Tips for SMBs looking to get the most out of their tax returns as the pandemic continues.
This end of financial year is a chance for Australian small business owners to take advantage of savings opportunities and tax breaks that may not have been available last year.
To encourage Australian’s to look closely at what they can and can’t claim, we commissioned a new research report, delving into what tax breaks are available to small and medium business owners (SMBO) this year, and how widely it is understood.
The research showed that 71 per cent of SMBO’s surveyed admit to finding the tax system for small businesses confusing; a clear sign that further knowledge and understanding of our tax system is needed for SMBO’s who are looking to take advantage this EOFY.
When looking ahead, 60 per cent of SMBO’s stated they are concerned about the growth and stability of their business beyond the COVID-19 pandemic.
The tax impact of working from home on employers
A third (33 per cent) surveyed stated the working from home climate will affect what they claim this year. With a further 14 per cent feeling confused over what is a personal (employee) cost and what is a business cost.
For SMBO’s, looking at where they can maximise on business tax breaks can be an effective way to save money or offset losses. However, as the research has showed, many small businesses don’t take advantage of them because they’re unaware of what’s available to them.
Despite this, 40 per cent of SMBO’s who reported that they don’t usually complete their tax return every year will complete one this year.
When it comes to EOFY, it is recommended to speak to a taxation professional to take advantage of all the new changes. For instance, small business owners can find out what their company qualifies for, and regularly monitor compliance. The key areas that they can look to take advantage of, is the instant asset write-off, as well as maximising deductible super contributions.
Taking advantage of instant asset write-offs and tax breaks
As the EOFY approaches, SMBO’s must make sure they understand the small business tax breaks and new temporary full expensing rules for asset write-offs, in order to allow them to maximise on tax refunds, in turn ensuring future business success.
With our research finding that 27 per cent of SMBO’s saw an increase in their year-on-year spending for office supplies, furniture and assets, these new rules will be helpful to many.
If you have financially assisted employees with setting up their dedicated workspace or room at home, you are likely to be able to claim a work-related portion for home office expenses.
Additionally, if you are running your own business from home, you may also be able to claim the work-related share of occupancy expenses. To ensure you are getting the most from your tax return this year, make sure to speak with an accountant about what you can and can't claim and you can also head to the ATO website to find out more about business tax breaks.