Tax Time – Tactics That Can Pay Dividends For SMEs

It's important to be aware of the types of business travel expenses that are tax-deductible in Australia. Eligible expenses typically include transportation (flights, taxis, car rentals), accommodation, meals, conference and seminar fees, and certain incidental expenses directly related to your business activities during the trip. For more details, visit the ATO website.

This tip definitely requires your accountants sign off, because you have to be sure to get it right. But, if you defer income by holding off issuing invoices until after July 1, then this income could go into the next financial year and it will be taxed later. Conversely, if you pay expenses earlier (before June 30) you may be able to claim a deduction in the current financial year.

The ATO rules change every year, so it pays to dig deep and find out the latest. Here’s a few nuggets of information that we found that could be good to consider...

The ATO has publicly announced its three key focus areas for this Tax Time: rental property deductions, work-related expenses, and capital gains tax. For SMEs, work from home deductions is most relevant, and the ATO’s advice is to not just copy and paste your details from last year. They expect you to be able to back up your claims and use the correct method of calculating your deductions.

The ATO is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements to take advantage of a new amnesty to get their lodgements back on track.

The amnesty applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and runs from 1 June 2023 to 31 December 2023. To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgement was due.

The instant asset write-off scheme implemented by the Australian government allows small businesses to claim immediate deductions for eligible assets (it’s probably why you see so many brand-new Toyota Hilux’s on the road!). Get to know the current thresholds, and strategically time your asset purchases to maximise these deductions.

On 30 April 2023, the Australian Government announced it will provide businesses with an annual turnover of less than $50 million with an additional 20% deduction on spending that supports electrification and more efficient use of energy.

Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024. This measure is not yet law, but it will help small businesses make investments like electrifying their heating and cooling systems, upgrading to more efficient fridges and induction cooktops and installing batteries and heat pumps.