It’s the moment of truth. Australian accountants are now on the watch on who’s on the other side of the line every time the phone rings. Well, it’s because it’s that time of the year again: tax time. Lucky for a handful of business, they’re already prepared to face the end of the financial year without that much stress. However, there are a majority of taxpayers in panic mode, scrambling to collect the necessary requirements and rummaging the internet for answers on tax deductions that can be claimed before the deadline draws nearer and nearer.
In order to alleviate the massive pressure this could bring, business brokers victoria have compiled tips on how to face the last days of the end of a fiscal year and make things organized before the dreaded deadline.
Tip #1: Claim your $20,000 instant asset write-off
Even though it’s still not a permanent staple in the law, it is being continuously renewed for a 12-month basis and, fortunately, small and medium enterprises (SME) are included in the eligible receivers. Before the looming deadline comes to pass, business owners should make sure to claim their asset write offs of up to $20,000 worth of assets for their businesses.
Basically, a business owner can purchase an asset and claim their deduction for the business portion. This is perfect for self-employed business owners in need of tools, cars, and other assets to improve the business.
Tip #2: Pay attention to deductions
Tax agents always recommend for businesses to claim their deductions during tax time, particularly SMEs. The deductions can be applied to a number of expenses, like rent, utilities, and repairs done with the business. Advice sought is also included, which can be professional, legal or accounting. However, before getting deductions, make sure business owners can justify each expense presented.
In the case that the business is unincorporated, there’s a chance to become eligible for the small business income tax offset, which can provide a deduction of up to $1000 from the tax bill as long as the business’ revenue is below $5 million. As of the present time, the offset is around 8 per cent, but may increase in 2027, which is said to be 16 per cent.
Tip #3: Get a better understanding of tax changes
In terms of the CGT changes, a business owner should be aware that not only they should be able to pass the $6 million net asset test wherein the total net assets should be below $6 million, the business itself should also pass the said test.
On the other hand, there are changes to the company tax rate. For small businesses, there will be a 2.5 per cent to 27.5 per cent cut in tax rate with a turnover of under $10 million, and may change to up to $25 million. Businesses should be well aware of the changes to avoid of passing of the opportunity to get write offs and tax offs.