March 23, 2022 – 3 min read
When you run a small business, it’s important to stay on top of your finances. That includes getting the most out of your tax refund each year. So what are the best ways for a small-business owner to maximise their tax return at the end of the financial year? From special tax breaks you might not know about through to the savvy deductions to make, finance expert Katie Cunningham has the answers to all your small business tax questions.
Good news: the ATO allows you to claim most expenses related to operating your business. This can mean computers, mobile phones and home-office equipment like desks, chairs, printers and keyboards. If it’s something you genuinely need to run your business, it’s fair game to claim.
The rules are pretty simple. To be able to claim a purchase, it must be one you made for your business, not for private use. If you buy something like a laptop for both work and fun, you can only claim a portion of its cost. And you also have to keep records of your purchases – so hold on to those receipts.
Finally, to include any purchases in your 2022 tax return, you’ll need to buy them before the financial year ends on June 30. The Good Guys EOFY Sale is the perfect time to upgrade laptops, tablets, mobile phones and more, so you are primed and ready for the new financial year.
There’s more info about what you can and can’t claim on tax on the ATO website.
Small business owners are also allowed to claim travel expenses they incur on the job.
So if work takes you out of town, hold onto your receipts for any accommodation, meals or travel tickets. You’ll also need to keep a diary – a simple date book, with your work appointments jotted down – as record keeping.
You can even claim a deduction for expenses you incur operating a car for work, so long as the vehicle is used only for business purposes. For instance, if you have a ute that you use to run your small construction company, that’s an eligible deduction.
If you’re a sole trader or you have a business partnership with one other person, you can still claim a proportion of the cost of running a vehicle.
One savvy way to maximise your tax return as a small business owner is to make voluntary superannuation contributions.
Self-employed Australians can contribute up to $25,000 a year to their super fund. The amount you put into super also serves as a tax deduction. It’s a great way to boost your super balance and maximise your tax return in one go.
You can get more information about super contributions on the ATO website.
Those running a home hair salon can claim items they need to keep their space clean, like vacuum cleaners, washing machines and dryers. Tradies who work outdoors can claim sunscreen. Freelance writers could claim magazine subscriptions, and cafe owners can claim the cost of the artwork they hang in their business.
If you run a business that brings you into physical contact with customers – such as running a home hair salon – this year you can also claim expenses related to Covid-19 safety, like hand sanitiser and cleaning products.
This one mostly applies to sole traders. The ATO allows certain professions – for instance writers, performing artists and sportspeople – to average their income.
Income averaging allows these professionals to ‘even out’ the amount of tax they pay over up to five years, to allow for good and bad business years. It’s designed to ensure that they don’t pay more tax over time than people on steady incomes – and can result in a big tax refund. So if you’re a freelance writer or creative, it’s definitely one to speak to your tax agent about.
Whatever industry you’re in, The Good Guys EOFY Sale is the perfect time to upgrade your home-office tech for the financial year ahead. Visit us in-store or online for expert advice, the biggest brands and the best deals at tax time.
Katie Cunningham is a freelance journalist who writes about personal finance. She is also the co-host of Frugal Forever, a podcast that has honest conversations about money.