This year, it is important to get your records and tax return correct because of the continued unusual business circumstances.
Tradies Tax can help make tax time easy for you, and make sure you are claiming all that you can for your business.
Are you claiming all the business tax deductions that you are entitled to?
There are many expenses common to most small businesses, and there are other expenses that are specific to the nature of the goods or services that your business provides.
Common Tax Deductions for Small Businesses
Below we have some common tax deductions, that may be relevant to your small trades business:
- 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 to assets and business premises.
Expenses must relate to the running of the business and providing the goods or services that your trades 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.
Tradies Tax will make sure to include all the deductions you’re entitled to.
What Is On The ATO Radar For 2022?
This year the ATO will be taking a closer look at record keeping, work related expenses, rental property income and deductions and cryptocurrency transactions.
- Keep records for 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.
- If your business is a company, keep all records for at least seven years, including director meeting minutes.
Additional 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 and servicing, finance arrangements, insurance, and registration. Keep a logbook to record private travel.
- Fringe Benefits – have you captured all benefits provided to employees? Vehicle and entertainment benefits are usually scrutinised. This year you’ll need records of any extra benefits provided to employees because of COVID-19.
- Superannuation – have you paid the superannuation guarantee on time to employees’ super funds? 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:
- Temporary full expensing – for assets you start to hold, and first use (or have installed ready for use) for a taxable purpose, from 7.30pm (AEDT) on 6 October 2020 to 30 June 2023.
- Increased instant asset write-off – if the asset was purchased by 31 December 2020, and first used or installed ready for use before 30 June 2021. The threshold remains at $150,000.
- Backing business investment.
Tradies Tax can help determine what applies to your trades business.
Let Tradies Tax Help Maximise Your Business Deductions
Contact Tradies Tax today, so we can check your trades business’s eligibility for concessions, offsets, employer incentives and rebates – and make sure your business is calculating taxable income correctly, so you don’t 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 and 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.
This blog was originally published by BOMA, but has had edits made by Tradies Tax for the benefit of our readers.