6 Lesser-Known Deductible Small Business Expenses

Small business and family enterprise in Australia, classified as businesses with less than 20 employees account for almost 98% of businesses, account for 35% of Australia’s gross domestic profit, and employ 44% of Australia’s workforce.

Because small businesses are so important to the Australian economy, the government gives this sector a break when it comes to taxation. If you are a small business owner or an online entrepreneur based in Australia, you can claim most of your business expenses as tax deductions.

Small Business Expenses You Can Claim

As a refresher, here are the parameters you need to meet so you can claim a deduction:

You must have a functioning business.

The expense must relate directly to running your business and earning income.

You must have complete records to substantiate your claim. Records (receipts, invoices, bank statements, payroll records) must be kept for at least five years.

If the asset is for a mix of business and private use, your claim must be pro-rated.

The business asset must be installed and ready for use before the end of the financial year.

You likely already know the usual business deductions—travel expenses, machinery and equipment, computers, office supplies, and business software. But beyond these usual expenses, there may be some others that you’re missing!

6 Lesser-Known Deductible Small Business Expenses

1. Donations And Gifts

If you donate to an organisation with a deductible gift recipient (DGR) status, you can claim this as a deductible expense. Your gift must be money, property, or anything that includes financial assets. Your gift must comply with the organisation’s DGR conditions.

If you meet all these criteria, any donation worth $2 or more can be claimed for the current income year. You can use the donation receipt or your bank statement to substantiate the deduction.

2. Maintenance And Repairs

Any repairs or maintenance done on machinery or tools used to generate income for your business can be deductible. Services such as electrical maintenance, plumbing, machine repair, painting, and others can be included as long as it means you’ve fixed defects on your business assets.

Any repairs done immediately after acquiring an asset are not included.

3. Insurance Premiums

Insurance costs and premiums for business vehicles, public liability, fire, theft, and even workers compensation are deductible. If your business incurs a loss due to theft by a third party or an employee, a deduction may also be allowed.

4. Self Education

You can claim education expenses if your study is directly related to your business. Your chosen course must improve the knowledge and skills required in your job and should result in an increase in your income. You can claim tuition fees, textbooks, accommodations, technical instruments ($300 or less), school supplies, student services fees, and more.

5. Work-Related Clothing

If you have clothing specific to your occupation (e.g., chef’s pants, work uniforms with company logos, protective footwear for construction work), you can claim purchase and laundry costs.

6. Tax Management Expenses

The cost of hiring a small business accountant or bookkeeper to help with your finances can be claimed as a deduction. Other tax services such as attending to tax audits or appealing an assessment can be deductible, too.

Conclusion

The government offers many tax break opportunities for small business owners in Australia. Most of your business expenses can be claimed as a deduction. Just make sure that you have thorough documentation for all assets and services. Consult with a professional if you’re unsure about your claim!

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