Small business tax deductions: What you can and cannot claim
By: Sky Accountants
Did you know that you can claim deductions (https://www.skyaccountants.com.au/)
To claim your business expenses, the money must have been spent for the business. In case of a mix of private and business use, you can still claim the business-related portion of it. It is also important that you have records to prove the expense. These business deductions are claimed in your business entity's tax return or personal tax return for sole traders (https://www.skyaccountants.com.au/)
What you can claim
Generally, business owners can claim operating expenses in the year they incur them, including wages and office stationery, as well as capital expenses such as machinery and equipment. In some cases, you may also claim a deduction for prepaid expenses, such as goods or services that you will receive in a future income year.
Operating expenses are generally incurred when there is a current legal obligation to pay for goods and services. While an invoice is not required, a record of the expense incurred is necessary to claim. For items used in the business for only part of a year, the claim may be restricted to the period it was used for the business.
There are several concessions available to small businesses, such as payment and reporting options which apply to sole traders, partnerships, companies and trusts. To apply for a small business concession (https://www.skyaccountants.com.au/
Accountants Ballarat & Bookkeepers Ballarat
Our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at firstname.lastname@example.org or 1300 328 855 (tel:1300328855)
Meanwhile, some expenses that are not deductible are entertainment expenses and traffic fines, domestic or private expenses, including child care fees or clothing for the family, expenses related to a non-assessable income such as from a hobby and the GST component of a purchase that is claimed as a GST credit on a business activity statement.
Note that most incomes are assessable for tax purposes, including gross earnings, proceeds from your business, net capital gains, foreign income and even money owed to you and value changes in trading stock. Assessable income does not include GST.
Sky Accountants (https://www.skyaccountants.com.au/