When it comes to small business tax, there are often many areas that small business fall short. So in this blog post for SecurePay, a division of Australia Post, Emma Petroulas talks about some of the key things that small businesses should be aware of when doing their tax this financial year.
Numbers might not be your “thing”, but knowing exactly how your business is performing is vital and is the most important, year-round accounting habit for SMBs. You need to know how much comes in and how much has gone out as the more you know how the business is going, the better your decision-making will be.”
Plus, when it comes to submitting your tax returns to the Australian Taxation Office (ATO), business owners are responsible for their figures, even if an outsourced accounting company has prepared the return.
If you think you can wine and dine your clients and simply claim those expenses as a tax deduction, think again.
Processing restaurant expenses though the business will attract a fringe benefit tax. It depends on what the expenses are, but you need to be very clear on who was at the meeting, what was discussed – and remember, alcohol is not tax deductible.
If it is a personal expense, don’t put it through the business as well. And if you have a motor vehicle, which is used for both business and personal reasons, only claim deductions for the business use.
Super is due on the twenty-eighth day of the month after the end of the quarter. If the payment is late, you need to declare it and pay the penalty. Depending how late you are, you might have to pay twice.
Superannuation expense is a tax deductable expense – to claim it in the 2013/14 financial year, the payment needs to be received by the superannuation fund by 30 June 2014, so you will need to process that payment by 25 June 2014, or earlier. A lot of people will get caught out this way and time is running out for that.
GST costs can make a significant difference for a small business, so it is worth paying attention to them.
Many small businesses think a lot of expenses include GST when they don’t. For instance, if you use a freelancer to do some work, some business owners assume the freelancer’s costs will include GST. That will only apply if that freelancer is registered for GST. Don’t assume that they are – it is important to check invoices from all suppliers carefully.
Another GST stumbling block is people claiming GST on overseas expenses that are not eligible. For example, if you buy a piece of equipment online from overseas, that supplier may well not include GST, so you can’t claim the GST.
You can claim deductions on expenses incurred in this tax year, so if you were thinking of buying a new laptop or piece of equipment, doing so before 30 June might be a good idea.
However, changes to the rules around tools and equipment were proposed as of 1 January 2014. While these changes still have not been passed (it will depend on the composition of the Senate in July), if they are passed, you will only be able to claim an outright expense for purchases from 1 January 2014 if the value of the item is under $1,000. You will need to depreciate any equipment costing over $1,000. Previously you could claim the whole expense, up to $6,500, so bear that in mind before you go shopping.