Business Franchise Australia

TRUSTED GLOBALLY FOR OVER 30 YEARS IN FRANCHISING

Business health check – year in review

A healthy business has regular check-ups throughout the year – not just at tax time. The ATO has plenty of tools and resources to help keep your tax and super obligations in peak condition. Here’s a couple of things to get you started.


Are you keeping good records?

Having good records is one of the best ways to track your business’s health. Not only will it help you make sound decisions all year round, but it will also make your life easier during tax time. 

 

If you don’t know where to start, try these 5 rules:

 

1. Keep all records related to starting, running, changing, and selling or closing your business that are relevant to your tax and super affairs. 

2 Don’t change information in your records. You must store records safely to protect information from being changed and prevent damage.  You can do this by storing your information digitally but if you do, make sure you keep backups.

3. Keep most records for 5 years and know which records 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 show us your records if we ask for them.

5. Ensure your records are in English or can be easily converted to English. 

 

If you want to double check you’re doing the right thing, we have a record-keeping evaluation tool on our website at ato.gov.au/recordkeepingevaluation. 

Find out more at: ato.gov.au/recordkeeping

 

Claiming deductions

Does your business have motor vehicle, travel, legal, digital or home-based business expenses?

 

You can claim deductions for most expenses you incur while carrying on your business, but they must directly relate to earning your assessable income. Claimable deductions can relate to your day-to-day operating expenses, purchased products or services, and certain capital expenses. 

 

Keep in mind there are some expenses you can’t claim, such as private expenses, traffic fines, and expenses that relate to earning non-assessable income, for example income from non-assessable non-exempt government grants.

 

To check what and how much you can claim, consider the 3 golden rules for allowable deductions:

1. The expense must have been for your business – not for private use.

2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.

3. You must have records to prove it.

 

Make sure you’re tracking your expenses throughout the year, so it’s easier to claim them as deductions during tax time. If you’re a sole trader, you can do this by using myDeductions.

Find out more at: ato.gov.au/businessdeductions

 

Fixing a mistake

Even with tax time over, you still have time to fix a mistake. If you forget to report some of your income, a capital gain, or a deduction, you generally have two years to amend your return. This starts from the date you receive your notice of assessment. There’s no limit on the number of amendments you can make within this period.

 

You can easily fix your return through your registered tax agent, Standard Business Reporting-enabled software, Online services for business or by writing to us. If you’re a sole trader, you can use ATO Online services for individuals to amend your return.

 

If you’ve provided false or misleading information to reduce the tax you owe, you can correct this through a voluntary disclosure via an approved form. This generally reduces any penalties that may apply.

Find out more at: ato.gov.au/amendareturn, ato.gov.au/voluntarydisclosure

 

Support and resources

We have a range of tools and services on our website to make it easier for you to get your tax and super right. 

 

Each year, the ATO releases updated tax time toolkits for small businesses. These have a directory of links to useful information, tools, calculators, learning resources and other support and services. You can use this info at any time throughout the year – not just tax time. 

 

The tax time toolkits include factsheets on expenses for home-based business, motor vehicles, travel, and digital products. There are also factsheets about using business money and assets or pausing or closing your business. 

 

You can also subscribe to our small business newsletter to keep up with all the latest tax and super information that could affect your business. When you subscribe, you’ll get newsletters sent directly to your inbox each month. 

 

Did you know that you can conduct most business and reporting transactions securely and efficiently through our online services? ATO Online services will save you time and should be your first port of call when you need to interact with us.

Find out more at: ato.gov.au/SBsupport, ato.gov.au/SBtaxtimetoolkit

 

Small business technology investment boost

The small business technology investment boost is for businesses with an aggregated annual turnover of less than $50 million. You will be allowed an additional 20% tax deduction on spending to support your digital operations and to digitise your operations.

 

The boost is for business expenses and depreciating assets. It is capped at $100,000 of expenditure per income year. You can receive a maximum bonus deduction of $20,000 per income year.

 

The boost applies to eligible expenditure incurred between 7:30 pm AEDT on 29 March 2022 and 30 June 2023. If the expenditure is on a depreciating asset, the asset must have first been used or installed ready for use for a taxable purpose by 30 June 2023. 

Find out more at: ato.gov.au/technologyboost

 

Small business skills and training boost

The small business skills and training boost is for businesses with an aggregated annual turnover of less than $50 million. You will be allowed an additional 20% tax deduction for external training courses delivered to employees, either in person in Australia or online, by registered training providers.

 

The boost applies to eligible expenditure incurred from 7:30 pm AEDT on 29 March 2022 until 30 June 2024.

Find out more at: ato.gov.au/skillstrainingboost

 

Small business energy incentive

The small business energy incentive has not yet become law. However, the Australian Government announced that the incentive will be for businesses with an aggregated annual turnover of less than $50 million. They will be allowed an additional 20% tax deduction on spending to support electrification and more efficient use of energy. 

 

The incentive applies to the cost of eligible assets and improvements up to a maximum amount of $100,000, with the maximum bonus deduction being $20,000 per business.

 

The incentive, if it becomes law, will apply to eligible expenditure on assets that are both first used or installed ready for use for any purpose, and used or installed ready for use for a taxable purpose between 1 July 2023 and 30 June 2024 (i.e. the ‘bonus period’). 

 

The incentive also applies to eligible expenditure on improvements to existing assets during the bonus period. 

Find out more at: ato.gov.au and search for ‘Energy Incentive.’

 

 

Emma Tobias is an Assistant Commissioner for the Australian Taxation Office in the Small Business line. Her focus is to help support small businesses by leading and influencing their experience across the tax, super and registry systems. Emma collaborates with small businesses, industry partners and government agencies to drive an improved small business experience and digital services. Her area also helps small businesses manage cash-flow and digital readiness, assisting them as they look to recover and succeed after the challenges of the last few years.