Supporting small business at tax time

With tax time just about here, the Australian Tax Office (ATO) wants to make it as easy as possible for your small business. Here are some tips from the ATO’s tax time spokesperson, Rob Thomson*, to get your tax and super right – and set yourself up for the year ahead.

“You can claim a deduction for most expenses you incur to carry on your business, as long as they’re directly related to earning your assessable income,” Rob said.

Costs you may be able to claim include:

• Day to day running expenses
• Purchases of products or services for your business
• Certain capital expenses, such as the cost of depreciating assets used for your business (like machinery and equipment).

To claim a deduction for any business expense, you’ll need to meet 3 golden rules:

1. The expense must have been for your business – not private use.
2. If the expense was a mix of business and private use, you only claim the business portion.
3. You must have records to prove it.

“It’s important to include all income in your tax return. This includes income from sales (cash and credit or debit card transactions), coupons and vouchers, and sales made online,” Rob said.

If you receive income in other forms, such as goods, services or other products or benefits like flights or accommodation, their market value is included as income in your tax return. You may also earn income that’s not part of your everyday business activities, such as making capital gains through selling assets – this also needs to be included.

“Whether you’re doing your tax yourself, or using a registered agent, it’s important that you understand what records you need to keep – and that those records are complete and accurate.

“You need to keep most records for five years – so make sure they’re stored in a safe place.

“If you’re a sole trader, the ATO app helps you keep on top of your tax and super. You can save time with the myDeductions tool, which allows you to record your business income and expenses on the go’, Rob said. ‘You can email the data to yourself, or your registered tax agent when it’s time to do your tax – you can also upload it to pre-fill into your tax return,” he said.

“If your business has paid employees during the 2023-24 financial year, you need to finalise your Single Touch Payroll (STP) data by 14 July,” Rob said. 

As well as checking that your employees’ year-to-date amounts are correct, you should also make sure:

• you finalise all employees you’ve paid this financial year, including terminated employees, and casuals that you may not have paid for a while.
• you’re finalising the correct financial year. 
• if you’ve changed software providers, finalise STP data from all providers used during the 2023-24 financial year to ensure all your employees can lodge their tax returns
• if you need help finalising your STP data, contact your software provider, or a registered tax or BAS agent

Note: Pay as you go withholding rates will change on 1 July 2024. Make sure your payroll software is using the new withholding rates from 1 July 2024, or check out the updated tax withheld calculator and tax tables to ensure your withholding and reporting the correct amount of tax from your employees.

As an employer, you must pay super guarantee (SG) contributions for each of your eligible employees at least four times a year – by the 28^th of January, April, July and October. Make sure the correct amounts of super are paid on time and to the right funds.

“When we say, ‘on time’, we mean the date the amount is received in your employee’s fund, and not the date that you pay, so allow additional time for this,” Rob said.

The 28 July due date is coming up fast, so be prepared! And don’t forget the SG rate will increase to 11.5% on 1 July. Pay and report electronically so it meets SuperStream requirements.

The ATO have a range of learning resources, tools, and services to support small businesses. Find them at ato.gov.au/SBsupport and ato.gov.au/smallbusinesstoolkit

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*Optus does not provide tax advice, this article has been prepared by the Australian Tax Office for guidance only.