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ATO publishes tax time tips for small business

ATO publishes tax time tips for small business

The Australian Taxation Office has published several tips for small businesses ahead of tax time. 

  • Staff Reporter
  • June 14, 2019
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The Australian Taxation Office (ATO) is lending a helping hand to nearly four million small businesses to get their tax right this tax time.

Assistant Commissioner Peter Holt said the ATO understands that small businesses have a lot on their plate with the day-to-day running of their business.

“That’s why we’re focusing on addressing common issues we see when small businesses lodge their returns so that we can support them to get it right,” Mr Holt said. 

The top 3 issues that ATO sees when small businesses lodge their tax returns are failing to report all of their income, not having the necessary records to prove their expenses claims, and claiming private expenses as business expenses.

“For example, you’re a sole trader landscape gardener who usually works in Perth but took on a job in Broome. While you’re up in Broome, you do some sightseeing. That’s a private expense and you can’t claim the cost of that in your tax return,” Mr Holt said.

He said there are three golden rules to remember about claiming deductions.

“One, the expense must have been for your business not yourself. Two if you use something for business and private purposes, you can only claim the portion that is related to your business, and three, you need a record to prove it.”

This year the ATO has developed fact sheets to help small businesses claiming three of the most common expenses, motor vehicle expensesbusiness travel expenseshome-based business expenses

“They have practical examples of how these rules apply to everyday small businesses – from home-based photography studios to someone who needs to travel quite a bit for their business. Our priority is to make it as easy as possible for small businesses to get it right,” Mr Holt said. 

His top tip for small business operators is to ensure that their records are kept up-to-date.

"They keep good records, they run their business with the help of technology (such as point of sale software and accounting systems), and they seek advice from a tax professional when they need it,” said Mr Holt.

“In addition to making it easier to meet tax, super and salary obligations, good records mean that businesses can measure their performance against the ATO’s small business benchmarks." 

Mr Holt also reminded small businesses that they are entitled to a range of tax concessions at tax time. One of these is the instant asset write-off, which allows eligible small businesses to claim an immediate deduction for the business portion of assets that cost under a certain threshold. 

More information about the instant asset write-off and other small business concessions is available at ato.gov.au/concessionsataglance

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