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Tax Tips for Small Business Owners During Tax Time

Published on May 6, 2024

With the economy still recovering from the COVID-19 pandemic, it’s no surprise that tax time can be quite stressful for small businesses. In fact, research has shown that 12 percent of business owners report that financial stability is the biggest challenge, ahead of technology and government regulations.

“While company tax rates have progressively decreased in the last few years, we know that superannuation guarantee rates will be increasing to 12 percent by 2025. The minimum wage has also recently increased and individual tax rates have progressively shifted,” says Jimmy Nguyen, accountant at DKM Accounting and member of the QuickBooks’ Trainer Writer Network (TWN).

“On top of which we have ambiguity surrounding the ongoing utility of trust structures which makes planning for tax time quite a new animal.”

Taxes can be one of the largest business expenses, for which you might be fined if filed late, inaccurately, or left unpaid. Whilst all small business owners need to pay taxes, the taxable amount may vary for different businesses according to their business structure: company, trust, or sole trader.

But, taxes don’t have to be as complicated as they’re made out to be. With proper professional tax advice, you might be able to reduce your tax liability if you are eligible for tax concessions and exemptions.

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5 Tax Tips To Follow Before Filing Your Tax Return

1. When In Doubt, Speak With Your Advisor

Jimmy says that you need to speak with your advisor because that’s where you can have the most influence on your tax position.

“It’ll be safe to say that over the last few years we’ve seen a number of changes to tax rates and reporting obligations. From registering for Director IDs to the removal of the super guarantee threshold, staying on top of these wide ranging albeit small changes is crucial to accurately mapping out your tax position,” he says.

2. Create A Tax Plan

“If you are under a tax agent lodgement list, the deadline is actually on May 15 of the following year albeit with some exceptions. So, you do get quite a bit of an extension if you lodge through a tax agent rather than by yourself,” Jimmy says.

But if you’re lodging your tax return yourself, you should aim to wrap up your previous financial year’s tax return (1 July 2021-30 June 2022) by 31 October 2022.

With that in mind, planning is essential so that you can be fully ready prior to the due date. You can maximise your tax returns with these strategic tips:

• Consolidate your expenses

If you prepay some of your costs – like insurance, rent, and subscriptions to professional associations – you can expect up to 12 months of the following year’s expenses to be deducted from your current tax year.

• Take advantage of depreciation measures

Temporary full expensing* (available at the end of income years between 6 October 2020 and 30 June 2022) allows you to immediately deduct business costs of eligible depreciating assets that are first installed or used for a taxable purpose. You can find out more on the Australian Taxation Office (ATO) website.

*Temporary full expensing ended on 30 June 2023.

• Review debtors

Review your debtors and write off any unrecoverable debts. As a business owner, you might be able to claim deductions for the income you cannot recover from a debtor. (Only applicable for those on accrual accounting)

3. Apply For Government Subsidies and Assistance Programs

Managing and supporting a business is a lot of work all on its own. Despite all the hard work you’re putting in, you can still improve your financial position by applying for the tax assistance programs the government is offering.

“I believe the JobMaker program is available until 6 October 2022. Aside from that, everything else has been sort of pulled back. But that being said, from a grant perspective, Australia has always had a number of state and federal grants that are available to various businesses,” Jimmy says.

“Just because the government is focused on supporting the effects of COVID-19, it doesn't mean that they don't already have a number of robust incentive programs that have been around for a very, very long time.”

There are many government-supported financial assistance programs available across Australia. Here are a few programs that might help you if your business was negatively impacted by COVID-19:

Pandemic Leave Disaster Payment. This program offers you and your employees support if your company cannot earn an income because you need to self-isolate, quarantine, or take care of someone with COVID-19.
Instant asset write-off for eligible businesses. This program provides an immediate deduction for the business portion of the cost of an asset in the year the asset is first installed or used.
Backing Business Investment. With this program, eligible businesses can deduct the cost of new depreciating assets at an accelerated rate.

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4. Check your obligations as an employer

“If you're an employer in Australia, you would have seen your payroll obligations increase over the last two years. Obligations which are now digital and required for submission throughout the year ” Jimmy says.

These increasing obligations have made it very difficult to maintain a legacy and/or paper based approach to pay slips and payroll.

So, if you’re still using a spreadsheet to manage your PAYG and staffing commitments, you should know that there’s a much higher risk of inaccurate records.

5. Check if you are eligible to claim a deduction if the business made a loss

If your business experienced a tax loss in the current year, you’ll be allowed to carry forward your loss and claim a deduction the following year. However, you’ll need to meet specific requirements to claim a deduction.

“Essentially, if you made a profit during the pandemic, you can amend previous years and reduce your tax payable that way. This is known as the losses carried back provision. So, you're basically getting a refund for the previous profitable years. Obviously, the mechanics of that are very specific and advice from your accountant is required,” Jimmy says.

Find out more about how to claim business tax losses and apply for tax refunds of previous years here.

Tax Deduction FAQs

What are key deductions I should be aware of post-COVID-19?

You can extend your tax deductions to your personal tax situation as well. “There is a shortcut method which was increased to 80 cents per hour during the height of the pandemic,” Jimmy says.

You can find out more about the shortcut method on the ATO’s site.

For businesses, If you are reimbursing your employee for their work-from-home expenses, you can claim deductions for those asset purchases and gain Goods and Services Tax (GST) credits for those items.

Should you spend more on business assets to claim a tax deduction?

What happens to record-keeping my tax deductions if I work from home?

About our expert

Jimmy Nguyen is a qualified accountant and a partner to DKM Accounting, which provides its services to Small and Medium-sized Businesses (SMEs) and manages their finances through Intuit QuickBooks software. He’s also the founder of the social media agency, If & When, designed to help small businesses grow.

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