A concession for small business means that you can generally claim a deduction for business expenses incurred while generating your business income.
Some of these deductions are straightforward – rent, materials, wages, supplies – but here are some you should not forget.
Tax Deductions For Small Business Australia
We will discuss this with you at our tax time meeting to ensure these claims are not missed.
Interest Paid on Business Loans & Business Finance
Interest business borrowing is generally tax-deductible. This includes interest on loans for business purposes, overdrafts interest and other business finance.
All interest accrued on business loans but not paid by 30 June is potentially also deductible.
Small Business Depreciation – Take advantage of the Temporary Full Expensing.
Don’t forget to claim depreciation.
Assets are usually depreciated over several years of the assets useful life, but special rules for SMEs can deliver an immediate tax write off for any asset.
If your income year ends on 30 June, deductions under temporary full expensing are only available in the 2020–21 and 2021–22 income years. The eligible new assets must be first held, first used or installed ready for use for a taxable purpose, between 7:30 pm AEDT on 6 October 2020 and 30 June 2022 for eligible businesses.
For example, if your business bought a $3,000 computer, your business could claim $3,000 as an immediate tax deduction when you do your tax return.
Trading stock
Tax time is a good opportunity to look at your stocktake and see if you have any deductible stock items.
You might write off damaged and obsolete stock and obtain a tax deduction.
If your stock valued at cost moves by more than $5000 from the 30 June previous, you must complete a stock take and you cannot claim the value of stock on hand at 30 June in the current year.
Bad debts – Good news
Some small business have Accounts Receivable who fail to pay for the goods or services sold to them.
This is very bad news for the selling business, but you can at least claim a deduction for the dollar value of bad debt.
A bad debt is any debt which has been outstanding for 12 months or more and which you have made a reasonable effort to recover.
Bad Debt is a Tax Write-Off
It pays to go back through your outstanding invoices to find bad debts and write them off before the tax year on 30 June.
If you calculate your GST on an accrual basis, don’t forget to claim a refund for the GST you paid to the Australian Tax Office when you issued the original invoice.
Get in touch
If you’re unsure about what deductions you are entitled to claim, book in for a consultation with our expert small business tax accountants today.
We have offices in Capalaba and service clients in Brisbane City and all throughout Australia.
Call 07 3823 2344.
Disclaimer
Material on this website is general in nature and does not take into account your particular circumstances. Before you make any financial decision based on this advice, you should consider, with an adviser, whether it is appropriate to your financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Every effort has been made to check the accuracy of the information contained on this page and on this website, Accountants 2 Business, its officers, representatives, employees, and agents disclaim all liability, for any mistake or omission contained in this website for any loss or damage incurred by anyone relying on the information.
