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Tax deductions for your small business

Tax deductions for your small business

Think about what deductions you can claim to boost your business’ tax return.

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.

Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank of Australia is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law. This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information.