Tax Deductions Australian Sole Traders and Small Businesses Can’t Afford to Miss

Even sole traders and small businesses crunched for time can unlock quick tax savings. 

The following six deductions might provide you with some much needed tax relief you didn’t realise existed. 😮

Don’t leave money on the table that could be put to better use in your business. 🤑

1. Prepay Expenses 💳

Paying costs early before June 30 pulls forward future deductions to increase current year reductions.

Policies, subscriptions, advertising, rent, and other standard operating expenses are all candidates for prepaying. 🗓️ 

Just be mindful of cash flow impacts next year when less is available to claim. 💸

2. Loan & Account Fees 🏦

Don’t overlook the expense of financing your enterprise. Interest, account fees and loan costs all may whittle away your tax liability. 📈

Tally up this drainage across credit cards, lines of credit, transactional accounts and lending. Every dollar counts when managing tax obligations. 💵

3. Personal Super Contributions 💼

Injecting personal funds toward retirement can benefit you twofold - grow your nest egg now while shrinking taxable income immediately. 👍

Just remember the $27,500 total yearly cap across mandated, salary sacrificed and deducted contributions. 📊 

Stay tuned on changing eligibility rules in upcoming budgets too. 🇦🇺

4. Working From Home 🏡

Home-based businesses rejoice! 

Expenses enabling you to generate income within your residential walls may deliver deductions gold. 🥇

Track specific costs for a dedicated home office and calculate an hourly rate for use based on time working there. 

Don’t guess - substantiate carefully. ⏱️

Two New Deductions to Explore In Coming Financial Year

The 2023-2024 federal budget might unlock fresh tax deduction opportunities for Australian small businesses.

If bills are enacted as proposed, small businesses could capitalize on full expensing of minor asset buys plus bonuses for energy-efficient upgrades after July 1st.

Let’s explore what’s on the table.

5. Potential Instant Deduction on Sub-$20K Assets

One major proposition would enable immediate full deductions for small business purchases under $20K per item.

Rather than slowly depreciating over time, companies turning over under $10M yearly could deduct equipment, gadgets, machinery and other eligible buys in a single year.

The rule would apply to items ready for business use between July 1, 2023 and June 30, 2024.

6. Possible Bonus Write-Offs for Green Upgrades

Another environmentally-friendly measure would give small players extra incentives to electrify.

Businesses earning under $50M annually may score bonus 20% deductions for upgrades like heat pumps, solar panels, EV chargers and efficient appliances.

Up to $100K in green upgrades would qualify, with a max $20K extra deduction per company. The same July 2023 - June 2024 usage window would apply.

While promising, neither deduction is guaranteed yet an is currently before Parliament. 

We’ll be keeping a close eye on final budget outcomes and can help uncover maximum savings once policies solidify.

Want to put your taxes on auto-pilot?

Our all-in-one money management app is designed to make managing your taxes as a small business owner or sole trader easy. 

Learn more about how we automate tax for you and sign up for free here.

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Published on the
December 13, 2023
Small business

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