How to minimise business tax and maximise tax returns

Here's a simple rundown on how you could minimise your business tax liability and maximise your tax return legally and efficiently. 

Understand your business tax obligations 

The Australian Taxation Office (ATO) categorises businesses differently for tax purposes. Knowing your business structure (sole trader, partnership, company) is crucial, as it determines your tax filing requirements and entitlements. 

Claim deductible expenses 

The good news is you can claim a wide range of business expenses as tax deductions, effectively reducing your taxable income. 

Common deductible expenses include: 

• Running costs. Rent, utilities, phone, internet, stationery, and cleaning for your business premises. 
• Marketing and advertising. Costs associated with promoting your business, like website maintenance, social media advertising, and printing flyers. 
• Vehicle expenses. If you use your car for business purposes, you can claim some of the fuel, registration, insurance, and depreciation costs. 
• Professional fees. Accounting, legal, and subscriptions to relevant industry bodies. 
• Employee benefits: Salaries, wages, superannuation contributions, and some fringe benefits provided to employees 

Are you working from home? You could claim a portion of your home office expenses based on the floor space dedicated to work. This includes: 

• Rent or mortgage interest (work-related portion) 
• Utilities (work-related portion) 
• Phone and internet (work-related portion) 
• Depreciation of furniture and equipment used for work 

Be mindful: You can't claim the cost of your entire home – only the dedicated work area. The ATO has a handy "shortcut method" using a fixed rate per square metre. 

Also, be aware that this could impact capital gains tax later, so ensure you get the appropriate tax advice! 

• Travel Expenses: Business travel is deductible, but ensure it's directly related to earning income. This includes: 
• Flights, accommodation, and meals (overnight trips) 
• Car travel (using the ATO cents per kilometre method) 
• Public transport fares 
• Parking fees 

Remember: Keep receipts and document the purpose of each trip. With Thriday, you can scan, photograph, and upload receipts directly through their app, saving them electronically, safely and organised. 

• Clothing and Equipment: Protective clothing specific to your industry and tools used solely for work are deductible. This could include: 
• Hi-vis clothing for construction workers 
• Steel-capped boots for tradies 
• Tools for mechanics or hairdressers 

Be aware:  General clothing or tools with some personal use can only be partially claimed (work-related portion only). 

Keep detailed tax records 

The ATO requires you to keep accurate records of your income and expenses for at least five years after the end of the income year. Digital receipts, invoices, and bank statements are all acceptable forms of documentation. 

Use the Thriday app to take a picture of any business receipt you get. Thriday cleverly matches it to the right purchase, so you don't have to do it yourself. What's great about it is that you don't need to manually sort transaction categories. Thriday offers integrated business bank accounts that use clever AI to automatically categorise your income as it flows in. That's an hour you can win back and focus on what matters – your business! 

Maximise Depreciation Deductions 

Assets in your business, like computers, furniture, and equipment, gradually lose value over time. The ATO allows you to claim depreciation on these diminishing assets, reducing your taxable income. 

There are two main depreciation methods: 

• Diminishing Value: Claim a portion of the asset's declining value each year. This is suitable for most business assets like computers and vehicles. 
• Instant Asset Write-Off: Deduct the total cost of eligible assets costing less than $100,000 (increased until 30 June 2023). This is a great way to maximise deductions for equipment purchases. Check the ATO eligibility criteria for your business here. 

Get tax-savvy or get help (the Thriday advantage) 

Australian tax can feel like a complex maze, and navigating it alone can be a time-consuming headache. Here's the reality: while tackling it yourself might save you a few bucks upfront, a tax mistake can cost you significantly more down the track, not to mention the stress. 

The upside of professional business tax help 

• Maximise Your Refund. A skilled tax agent or accountant knows the legal deductions you might miss, potentially minimising tax and boosting your return. 
• Minimise Tax Liability. They'll help you claim everything you're entitled to, keeping your tax bill as low as possible. 
• Stay ATO-Compliant. They'll handle the complexities, ensuring accurate tax filings and avoiding ATO troubles. 

But what if a tax agent isn't your style?  

Here comes Thriday's advantage. 

Thriday's smart tax management is your personal tax assistant, minus the hefty fees.

• It offers real-time tax tracking. Thriday automatically calculates your estimated tax liability throughout the year based on your income and expenses. No more scrambling at tax time! 
• It simplified tax payments. Thriday helps you set aside the right amount of tax each month, avoiding last-minute stress and potential penalties. 
• It has a user-friendly platform. The system is easy to navigate, giving clear insights into your tax situation without the tax jargon. 

Thriday empowers you to stay on top of your tax obligations without feeling overwhelmed. It's like having a tax expert in your pocket minus the hourly rate. 

The choice is yours: spend hours deciphering tax codes or leverage smart tools and get back to running your business. 

Stay Informed 

Tax laws and concessions can change from year to year. Staying up-to-date on the latest ATO regulations is crucial to ensure you take advantage of all available benefits and avoid potential penalties. The ATO website is a valuable resource for Australian businesses, offering clear explanations, helpful guides, and downloadable resources. 

Following these tips and staying organised can minimise your business tax burden and maximise your tax refund come tax time. Remember, the ATO is there to assist you – don't hesitate to reach out to them for clarification on any tax-related issues.