As a small business owner, it is easy to miss out on a variety of tax deductible expenses which you and your business may have incurred.
To help you minimise the chances of missing out, we have put together the five most common tax deductions small business owners overlook, ensuring you will be able to achieve tax efficiency.
State Payroll Tax
In Australia, payroll tax is a state tax, which is imposed on the wages paid or payable by an employer. The tax is assessed on the employer not the employee, and it’s the employer’s responsibility to self-assess their liability and make monthly payments.
The tax is calculated on the total wages paid by an employer, which includes salaries, wages, bonuses, commissions, and allowances. It can also include fringe benefits and contributions to superannuation on behalf of the employee.
Each state and territory in Australia sets its own payroll tax rate and threshold (the amount of wages an employer can pay before they are liable for the tax). These thresholds and rates vary from state to state
Before July 1, 2015, qualifying capital expenses (included start-up costs) were deductible on a straight-line basis for the first five years. However, changes in tax law after July 1, 2015 actually allows certain business start-up expenses to be immediately deductible in full instead of on a limited straight-line basis over five years. These new allowances include costs relating to securing capital and professional expenditures related to a new business start-up such as professional consultations, including legal and accounting consultations.
If you use your personal car for work-related reasons (not including driving to and from your place of work), you may be eligible to claim motor vehicle expenses. For eligibility reasons, you should keep a valid logbook for at least three months and be the car owner.
1. Business Expenses
You will have various expenses when running a business, such as operating expenses (wages, rent , consumables, subscriptions, registrations etc) and capital (purchase of equipment and other fixed assets). Keeping records of your expenses is the best way to ensure you are able to maximise your tax deductions. If for example you need to pay for repairs to equipment you should maintain the invoice in order to fully deduct this cost against the business’s assessable income.
2. Remote Working Expenses
Remote working is incredibly common for small businesses; luckily, many home office expenses can be deductible provided certain conditions are met. For example, if you use equipment such as your personal computer, furniture, heating and software, these costs can count towards your work deductions.
Maintaining a record of such expenses will ensure your tax deductions can be maximised.
Need Help With Your Business Taxes? We Can Help
Being a small business owner comes with various challenges, and the management of your accounting & tax affairs can be time consuming and confusing. Get in touch with the team at Accounting Tax Solutions for further assistance and advice.