We all know the old saying, “You’ve got to spend money to make money”.
Small business owners know it particularly well!
You invest a large amount of financial capital into your business to generate profit, like purchasing equipment, hiring employees, and marketing your products or services.
These expenses and more can be claimed as tax deductions, reducing your business’s taxable income so you can reclaim some of your hard-earned profits.
Bottom line: knowing exactly what business expenses you can claim on your taxes can save you money.
Some expenses, like those related to technology investment and skills training, are even eligible for extra deductions under certain taxation boosts.
Wondering, “What can I claim on tax?” We’ve compiled this guide to break down essential small business tax deductions and ATO boosts available to help you unlock hidden savings, amplify your profits, and fuel your business’s growth.
Understanding Small Business Tax Deductions
Small business tax deductions are certain expenses you can subtract from your business’s taxable income, reducing the amount of tax you owe.
These expenses must be related to running your business, such as office supplies, rent, utilities, and employee wages.
Understanding what expenses you can deduct ensures you’re not overpaying your taxes, helps lower your tax bill, and allows you to plan better and make informed financial decisions.
Eligible Expenses for Small Businesses
You may be able to claim the following deductible expenses if they’re related to the running of your business.
Operating Expenses
- Office supplies and equipment: Stationery, computers, laptops, printers, and other office equipment
- Utilities: Electricity, water, gas, and internet services
- Rent: Office space, retail stores, and warehouses
- Insurance: Premiums for property and liability coverage
- Professional services: Accounting, legal, and consulting services
- Repairs and maintenance: For business premises and equipment
- Software and subscriptions: Business-related software, applications, and online services
Business Travel Expenses
- Flights: Domestic or international airfares
- Accommodation: Hotels or rental properties
- Transport: Rental cars, taxis, rideshares, and public transportation
- Food: Meals consumed during the trip, including client meetings and conferences
- Travel insurance: Premiums for insurance coverage specific to business travel
- Miscellaneous expenses: Tips, laundry, and other small costs incurred
Vehicle and Transportation Costs
- Fuel: Petrol or diesel
- Tolls: For certain roads and bridges
- Maintenance: Servicing and repairs
- Insurance: Premiums for first-party (covering damages to your vehicle) and third-party (covering liabilities to others) insurance
- Registration: Annual renewals and any related charges
Marketing and Advertising Costs
- Online ads: On Google Ads, Facebook, and other online networks
- Print ads: In newspapers, magazines, brochures, and other printed materials
- Social media promotion: Sponsored posts and influencer partnerships
- Marketing materials: Business cards, flyers, banners, and other promotional materials
- Website development and maintenance: Creating, hosting, and maintaining your business website
- Trade shows and events: Attending or exhibiting at industry trade shows, conferences, and other events
Claim Caps and Eligible Expenses for Technology Investment and Skills Training
What is the Small Business Technology Investment Boost?
Announced as part of the 2022–23 Budget, the Small Business Technology Investment Boost allows small businesses to claim an additional 20% deduction for expenses incurred on digital operations.
To qualify, small businesses must have an aggregated annual turnover of less than $50 million, and the eligible expenditure must have been incurred between 7:30 pm AEDT on March 29, 2022, and June 30, 2023.
Eligible Technology Investments
Under this boost, small businesses can claim the additional 20% deduction on the following digital expenses.
- Digital enabling items: Computers, laptops, telecommunications hardware, software, internet costs, and computer network systems and services
- Digital media and marketing: Audio and visual content for digital devices and web page design
- E-commerce: Online transaction support, portable payment devices, digital inventory management, cloud service subscriptions, and digital operations advice
- Cyber security: Cyber security systems, backup management, and monitoring services
Claim Caps for Technology Investments
The Small Business Technology Investment Boost is capped at $100,000 of eligible expenditures and depreciating assets each income year, making the maximum bonus deduction you can receive $20,000 (20% of $100,000).
You can still deduct expenses above the cap under the existing tax rules.
What is the Small Business Skills and Training Boost?
The Small Business Skills and Training Boost allows small businesses to claim an additional 20% tax deduction for expenses related to external training courses provided to employees by registered training providers.
To be eligible for the boost, businesses must have an aggregated annual turnover of less than $50 million, and the eligible expenditure must have been incurred between 7:30 pm AEDT on March 29, 2022, and June 30, 2023.
Eligible Training Expenses
Under this boost, small businesses can claim the additional 20% tax deduction on expenses related to the following training courses for their employees.
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- Professional development courses
- Industry-specific certification training
- Regulatory compliance training
- Technical training
- Workshops and seminars
Claim Caps for Skills and Training
A business’s income year usually lasts 12 months, starting July 1 and ending June 30. The ATO refers to these businesses as “normal balancers”.
Under the Small Business Skills and Training Boost, normal balancers with eligible expenditures incurred between July 1, 2023, and June 30, 2024, can immediately deduct the full amount of these expenditures (100% deduction) from their 2023–24 tax return, as well as the 20% bonus deduction.
How to Maximise Your Small Business Tax Deductions
Follow these tips to make the most of your eligible business deductions.
- Keep accurate and detailed records of all business transactions: Receipts, invoices, and statements.
- Familiarise yourself with the types of expenses that are tax-deductible: Operating, home office, vehicle, travel, marketing, and employee training expenses.
- Claim depreciation on assets to spread the tax benefit over their useful life: Larger purchases like equipment and vehicles.
- Use the simplified depreciation rules: Instant asset write-off for assets up to a certain threshold allows you to deduct the cost of eligible assets immediately.
- Take advantage of tax concessions: Such as the Small Business Technology Investment Boost and the Small Business Skills and Training Boost.
- Prepay expenses: Certain expenses paid before the end of the financial year, like rent, insurance, or subscriptions, may be deductible in the current year.
- Claim business losses: These may be carried forward to offset future taxable income, reducing your tax liability in profitable years.
- Hire a tax professional: To help you navigate the complexities of tax law, ensure you claim all eligible deductions, and provide advice on tax planning strategies.
Boost Your Tax Savings with Pherrus Financial Services
“What can I claim on tax?” Anything related to the running of your small business.
You cannot afford to wash money down the drain by missing out on claiming tax-deductible expenses!
Are you making the most of your business’s deductions?
Let the business taxation experts at Pherrus Financial Services make sure you are.
They’ll also help you navigate the latest tax laws and ATO rules for compliance.
For personalised, expert tax advice, contact us today by filling out this online form or calling +61 (02) 9099 9109 to book an appointment at our Bella Vista office in Sydney, NSW.
FAQs
What Is the Maximum Amount I Can Claim for Business Travel Expenses?
The ATO does not specify a maximum amount for claiming business travel expenses.
You can claim all reasonable expenses incurred during business travel, provided they are directly related to your work and substantiated with proper records.
What Are the Eligibility Criteria for the Technology Investment Boost?
To be eligible for the Small Business Technology Investment Boost (an additional 20% deduction for expenses incurred on digital operations), businesses must have an aggregated annual turnover of less than $50 million, and the eligible expenditure must have been incurred between 7:30 pm AEDT on March 29, 2022, and June 30, 2024.
How Do I Claim Training Expenses for My Employees?
To claim training expenses for your employees, the training must be given by a registered training provider in Australia.
Keep detailed records and receipts of all eligible training expenses, and include them in your tax return as business operating expenses.
