim back the work-related portion of any eligible new or used depreciating assets.
Eligible assets must be used or installed ready to use for a tax-related purpose between October 6, 2020 (7:30pm AEDT) and 30 June 2023. This is a temporary measure due to the pandemic. To be eligible for the temporary full expensing, you must have a business with an aggregated turnover of less than $5 billion or meet an alternative income test.
COVID-19 related expenses
The current COVID climate has been responsible for additional costs to many small businesses. For example, if you need to provide anti-bacterial spray, face masks, face shields, hand sanitiser or rapid antigen tests, you may claim these back if your employees are essential workers or work in an industry where close contact with clients is unavoidable.
Other COVID related costs could include equipment provided to staff to allow them to work from home during isolation, printed signage for hygiene and social distancing reminders, and licences for cloud-based software and subscription-based computer programs required for staff to work remotely.
Continued professional education
Undertaking a formal qualification (such as certificate, diploma, PhD, Masters, or Doctorate) to enhance your current career may be eligible for deductions. Course fees, textbooks and other course items can be claimed if the furthered education results in professional development resulting in increase in income.
There are quite strict regulations you must abide by if you wish to claim on upskilling expenses. For example, if you’re a dog trainer and want to specialise in formal certification for animal behaviour, it’s likely to be covered. If you’re a dog trainer who wants to become a yoga teacher, it’s not claimable.
Write off bad debts
Outstanding debts from clients that have been unable to be recovered, despite steps taken to reclaim the money, can be written off.
You will need to show proof that there’s a low probability of ever recouping the money owed (i.e. the person has gone bankrupt or can’t be found), and you may be eligible to claim the unrecoverable amount. The debt must not have been sold to debt collectors, waived, or forgiven.
Fringe Benefit Tax (FBT)
If you have provided employees with items required to work remotely during the pandemic, a majority of these items will be exempt from FBT. The provided assets must be related to carry out their job responsibilities, such as computers, laptops, printers, tablets, ergonomic office desks and chairs, etc. Keep records and receipts as you may be eligible to claim these back to reduce your business tax.
Non-entertainment or recreational gifts with a value of $300 (including GST) or less are also considered exempt. You’ll be able to claim back the value of the minor benefits providing they fall under the ATO guidelines and is a one-off, not the norm.
Hire a certified tax accountant
If tax is not your speciality, that’s okay. Hiring a certified taxation accountant is simply not only time-saving but removes a lot of the unnecessary risk.
The cost of hiring CMA Accounting and Taxation Services to manage your tax obligations and prepare returns is tax deductible for the following financial year. To make an appointment, please call our office on (077) 5448 8161.