7 Overlooked ATO tax deductions
As a small business owner you can often fall into old habits at tax time and not consider some of the less obvious or new ATO tax deductions available. With 7 day’s to June 30 here are 7 commonly overlooked tax deductions that could help your business become smarter and sharper every financial year!
1. Prepay expenses
Prepaying your expenses can attract a tax deduction that is often overlooked. You can prepay expenses such as subscriptions, business travel expenses, training events, leases, rent, phone, internet, insurance and business asset repairs, not exceeding more than one year.
2. Review your asset acquisition
Do you need new assets? Now may be a good time to purchase them. As part of the recent 2017 budget, small business and sole traders have been given a $20,000 tax deduction for any small business or sole trader with an active ABN, whose turnover is less than $10 million.
The items purchased can be brand new or second-hand and need to relate to your business. This new deduction goes through to June 30, 2018 so make sure you make full use of it.
3. Rental property expenses
Rental property expenses are often forgotten and can go unclaimed. These expenses can include: bank fees, gardening and lawn mowing, pest control, security patrol fees, secretarial and bookkeeping fees, travel and car expenses for rent collection, inspections of property and maintenance. If you have a rental property review the expenses from the last year to see what you could claim.
4. Income protection insurance
You’re entitled to a tax deduction for insurance premiums paid against the loss of income. This does not include life insurance, trauma insurance or critical care insurance.
5. Self-education expenses
You can claim self-education expenses if there’s a link between the course and your role in your business. You could be entitled to a tax deduction for expenses including the following:
- textbooks, professional and trade journals
- computer expenses
- student union fees
- student services and amenities fees
- accommodation and meals, only when participating in your course requires you be away from home for one or more nights
- running expenses if you have a room set aside for self-education purposes – such as the cost of heating, cooling and lighting that room while you are studying in it
- allowable travel expenses.
Self-education expenses are broken into five categories. If all of your self-education expenses fall into ‘category A,’ then you may reduce your deduction by $250.
6. Sun protection
You’re entitled to a tax deduction for sunglasses if, as part of your employment, you are required to work outside for prolonged periods.
While there is no limit on how much you can spend on sunglasses if they are more than $300 the ATO will expect them to last for more than 12 months – meaning you should claim the depreciation on the glasses rather than an upfront deduction.
7. Cost of managing your tax affairs
Did you use Etax.com.au or another tax agent to prepare and lodge your tax return last year? If you did, then you can claim the amount you paid last year – on this year’s return.
On your tax return, simply put the amount you paid in 2016 into section D10 – “Cost of Managing Tax Affairs”. The fees you pay for tax return help are always tax deductible.