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How to Reduce your Tax Bill in the Hospitality Industry
taxes

How to Reduce your Tax Bill in the Hospitality Industry

As a small business owner in the hospitality industry, there are a lot of moving parts you have to manage. That is why, for many, it can be stressful when tax season comes around.

However, you should prepare early because filing your taxes with the Australian Tax Office (ATO) correctly can help reduce your tax bill significantly. For those in the hospitality industry, that reduced tax bill can be extra beneficial. Here are eight ways that businesses in the hospitality industry can reduce their tax bill.

1. What expenses can you claim?

Firstly, you need to know what expenses you can claim on your taxes. There are manyexpenses that hospitality businesses can consider, including the following:

  • Clothing is an expense most businesses can claim, provided that it serves as part of the uniform. This includes items with a logo, aprons, footwear, and more. Notably, you cannot claim clothing that is not workplace wear. The cost of the clothing items, laundering, and repair are all deductible expenses.
  • Tools and equipment are also deductible from your tax bill, including cooking utensils, tablets and computers, etc. Businesses can also claim for repair and maintenance of equipment, and for depreciation of equipment costing over $300.Β 
  • Car expenses are deductible if your business engages in delivery or pick-up services. You can only claim car expenses for work-related trips. There are two ways to claim: you can either keep a logbook of work-related mileage or use the cents per kilometre rule, for the tax year as of writing (2023-2024) you can claim 85 cents per kilometre up to 5,000 business kilometres per car.
  • Other travel expenses may apply if you travel to conferences and other work-related events using flights, taxis, or public transport. You can claim expenses on tolls, overnight accommodation, and meals.

Other tax-deductible expenses include:

  • Self-education expenses
  • Home office running costs
  • Tax agent fees
  • Work-related phone expenses
  • Charity donations

Being aware of what you can deduct from your tax return can significantly reduce the financial burden on your business.Β 

2. Pay taxes on time

To avoid paying fines, you need to make sure you pay your taxes on time. Make sure you check the dates ahead of time and get all your affairs in order to submit your tax payments and give them time to clear.Β 

It’s best to make the payments at least a week before the end of the financial year (EOFY) to ensure the process runs smoothly.

3. Pay your bonuses

Bonuses paid to staff or directors are only tax deductible if paid before the end of financial year.

You should also be aware of the bonus types you are paying and whether they attract compulsory superannuation.

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4. Check your superannuation

Superannuation must be paid before the quarterly super due dates. Missed payments may attract the Super Guarantee Charge (SCG), which means you will pay tax on the superannuation and the SCG.Β 

Just like other payments, it’s best to pay it a few days in advance to give the payment time to clear. The quarterly payment deadlines are as follows:

Quarter

Due Date

1 July to 30 September

28 October

1 October to 31 December

28 January

1 January to 31 March

28 April

1 April to 30 June

28 July

5. Complete your STP declaration

All businesses should be registered for Single Touch Payroll (STP). With accounting programs like QuickBooks, the end-of-year payroll process is very easy to complete.

Before paying your taxes, ensure that you file all pay runs for the year, reconcile all reports, and complete the final STP declaration. Furthermore, now is a good time to update any staff information and remind your employees that they can access their income statements through their MyGov accounts.

6. Carry out a final stocktake

Hospitality businesses usually have stock that they buy and sell. At the end of the income year, you must carry out a stocktake, unless your small business estimates a change in stock value of less than $5000 or a small business with an annual turnover of less than $10 million.Β 

A stocktake can help you better understand your stock levels and improve efficiency in the future. For example, if you have some slow-moving items, you know to reduce the stock for the following year, freeing up cash to use elsewhere in your business.

7. Review your Trade Debtors listing

Trade Debtors that are unrecoverable can be written off as bad debts, making them tax deductible. Make sure you do this before 30 June in order to apply for a deduction on this basis.

Final thoughts: how to reduce your bill

Hospitality businesses have many ways to potentially reduce their tax bill. Whether you do it yourself or hire a tax accountant, it is possible to reduce your financial burden and help you have more money to put back into your business next year but doing so requires your business to keep good records of your accounts. Accounting Software, like QuickBooks, can help in keeping your accounting in order which can help simplify your job come tax time. Visit our pricing page to get a 30-day free trial of QuickBooks.Β 

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