Industry specific tax deductions

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As the end of financial year draws near and whilst there are a wide variety of tax deductions open to all small businesses.

Professional services
Your business could look to claim the following items:

New capital equipment such as computers, laptops, phones or office furniture. This can include the cost of refitting the office kitchen or reception and can also encompass such items as works of art, x-box consoles and cable TV subscriptions provided the items are demonstrably used as part of the business (for instance, in the office reception or canteen).

  • Remember to utilise the $20,000 instant tax deduction if your firm has an aggregated turnover of less than $10 million.
  • Stationery, notebooks, accounting software and business manuals. All of these could be tax deductible.
  • Travel expenses for your staff.
  • If you plan to pay year-end bonuses to staff, try to make the payments by 30 June in order to claim the tax deduction this year. Retail industry Your business could look to claim the following items:

Retail industry
Your business could look to claim the following items:

  • Cash registers, in-store security systems, new computers or laptops, POS machines, accounting software, retail furniture (racks, shelves, etc). All of these can be written-off immediately using the $20,000 instant tax deductions for small businesses (see above).
  • Make sure you write-off any lost, damaged or obsolete stock before the year end in order to claim a tax deduction.

Tax tips can save your small business thousands

Trade businesses
If you work in the trade industry be aware of all the tax breaks you can get to help boost your business in the next financial year:

  • Tools. You can claim tools that are used in your business to earn income. Any tool or other item of plant or equipment which costs $20,000 or less can be written off immediately if your aggregated turnover is less than $10 million.
  • Motor vehicles. If you buy a van, ute or other motor vehicle for use in your business, a tax deduction is available. If the vehicle costs less than $20,000, it can be written off straight away if you are a small business (particularly helpful if you acquire a second hand vehicle). If the vehicle costs more than $20,000, it must be written off over its useful life.
  • Building materials. If you have any obsolete, damaged or otherwise unusable materials left on your site at the end of the year, remember to write-off the cost before the end of the year in order to claim a tax deduction
  • Bad debts. If you have customers who can’t or won’t pay and you have done everything possible to recoup the debt without success, write it off by 30 June in order to claim a deduction. Make sure to record the writeoff in the form of a Board Minute or other similar record.
  • If you operate on a cash basis, make sure all your takings are properly accounted for. The ATO has a major focus on cash-based businesses which don’t declare all their turnover so don’t get caught in the spotlight. Hospitality  Try to take maximum advantage of the small business $20,000 instant asset write-off available to all businesses with a turnover of under $10 million. If you’re in hospitality, that could include spending on new kitchen equipment, POS equipment and restaurant fit-out, such as chairs, tables, décor, etc. Each purchase qualifies separately, so you could potentially be looking at a major renovation or set-up being immediately tax deductible.

Hospitality
Is your small business in the hospitality industry? Make sure you don’t miss a trick when it comes to your tax this financial year:

  • If you have old, obsolete or non-operational kitchen equipment which is still being depreciated, write it off and claim a tax deduction for the residual value.
  • If you employ working holiday-makers on visa categories 417 and 462, you’ll need to give your qualifying employees two payment summaries, one for the period to 31 December 2016 and one for the period to 30 June 2017. That’s because you should have been applying the new 15% tax rate for working holidaymakers for the second half of the year (and should have registered as an employer of working holidaymakers with the ATO). If you’re not yet on top of the new rules and haven’t registered and/or applied to the new rules, talk to your accountant urgently.
  • If you have out of date liquor in your bar, write it down to nil value and claim a tax deduction for the write-off.

The End of Financial Year (EOFY) is fast approaching, and with the Australian Government extending the $20,000 tax break for an additional year, and the annual turnover limit increased to $10 million, your accountant might just advise you to look at some technology upgrades to really make the most of the tax opportunity.

These items that could be tax deductable for this financial year, if purchased ahead of June 30.

Please speak to a financial advisor or specialist for advice tailored to your individual circumstances.

Want more? Read our 3-part tax series here:
Part 1: $20,000 instant asset write-off
Part 2: depreciable assets 
Part 3: income deferral

Small businesses = big economic impact

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