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Tax time can be stressful, especially if you have left everything to the last minute. You may have forgotten to update your records or check for changes to tax rules that affect you. Alternatively, you may not know about the various small business concessions and deductions you can access to lessen the financial load on your business. This article will provide five tax time tips for your small business.

Keep Updated Records

You should keep records explaining all transactions that relate to your tax affairs. They should contain “enough information to calculate the income, expense and other amounts that must be reported in tax returns”, according to the Australian Tax Office’s (ATO) Assistant Commissioner, Matthew Umina.

You should also update your records regularly. This will help your business in the long-run, especially when it comes to completing and lodging tax returns, meeting your tax obligations and managing cash flow.

Check Small Business Concessions

There are a range of tax concessions available that can help you at tax time.

Some small businesses can take advantage of the $20,000 instant asset write-off, which offers immediate deductions for asset purchases up to the value of $20,000 (which would ordinarily have to be depreciated over their effective life). You need to make the purchase before 30 June to write off the business portion in your tax return. Therefore, consider bringing forward any asset purchases to access the deduction sooner.

You should also consider whether you can benefit from the simplified trading stock rules. For example, if the difference between opening and closing trading stock is $5,000 or less, your small business does not have to do a stocktake (which can be time-consuming and costly).

Claim Your Deductions

Most expenses incurred in running a business can be claimed as a deduction. This includes operating expenses, business travel expenses, home-based business costs and costs of employing people.

Mr Umina says there are “three golden rules” when working out what business deductions to claim this tax time. These are:

  1. you must have spent the money on your business. You cannot claim a deduction for personal expenses;
  2. if you use something for business and personal purposes, you can only claim the part that is related to your business; and
  3. you need to keep a record of your expenses to prove you can claim a deduction.

Find Out if Changes Apply to You

There are a few changes that apply from 1 July 2018. For example, small businesses with 20 or more employees will be required to start reporting through Single Touch Payroll, unless they have been granted a deferral or exemption from the ATO. Therefore, you should do a headcount and spend the lead up to tax time preparing for the new rule changes.

Further, if you have registered for GST and import low-value goods for business use in Australia, you may not have to pay GST. All you need to do is tell your supplier that you are registered for GST and provide them with your ABN.

Know Where to Get Help and Support

It is essential you know where to find tax help when you need it. Expert advice from an experienced accountant or tax lawyer will ensure you know exactly how your business should approach tax time. The ATO also provides a number of resources. 

Key Takeaways

There are five tax time tips you should keep in mind:

  1. keep your records detailed and up-to date;
  2. consider the small business concessions that apply to you;
  3. claim your deductions;
  4. stay on top of any changes to tax rules; and
  5. make sure you know who to go to for help.

If your small business needs help this tax time, get in touch with LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page.


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