Talking Cents

Piece of advice from accountants for small business about tax

Personally, I think that claiming tax is one of the most complicated tasks. Technically speaking, Australian Taxation Office (ATO) allows you to claim most expenses that are directly associated to earning your small business assessable income. However, private expenses, such as childcare, are strictly out of the box.

The tricky part about how much you can claim, what you can claim and when you can claim all depends on the assets you’ve purchased. Typically, you can claim working expenses in the year they occur. While capital expenses, on the other hand, can be claimed over time.

Working expenses

Working expenses is also known as revenue or operating expenses. As aforementioned, these items can be claim in the year they occur. Some examples are wages, advertising expenses, parking fees, printing paper and pens, etc.

Capital expenses

Capital expenses refer to assets items that have a longer life more than 12 months and have to be claimed over time such as computers, printers, vehicles, carpets, equipment, etc. In the initial year, you are not able to claim the total cost of an asset, however, in the sequence years, you are able to claim the depreciation in value of the asset over time. However, for all small business owners, if an asset costs less than $6,500, you eligible to claim the full amount in the year you incurred the expense.

Owning a commercial property

Rental income should be recorded in your tax assessment if you own a commercial property and leased it to a tenant. Any maintenance, ownership costs and loan interest incurred in the year can be claimed as income tax deduction. You must also claim a credit for the GST included in the purchase price of a commercial property if you buy one. If you sell one, you might be liable for capital gains tax. More research has to be done, as you might be eligible for reductions.

Leasing a commercial property

Your rent expenses, GST credit and the GST included in the rent, can be claim as a tax deduction with you leased a commercial property to run your business.

All information on this article are however, still subjected to changes depending on your business size, etc. For more accurate advice and guidance, we urge you to contact our team of professional accountants.