Is my business entitled to any tax concessions?

One of the biggest hurdles for small businesses is learning to approach finances as a business owner, rather than an individual. Having a clear understanding of the items you are eligible to deduct from your taxable income is important for individuals, but critical for businesses that rely on cash flow to survive. The money you save through deductibles could help keep the business afloat for the next financial year. Likewise, knowing what you can deduct allows you a clearer picture of taxable income, which is critical for SMEs who may need to pay business tax as part of a pay as you go arrangement.

Unlike sole traders, who are charged at an individual tax rate, a company (pty ltd) enjoys no tax free threshold and the owner will lodge a separate individual tax return. Likewise, different rules apply for partnerships and trusts, see: Am I operating under the correct business structure. All businesses, however, have allowable deductions as well as things they are unable to claim.

  • Allowable deductions include:
  • Bank fees and charges
  • Employee wages
  • Electricity
  • Cost of office rental
  • Transport
  • Depreciating assets

While expenses you cannot claim include:

  • Private or domestic expenses
  • Capital expenses
  • Superannuation guarantee charge
  • Expenses incurred before the business starts.

Under the 2012 federal budget, small businesses are now entitled to claim unlimited individual business assets of up to $6,500 each as well as $5,000 from the cost of a business vehicle. The budget also included tax offsets for businesses that record a loss of up to $1 million.

For more information read Tax breaks for small business owners or visit www.ato.gov.au 

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