Small business top questions at tax time
What business income do I need to declare in my tax return?
When thinking about business income, start by including all of your gross earnings received through the ordinary course of your business. This includes any cash, EFTPOS, credit or debit card, and online sales. There may be other sources of business income you need to declare, depending on your circumstances. Some common examples include:
- Net capital gains made when disposing of business assets
- Rental income from property owned by your business
- Any assessable government industry payments such as fuel tax credits
- Foreign income from overseas business activities (if you're an Australian resident)
- Distributions to your business from partnerships and trusts.
What can I claim for my business at tax time?
- Most businesses have every day operating expenses, including the costs of stationery, trading stock, advertising, bank feeds and insurance.
Business premises costs
- You can claim business premises costs such as electricity, phone, water and rental or lease. If you run your business at your home, you can claim the business portion of occupancy expenses and running expenses like mortgage and electricity.
Travel for business
- Do you or your employees travel for business? You can claim business travel expenses such as bus, plane, uber or taxi trips. If you have a vehicle for your business, you can claim motor vehicle expenses associated with running and maintaining the vehicle such as petrol, rego and insurance.
For all of your business expenses, use the three golden rules:
- The money must have been spent for your business - not a private expense. For example, you can't claim private expenses such as traffic fines or clothes for your family.
- If it is for a mix of business and private use, only claim the portion that is related to your business. For example, if you buy a computer for your business and your kids use it to do their homework; that's private use. You'll need to work out how much of the computer's use was for your business and only claim a deduction on that portion of the computer's cost.
- You must have records to prove it. Whether it is electronic or paper, it is important to have records, like a receipt for your business expenses. You'll also need to show how you calculated the business portion of expenses, if that applies to the expense.
For more information visit the ATO website or contact the team at The Money Edge.
The Money Edge | Bundaberg