The tax deductions available for your small business can change every year. Being across the latest deductions available will help ensure your tax return is completed correctly.
It is important to consider the Federal Budget that comes out in May each year to see if there have been any relevant changes.
Here are some potential tax deductions you should consider if you are a “Small Business Entity” (generally, businesses with an aggregated turnover of less than $10m).
1. Purchase of a business asset that costs less than $20,000
“Small Business Entities” are entitled to immediately write off the acquisition of new depreciating assets that cost less than $20,000 and are used or installed ready for use prior to 30 June 2018. Eligible assets may include a new business vehicle, machine or equipment.
The Government has announced (in the 2018-2019 Budget) that it intends to extend this rule to 30 June 2019. At the time of writing, the extension was not yet law.
Assets that cost more than $20,000 may be “pooled” and claimed at 15% in the first year and 30% in subsequent years. When the balance of the “pool” is less than $20,000 the balance can be claimed as a deduction or “written off”.
Further information is available on the ATO website, for instance, refer to
2. Prepaid expenses
Prepaying some expenses prior to 30 June may increase your allowable deductions for this financial year. Expenses that may be eligible are those that relate to a service period of 12 months or less, for example, you may be entitled to claim a deduction this year if you pay for next year’s annual insurance policy, utility bill or professional subscription before 30 June.
You should be mindful that claiming these expenses this year may reduce your allowable deductions next year.
3. Business account and loan expenses
Although these are not new, you should also consider whether you can claim the fees and interest from your business accounts and loans around tax time.
4. Deductions for personal super contributions
From 1 July 2017, if you are aged under 75 you may be able to claim personal super contributions made to an eligible super fund. Those aged between 65 and 74 need to meet the work test to contribute, which means you need to be employed for at least 40 hours over 30 consecutive days during the financial year.
When claiming a personal superannuation deduction, it’s important to remember that the combined total of your superannuation guarantee payments, salary sacrificed amounts and your personal tax-deductible contributions can’t exceed $25,000 in a financial year or extra tax will apply.
If you intend to claim a tax deduction for personal contributions, please refer to the ATO website on "How to make a claim".
5. Other deductions
There are many other expenses you pay to keep your business running or help you earn business income, most of which are typically tax deductible. You can find more information about claimable deductions on the Australian Taxation Office ATO website or by speaking to an accountant.
This document takes into account the tax law and announcements as at May 2018.