June 3, 2021
Irrespective of the size of your business, you have to pay tax at the scheduled time of the financial year. There are various tax deductions that you can claim for your business, but the essential thing you must keep in mind is that you can claim only those deductions related to the company.
How Do Small Business Tax Deductions In Australia Work?
As we said, the deductions that you will be claiming while submitting the tax return must be related to your company. These are called work-related deductions. Requirements for the tax deductions are as follows.
- You must be able to show all the records as valid proof.
- You must have evidence that the money has been spent by yourself.
- There should not have been any reimbursement for the cost.
- Most importantly, the expense should have been incurred for the job.
If the claimed expense is for private and works causes, only the work portion of the cost can be claimed. You can seek a professional tax accountant Perth for more detailed and expert assistance over tax deductions.
What Are The Types Of Tax Deductions That You Can Include In The Tax Return?
Different kinds of deductions you can claim include:
Travel and vehicle expenses
For business-related purposes, travels are very common. The most vital thing you should keep in mind is that you have to keep all the records for vehicle and travel-related costs. The whole work procedure thus becomes a lot easier at the time of tax return.
- You can claim the travel-related costs only when you go outside the city or the area where your business is based. If you travel to and from work daily, you cannot claim it as a travel cost as that will be taken as private travel as you may find this in travel tips to use this procedure to save money.
- For vehicle costs, you have to show that you use it for the work you do. But, you cannot claim the everyday trip expenses incurred even in some business-related minor jobs during your daily office going. These little tasks may be picking up the mail, responding to a security call, or doing overtime work.
Work-Related Laundry Expenses
Do you have to wear an office suit? Or do you need to wear a uniform with the company’s logo embossed on it? Or maybe you work in a dress shop and need to come to the office wearing dresses purchased in that store? Irrespective of the needs, you have to follow your company’s employers’ dress policy. It will help you get attention from the tax person when claiming deductions for your clothing. Now you may wonder what type of clothing can be claimed as deductions.
First of all, the clothing needs to be specific to your profession. Chef’s pants may be an ideal example. Costs of clothing that are not related to your occupation cannot be claimed. Thus, you cannot claim white-collar shirts or black pants.
- Some people may need to use specific types of clothing and footwear to get protection from potential injuries or illnesses. All these can be easily claimed.
- Company uniform with the logo attached to it can also be claimed.
Deductions You Can Claim While Working From Home
Do you entirely or partly work from your home? If so, then you can claim a significant part of it as a tax deduction.
- You must have a room area for carrying out all the business-related activities. Though you need not have a separate room as a home office, if you use a space that serves more than one purpose (like a dining room) or shared by other people too (such as a lounge room), costs of only those hours can be claimed during which you exclusively used the area.
- You can claim deductions for costs like electronic devices, computers, or phones that you will need to carry out your work for your home office. Tax can also be claimed for electrical running costs. According to the general rule, equipment costs can be claimed against an amount up to $300 or if there occurs any decline in the value for products that cost $300 or more.
- Phone bill can also be claimed if it is used partly for business-related causes. You should never forget about mobile phone use, and that is, if you use your mobile phone for business purposes, you can claim the deduction if you paid all the bills. Naturally, you will have to provide relevant supportive documents for your claim. If you use your phone for personal and business cases, you will have to calculate the percentage amount related to your business use. However, you cannot claim phone expenses if you have received reimbursements from your employer.
- To determine the deduction, you may choose to select a usual four-week period from some point in the financial year. If you get an itemized bill within your phone plan, you should figure out the percentage of work use over that period of 4-week.
Deductions Related To Professional Associations, Trade Union Fees, And Magazine Subscription
You can also claim deductions if you,
- A member of any organization as a part of your occupation.
- You are a member of any trade union.
- Have to subscribe to business magazines that are highly essential for your line of work.
- You are an investor and have to finance research services and financial publications.
Donations And Gifts
You can claim donations or gifts only if the organization where you have made the donations has the status of DGRS or deductible gift recipients. For essential criteria that you have to meet to claim a deduction for a gift include:
- The gifted organization must have DGR status.
- Whatever gift you are giving must be a true gift.
- It should include financial assets.
- Different DGRs have different conditions with which you have to comply. So, it is always better to check before you proceed.
Depending on the type of gift, you can claim the amount. If the gift is in the form of money, it should be at least $2. If you gift property, the rules will vary according to its type and value.
For professional help regarding tax-deductible expenses in Australia, you can get in touch with Accountant Perth. They are the best professionals who can help with tax calculations and deductions.