Tax Tips for small businesses 2022

Jun 28, 2022

Tax Tips for small businesses 2022

Common Tax Deductions for Small Business

Are you claiming all the business tax deductions that you are entitled to?

There are many expenses common to most small business, and there are other expenses that are specific to the nature of the goods or services that your business provides.

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 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. We’ll make sure to include all the deductions you’re entitled to.

What’s 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.

Other 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.

Talk to us about what applies for your business.

Maximise Your Business Deductions

We can check your 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.

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Tax Tips for Individuals 2022

by Carmel Summers • 28 Jun, 2022

The end of the financial year is nearing…have you captured all your work-related deductible expenses to make the most of your 2022 tax return? Income The Australian Taxation Office (ATO) automatically receives information from your employers about salary and wages that you have been paid for the financial year. You need to declare all income from other sources on your tax return as well. Wages and salaries from employment. Pensions, annuities or government payments such as JobKeeper. Investment income including interest earned and dividends paid. Cryptocurrency gains or losses. Business or hobby income. Foreign income. Crowdfunding income. Sharing economy income such as Uber or Airbnb. Any other income such as prize money, compensation or insurance payments. Even if you have only earned a small amount from one of these sources, it still needs to be declared on the tax return. Gather all your records for anything you have earned apart from salary and wage payments from employers. You will need: bank statements that show interest income; proof of earnings from other sources such as crowdfunding or share economy platforms; records of business or hobby income; records of government payments received; records from cryptocurrency wallets showing transactions and the balance of each currency at 30 June; and records of any other payments received from overseas sources, prize winnings, insurance or investments. Tax Deductions Employees are entitled to claim work-related expenses as a tax deduction. To claim a tax deduction, you must have spent the money out of your own funds and not have been reimbursed by your employer. The expenses must relate to your earnings as an employee. Make sure you have invoices and receipts as proof of payment for any work-related expenses. Expenses you may be able to claim Vehicle and travel expenses – make sure you have a travel diary to record details of trips taken for your employment. Clothing, laundry and dry-cleaning expenses – you can claim for occupation specific clothing, uniforms and protective gear. Home office expenses – the shortcut calculation is still available this year for people who have worked from home due to COVID-19. This allows for a flat rate of 80 cents per hour for work time. You will need records of the hours you have worked from home to claim the ATO special rate. For people who usually work from home, check the ATO home office expenses calculator to maximise the allowable deduction. Self-education expenses – some education expenses that relate to your current employment are claimable. Tools and equipment – if you buy gear to help you in your job, these may be claimable. Small tools of trade, protective items, professional references and laptops are some examples of equipment you may be able to claim. Occupation and Industry Specific Guidelines The ATO recognises that some occupations and industries have specific requirements that employees need to pay for. There are handy ATO fact sheets for many industries, including hairdressers, teachers, performing artists, hospitality workers, lawyers, medical professionals and more. These guides are a great starting point if you are not sure what you can claim, but we can give you information tailored to your situation when you do your tax return. Superannuation If you have made personal superannuation contributions separate to your employer’s superannuation guarantee contributions, you may be able to claim this as a tax deduction. You will need to provide a notice of intent to claim form to your super fund and receive acknowledgement from the fund before doing your tax return. Book a time with us now to prepare for your tax return and we’ll make sure you maximise your allowable tax deductions this year. Contact details below: