The tax deductions available for your small business can change every year. Being across the latest deductions available can be an easy way to reduce your tax liability.
It is important to consider the Federal Budget that comes out in May each year to see if there have been any relevant changes. To save you time, here are six tax deductions worth knowing about.
1. Purchase of a business asset that costs less than $20,000
If you purchase a vehicle, machine or piece of equipment that costs less than $20,000 before 30 June 2018, you could get an instant deduction. To qualify for this benefit, you’ll need to be an eligible small business and have used or have the asset ready for use before 30 June 2018.
2. Prepaid expenses
Eligible small businesses can claim a tax deduction for prepaid expenses that stretch forward for up to 12 months. You can claim a deduction this year if you pay for next year’s insurance policy, utility bill or professional subscription before 30 June.
3. Business account and loan expenses
Although these are not new, don’t forget to claim the fees and interest from your business accounts and loans around tax time.
4. Sole traders’ and partners’ super contributions
From 1 July 2017, all individuals under 75 years old are eligible 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.
To claim a tax deduction for personal contributions, you need to give your super fund a notice of intent.
5. Start-up costs
If you’ve started your small business this financial year, keep records of your setup costs handy. You may be able to claim these as a deduction if they were for:
- Professional advice on your proposed business structure or operation
- Government fees, taxes or charges to set up your business structure – the fees to create your company, for example
6. 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 ATO website or by speaking to an accountant.
This document takes into account the tax law and announcements as at May 2018.