Whether you use a registered tax agent or manage your own tax affairs, here are some tips to help you get it right.
Include all your income
It is important to make sure that small business should declare all their cash and online sales in their tax return. Income may also include money earned from participating in the sharing economy. Example, renting out a room, a car parking space, doing odd jobs such as delivery or cleaning for a fee, or driving passengers for a fare, should be included in the tax return.
Don’t miss out on deductions
Businesses should claim what they are entitled to – no more, no less. They can claim tax deductions for most costs they incur while running their business. Operating expenses, such as office stationery and wages should be claimed in the year they are incurred. Typically capital expenses, such as buildings, machinery and equipment, can be claimed over a longer period of time.
Check for personal services income
In case of self-employment, personal efforts, skills or expertise, earning is referred to as personal services income. If the special tax rules apply to personal services income, they can affect the deductions depending on how one claims.
Simplified depreciation rules can be used if small business have an aggregated turnover of less than $2 million. One of the simplified depreciation rules is the instant asset write-off. The instant asset write-off means assets bought can be deducted immediately, which cost less than $20,000 in the year that are bought and used, or installed for use. Besides the instant asset write-off, another important rule to remember is that if the balance of pool for depreciating assets is less than $20,000, before applying any other depreciation deduction, immediate deduction of the full amount should be made in the tax return.
Lodge on time
In the case of small businesses preparing their own return, they must lodge by 31 October. Registered tax agents will have different lodgement dates. In the case of using a tax agent for the first time or using a different tax agent, they should be informed before 31 October. For employee’s, PAYG payment summary annual report should be lodged to the ATO by 14 August each year.