It can be hard to keep on top of all the various tax breaks and incentives small and medium businesses are eligible for. There are a lot of them. From deducting your stationary to grants for safety equipment.
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1. General expenses you can claim on your tax
You can generally deduct expenses incurred in running your business, as long as they are related to earning an income. The Australian Tax Office breaks these down into two categories — expenses you can claim in the year incurred, and those that can be claimed over time.
Revenue expenses — the costs incurred in day-to-day operations, can be deducted in the year they are incurred. These can include advertising, bad debts, bank fees, travel, legal fees, wages paid, and utilities. You can also claim a capital expense of less than $1,000 in the year it is incurred. Check out the ATO website for a more complete list of revenue expenses.
A capital expense — the cost of an asset with a long life, or the expense of establishing or modifying a structure, can be deducted over time. Computers, tools, furniture, buildings, vehicles and other equipment are examples of capital assets. The ATO website has a more complete list of capital assets, as well as a calculator for figuring out how much you can claim and over how many years.
2. $20K small business tax deduction
In the last federal budget, the government introduced a deduction to encourage small businesses to invest in new assets. If your business has less than $2 million in annual revenue, and you purchased new equipment, software, hardware or vehicles, you may be eligible for an immediate $20,000 tax deduction.
Although, as we have written about before, you won't be refunded on a dollar-for-dollar basis. You will likely receive a benefit of less than half of the total purchase price of the asset you choose to claim. So its probably best you only deduct something you were going to do anyway.
3. Government grants
All levels of government run a variety of grant programs, many of which you can find through this tool. New South Wales, for example, offers a rebate for small business owners who buy and install eligible safety equipment. Frankston City in Victoria offers numerous grants for businesses who create new employment.
If you’re unsure what you can claim, visit the ATO’s website, call the ATO or check with your tax adviser.