You’ve only got one week left before EOFY to take full advantage of the tax benefits!
We all know EOFY is next Thursday the 30th of June and can be stressful when it comes to reviewing your business operations, but are you taking advantage of the tax deductions when purchasing new business items?
Purchases before tax time! How to make your money work for you.
To make your money work hardest for you, ensure you are prepared and plan accordingly! When operating a business, it is important to understand your profits and losses. If you are likely to make a profit before EOFY it is recommended to purchase assets, tools and more before June 30 to reduce the amount of tax you will pay.
This may not be the case for all businesses so consult your accountant before making these purchases.
What does this actually look like?
For a small company, tax is paid at 25%. This means if you spend big now on flashy new computers in the office, you can claim this as a deductible work expense, therefore lowering your profit margin and ultimately saving you 25% of the computer price!
This also applies to sole traders and other business structures, comparable with the marginal tax bracket you fall into. If you pay 42c tax for every $1, you can leverage this to save 42% tax on your business related purchases!
What is a work related expense?
Work related deductions are a simple, yet essential way to reduce tax and maximise your business profits.
When completing your tax return you may be entitled to claim more deductions than you realise.
Check your expenses meet the following criteria:
Maintained records to prove your purchase
Must not have been reimbursed for the cost
Money must be on your individual account
The product or service must be related to your job
I work from home, can I claim tax deductions?
Who would’ve thought it’d take a worldwide pandemic to shake up the business world and make working from home the norm in most 2022 businesses. With this ongoing shift in working landscapes, utilities at home may be claimed as a tax deduction!
This can include claiming the room you use for work purposes, mobile phones and electronic devices and even some phone payments/bills if used for work purposes.
If you require advice please speak to our professional accountants to know if you are complying to your tax obligations.
Business deductions, where do I start?
If you’re a start up business, you could be eligible to deduct $5,000 in business expenses, and another $5,000 in organisational expenses for the year you started the business.
Running a business can be stressful enough, let alone trying to calculate your tax deductions and expenses. We recommend that you speak to an accountant to ensure you meet your tax requirements by the Australian Taxation Office (ATO).
For most small business owners you may be able to claim deductions for most of your costs incurred whilst running your business, including staff wages, marketing and business finance expenses. Ensure you keep records of all your business costs.
Other deductions to claim:
Other deductions to claim:
Vehicle and travel expenses
Professional association fees
Trade union fees
Tools and equipment
Tax preparation fees
Work related clothing and laundry
Some gifts and donations
Self education expenses
So what are you waiting for?
You’ve got 7 days to splash out big and simultaneously save big!
If you’re not sure what you can and can’t claim, contact the local Accounting team at Greenhalgh Pickard for professional advice.