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Tax Tips for 2022: Small Businesses

Common Tax Deductions for Small Businesses

Are you claiming all the business tax deductions to which you are entitled?

There are many expenses common to most small businesses. Other expenses are specific to the nature of the goods or services that your business provides.

  • Operating expenses include; accounting, administration, advertising and marketing, office premises, office running expenses, trading stock, legal fees, insurance, and vehicle expenses.
  • Employment expenses include salary and wages, fringe benefits, superannuation, and training costs.
  • Other operating expenses may include things specific to your business. For example; point of sale systems, freight, professional membership fees, professional education, protective equipment, tools, or specialised software.
  • Capital expenses include machinery and equipment, vehicles, furniture, and computers. Depreciation for these assets may also be deductible if the expense was not written off immediately.
  • Repairs and maintenance of assets and business premises.

Expenses must relate to running the business and providing the goods or services that your business offers.

Some common expenses that are not deductible are; fines and penalties, provisions for employee leave, donations to entities not registered as deductible gift recipients, and entertainment.

There may be some expenses you want to check with us, such as; private usage of business vehicles, prepaid expenses, bad debts, loss of stock, and borrowing expenses. We’ll make sure to include all the entitled deductions.

What’s on the ATO Radar for 2022?

This year the ATO will be taking a closer look at things like; record keeping, work related expenses, rental property income and deductions, and cryptocurrency transactions.

  • Keep records of all business transactions (income and expenses), activity statements, and financial reports for at least five years.
  • Keep all records relating to employees, contractors, and payroll for at least seven years.
  • Keep all records for at least seven years if your business is a company, including director meeting minutes.

Other Common Tax Return Issues

  • Work-related travel expenses – travel fares, accommodation, meals. The travel should be directly related to income producing activities, and you need records to verify the travel claims.
  • Motor vehicle expenses – keep records for fuel, repairs, servicing, finance arrangements, insurance, and registration. Keep a logbook to record private travel.
  • Fringe benefits – have you captured all benefits provided to employees? The ATO usually scrutinise vehicle and entertainment benefits. This year you’ll need records of any extra benefits provided to employees because of COVID-19.
  • Superannuation – have you paid the superannuation guarantee to employees’ super funds on time? The ATO will examine your Single Touch Payroll records, including superannuation payments.
  • Current temporary tax depreciation incentives – There are currently three temporary tax depreciation incentives available to eligible businesses:

Talk to us about what applies to your business.

Maximise Your Business Deductions

We can check your business’s eligibility for concessions, offsets, employer incentives, and rebates. We can also make sure your business is calculating taxable income correctly. Don’t want you to pay more tax than you need to!

With so many businesses still affected by COVID-19, it’s important to get the allowable tax deductions right for your business. Also, get in early for your tax return. This way, you get more time to plan for payment, or if you are due a refund, you will see it in your bank sooner.