What’s in your tax toolbox?

We’re sure you’ve had a busy toolbox this financial year, but when it comes to tax deductions, we’ve asked ATO tax time spokesperson, Rob Thomson, to give us some tips!

To claim a business deduction, you’ll need to meet three 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.

‘Business deductions may include motor vehicle expenses, overnight travel, legal, digital, and home-based business costs. As long as they directly relate to earning your business’s assessable income’, Rob said.

Know the (car) limit

If you’re running your own business, the car limit has increased to $68,108 for the 2023-24 income year. The car limit is the maximum cost you can use to work out the depreciation of passenger vehicles that are designed to carry a load of less than one tonne and fewer than nine passengers, excluding motorcycles or similar vehicles.

Good records are vital – and your glovebox may not be the best filing cabinet.

‘Not only can they act as a reminder of what you’ve purchased throughout the income year – but you’ll also need good records to show how you have calculated each deduction,’ Rob said.

‘And they don’t just make it easier to meet your tax and super obligations, they also help you keep track of how well your business is doing in terms of cash flow.’

Here’s five tips to ensure your records are in good working order:

1. Keep all records relating to starting, running, changing, selling or closing your business that are relevant to your tax and super affairs.
2. Don’t change information on your records – store them safely and protect your information.
3. Keep most records for 5 years, and know which records you need to keep longer. (You’ll need to keep records longer if they’re connected to a future, corrected, or amended return; or records about depreciating or capital gains tax assets).
4. Be able to access and show your records – if needed.
5. And ensure your records are in English – or can be converted to English easily.

A spotlight on support for small businesses

Measures to support small businesses are being announced frequently – so let’s put them in the spotlight. ‘It’s especially important to keep up to date with these measures, as each have their own eligibility criteria, and period for when you can claim them,’ said Rob.

‘Your eligibility is what qualifies you to claim a certain measure and may include things like your aggregated turnover’.

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

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