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How to Save on Tax in Australia

Q: What should I do if I have missed a claim on my latest tax return?

If you miss a claim on your latest tax return, you can still make a claim by amending it online. This can be achieved by sending an amendment request to the ATO. An online amendment will take about 20 days to process. It’s important to note that limitations do apply, so it's best to act fast if you realise you’ve missed a potential tax claim.

Q: Can I claim a deduction when working from a home office?

Yes. As long as you work from home as part of your regular business operations, you can claim a deduction for home office expenses like electricity, phone bills and your internet. The ATO has specific rules surrounding working-from-home tax deductions, so it's important to consult professional help or visit the ATO website for more information.

Q: Can I claim a deduction for personal expenses?

No, unfortunately, you cannot claim a deduction for personal expenses such as food, clothes or travel for personal reasons. Only expenses directly related to your business operations are eligible for tax reductions.

By QuickBooks Australia

May 9, 2023

Tax season can be a stressful time for small business owners, but with the right advice and powerful accounting software just like QuickBooks behind you, it doesn’t have to be.

Thankfully, by taking advantage of the many tax-saving strategies available, you can decrease your taxable income, save money, and reduce headaches at tax time. This article will explore some of the best ways to save on your tax return in Australia, so you can take control of your finances and make tax season a little bit easier.

Claim back everything you’re eligible for

If a cost is tied directly to your business's operations, you can reduce your assessable income by claiming it back as a business expense. The Australian Taxation Office (ATO) states that operating costs such as wages, rent, advertising and utilities can all be claimed back as a tax deduction. Certain capital expenses, such as machinery, vehicle and equipment costs, are also tax deductible.

If you're keen to start claiming back on your taxes at the end of the financial year (EOFY), keeping accurate records of your receipts is vital. The ATO requires them as proof of purchase and only allows receipt-free tax reductions up to the value of $300. If you struggle to keep up-to-date with your financial records, consider QuickBooks receipt capture function, which lets you snap, save, and organise all of your receipts automatically through the QuickBooks mobile app.

Write off bad debts

Bad debts (debts that cannot be paid) can be incredibly frustrating for small businesses. Whether a buyer has filed for insolvency or you're simply having difficulty getting a customer to pay up, a series of unrecoverable incomes can put you under severe financial strain.

Fortunately, there are ways to fix this problem. The ATO allows you to write off bad debts as an allowable tax deduction provided the debt occurred before the end of the previous tax year (30 June), and the debt was recorded as income initially. If you've exhausted all other options, recording and writing off your bad debt can help you claim back some well-deserved tax.

Invest in your super

Making personal contributions into your super fund before the end of tax time allows you to claim your investment as a tax deduction. Note that all super fund payments are capped at $27,500.

This deduction only applies if you contributed to your super before the end of the previous tax year. You also need to be under the age of 75 and must pay the money into a compliant super fund to be eligible for tax deductions.

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Always pay employee’s super on time

As long as you make all super payments by 30 June, you can claim a deduction for Superannuation Guarantee contributions, industrial awards and salary sacrifice contributions.

To ensure your employees get paid on time, consider paying off contributions in advance to leave enough time for potential processing problems.

Bring payments forward

There are many opportunities to prepay expenses to bring your tax reductions forward to the current financial year. For example, by prepaying rent, subscriptions or phone bills for the following year, you can claim eligible tax reductions in advance for these expenses.

To claim a deduction for prepayment, the prepaid expense must be less than $1,000 or meet the 12-month rule. This rule states the benefits of the asset must not last beyond 12 months from the date of purchase or the end of the tax year that follows the year from when you completed the transaction.

Remember that paying in advance can impact your cash flow. It's vital to ensure your finances are in order before making a prepayment.

Utilise instant asset write-off

If your business has an aggregated turnover of less than $500 million, you may be eligible to claim an instant asset write-off of up to $150,000 under the instant asset write-off scheme. This scheme allows small business owners to claim the depreciation for eligible assets immediately rather than claiming over time as the asset depreciates.

This means you can invest in a $150,000 asset before 30 June and immediately claim the total amount on your tax return. Once you claim, your income tax will be reduced by the asset's cost.

Note that eligible assets must be purchased and used in the same year the write-off is claimed.

Take advantage of small business tax offsets

If you work as a sole trader, you may be eligible to claim a small business tax offset. This can reduce the amount of tax you owe by up to $1,000 each year. To be eligible, you must have an aggregated turnover of less than $5 million and be operating as a sole trader, or have a small business income share from a trust or partnership.

Stocktake for damages

Regular stocktake is essential to identify broken or obsolete inventory. If you do identify items that have been damaged or that may need to be repaired, you can either reduce the value or write the inventory off completely. This reduces the value of your trading stock and limits how much tax you need to pay.

Donate to charity

Making donations is another effective way to reduce your taxable income. Donations of money or property are eligible for tax reduction as long as the charitable donation is made to an organisation approved as a deductive gift recipient (DGR).

Use powerful accounting software

Keeping accurate tax records can be challenging, especially when there are so many different deductions to consider. To stay on top of your bookkeeping and make sure you’re always ready for tax season, use a powerful accounting software like QuickBooks that stores all of your financial data in one place.

QuickBooks receipt capture feature allows you to snap, save and organise receipts quickly and easily, so you spend less time searching through piles of paper when tax season rolls around.

Looking to automate your bookkeeping and make tax season simpler? Try QuickBooks for free today with our 30-day trial.

While every care has been taken to ensure the accuracy of the information presented as at 12 April 2024, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.

FAQs

What should I do if I have missed a claim on my latest tax return?

Can I claim a deduction when working from a home office?

Can I claim a deduction for personal expenses?

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Sole Trader Tax Return: Guide and Tax Tips

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Tax Deductions in Australia - Tax Guide

May 3, 2024

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How to Save on Tax in Australia

Claim back everything you’re eligible for

Write off bad debts

Invest in your super

Grow Your Business with QuickBooks

Always pay employee’s super on time

Bring payments forward

Utilise instant asset write-off

Take advantage of small business tax offsets

Stocktake for damages

Donate to charity

Use powerful accounting software

FAQs

Related Articles

Looking for something else?

Get QuickBooks

Help Me Choose

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Stay up-to-date with the latest small business insights and trends!