Tax Tips for Small Businesses 2022
It’s the end of the financial year and we have some last-minute tax tips that you should consider.
We cover common tax deductions, what the ATO is looking for & other tax considerations you should make prior to June 30.
Common Tax Deductions for Small Business
Don’t forget to look through this list to make sure you have claimed everything you are entitled to.
These are expenses that are most common to most small business, as well as other expenses that are specific to the nature of the goods or services that your business provides.
Operating expenses include accounting, administration, advertising and marketing, office premises, office running expenses, trading stock, legal fees, insurance and vehicle expenses.
Employment expenses include salary and wages, fringe benefits, superannuation and training costs.
Other operating expenses may include things specific to your business, for example point of sale systems, freight, professional membership fees, professional education, protective equipment, tools or specialised software.
Capital expenses include machinery and equipment, vehicles, furniture and computers. Depreciation for these assets may also be deductible if the expense was not written off immediately.
Repairs and maintenance to assets and business premises.
Common expenses that are not deductible are fines and penalties, provisions for employee leave, donations to entities not registered as deductible gift recipients and entertainment.
There may be some expenses you want to check with us such as private usage of business vehicles, prepaid expenses, bad debts, loss of stock and borrowing expenses. We’ll make sure to include all the deductions you’re entitled to.
What’s on the ATO Radar for 2022?
From our understanding the ATO will be taking a closer look at record keeping, work related expenses, rental property income/deductions and cryptocurrency transactions. So,
Keep records for all business transactions (income and expenses), activity statements and financial reports for at least five years.
Keep all records relating to employees, contractors and payroll for at least seven years.
If your business is a company, keep all records for at least seven years, including director meeting minutes.
Other Common Tax Return Issues
Work-related travel expenses – travel fares, accommodation, meals. The travel should be directly related to income producing activities and you need records to verify the travel claims.
Motor vehicle expenses – keep records for fuel, repairs and servicing, finance arrangements, insurance and registration. Keep a logbook to record private travel.
Fringe benefits – Vehicle and entertainment benefits are usually looked at carefully by the ATO. This year you’ll need records of any extra benefits provided to employees because of COVID-19.
Superannuation – have you paid the superannuation guarantee on time to employees’ super funds? The ATO will examine your Single Touch Payroll records including superannuation payments.
Other temporary tax depreciation incentives - There are other temporary tax depreciation incentives available to eligible businesses. Let us know if you would like to us to look into this for you.
Need to do some last minute tax planning?
Give us a call to make an appointment today on (02) 6942 4932.