After another tumultuous year for small-business owners with the coronavirus pandemic continuing to impact the nation, it’s more important than ever that you know what your small business is entitled to claim when it comes to tax time. This article is not an extensive list of what’s available to business owners and we recommend making an appointment with a certified taxation account to make sure you’re claiming what you’re legally entitled to.

Instant asset write-off / temporary full expensing

Eligible businesses are entitled to immediate deductions for the business portion of most new or second hand depreciating assets up to $150,000. Small businesses can use the simplified depreciation cost rules to work out whether their purchased assets meet the criteria. A 12-month extension was announced as part of the 2021 budget to include assets first used or installed between 6 October 2020 and 30 June 2023. There are a number of assets excluded, such as horticultural plants like grapevines and those used for research and development. Given the complexity of compliance, you’d be well advised to seek out assistance from a certified tax accountant to see which purchases meet the guidelines.

Outstanding bad debts

If you have outstanding debts from customers, you may be able to claim for the unrecoverable amounts. You will need to show you have included the income as part of your assessable income and taken steps to attempt to recover the money owed. The debt must not have been waived, forgiven, or sold to debt collectors.

Tax affairs management

If you use an accountant or tax agent for tax advice, managing your tax-related affairs and preparing tax returns, you can claim these as a deduction.

Business travel

Business travel expenses can be claimed if you pay for yourself or any of your employees to travel for work. This includes public transport, rideshare and airfares. Also, business owners are entitled to claim for accommodation and food expenses. In cases where employees add on an extended holiday to sightsee or explore for a day or two either side of business activities are not eligible to be claimed for. Keeping accurate records and receipts is crucial. One of the best apps to keep track of your travel expenses is the official ATO app. Its built-in travel metre can even help you log the kilometres you drive for work-related travel when using your own vehicle.

Home-based business expenses

When running your business from your home, you may be eligible to claim a portion of your home expenses, including rent or mortgage, water, heating, cooling, lighting, repairs of office furniture or computer consumables. You can even claim for a cleaner for your work area. All home-based business expenses only apply to the area you work in, not the entire house.

Continued professional development and self-education.

If you are upskilling your education, there are no limitations on the cost of the courses that you can claim on. However, there are some clear guidelines that must apply if you wish to claim your professional development or self-education as a deduction.

  1. The course studied must result in a formal qualification (such as a PhD, Masters or Doctorate).
  2. You must be able to build on your current skills and knowledge that apply to your business. For example, if you own a hairdressing salon, you cannot apply for a claim for course expenses that prepare you for a career change as a vet.
  3. Undertaking the study will result in an increase in income.

For more information on tax entitlements your small-business owner can claim for 2020/2021 financial year, make an appointment with a certified tax specialist today or talk to the ATO.