It’s tax time, and a lot of small businesses have put off their tax returns in fear of what awaits. However, we have come to save the day, reminding you of the extra tax items you could have forgotten about – potentially saving you a few hundred or thousand dollars.
Many small businesses omit everyday expenses and smaller-ticket items in their tax return deductibles. Often, it’s these items cumulatively that put a strain on your cash flow, reducing the amount you can reinvest into your business. But for those who are new to tax, it doesn’t have to be all bad! This could be a chance to earn back some of your hard-earned cash.
As a rule of thumb, anything that you spend to run or scale your business is potentially tax deductible. If you’re working outside in construction and you slather on some sunscreen and slip on some work boots, they’re both tax deductible. If you work in professional services and need to print a 50-page contract, the printer, ink and paper are all tax deductable.
Let’s run through some of the items some entrepreneurs don’t know are tax deductible – hopefully saving you some extra cash along the way to help with cash flow, meaning you can put extra funds toward scaling your business.
Are you working from home? Perhaps you have a study which you use as a home office? If so, great – the federal government les you claim some of your rental expenses as tax deductions. In order to claim rent as a partial tax deduction, you need to have a room set aside exclusively for work activities. You would need to ensure you don’t have another office premises elsewhere – that is, your home is your principal place of business. In addition to this, you can then be eligible for associated deductions – such as heating, gas and electricity.
Charging your laptop and work phone at home? Need light to see in your office? Perhaps you’re a videographer and your drone needs recharging? It’s all tax deductible. Your business no doubt needs electricity to run – no matter where your’e located – so you are likely eligible for a tax deduction on your energy bills. Just be sure to calculate it correctly.
3. Fuel and Travel
Do you use a car for work? Fuel is a commodity that can be claimed as a tax deduction. If you are using your car to carry bulky items, attending conferences or meetings, delivering products or collecting supplies, you can claim part of its use on tax as a business expense. There are various methods to calculate how much tax you can claim, but it is best to refer to the ATO’s website or your accountant for more information.
4. Internet and Phone
Using the internet and your phone for work purposes? Great news – it’s probably a tax deduction. The ATO allows you to claim on telecommunications when used specifically for work. The basic calculation used is to figure out the percentage of work use as a fraction of the bill total. You can also now claim your domain name registration and ongoing website costs as part of your tax deductions.
5. Dry Cleaning
You can claim a deduction for the cost of buying and cleaning occupation-specific clothing, protective clothing, and unique, distinctive uniforms. Included in possible deductions are the costs of professional washing, drying and ironing eligible work clothes, or having them dry cleaned. For washing, drying and ironing you do yourself, you can claim $1 per load. If you’re doing 2 loads a week, this means you can claim $104 a year – it all adds up!
6. Union Membership Fees
Part of a union? Membership fees are tax deductible as well. Fortunately, most unions and associations will send members statements of the fees or subscriptions paid for convenience. Be sure to keep a copy in case you are audited.
7. Self-education, Seminars and Conferences
If you are learning in a way that will directly benefit your company, that’s also tax deductible. You can usually claim the cost of attending seminars, conferences or education workshops proven to be sufficiently linked to your work activities. This can include formal education courses provided by professional associations. So you can probably afford to go wild – and enjoy the benefits of education!
8. Tax agent fees
Businesses will often refer to a tax agent when they mature as finance can get quite difficult. The good news is that any expenses relating to preparing and lodging your tax return and activity statements are tax deductible. This means that lodging your tax and getting advice through a registered tax agent is claimable… this could even include related advice from a solicitor or barrister.
9. Office supplies
If you’re running a home office, then you can claim a variety of running costs such as calculators, computers, software, office furniture such as desks, chairs and lamps as well as professional libraries. If exclusively used for work and you can prove this use, you can claim a variety of stationery and accessories next time you file your tax return.
It is best to keep written records and proof of purchase for each item you claim, and you must be able to prove that you are using each item for business-related purposes. Be sure to check with the ATO or with your tax professional to calculate exactly how much and if you are eligible for these tax claims, in your specific case.
Until next time,
The Spotcap Team
N.B. Although we pride ourselves on being at the cutting edge of fintech, we don’t know your business’ particular financial situation. Always consult your accountant or financial professional before submitting tax documentation to the ATO.
Originally published July 19 2017