The 5 Common Tax Deductions You will not Want to Miss

Did you know you could be applicable to the following tax benefits?

  • Auto Expenses

If your business operates as a trust or a company, you are able to claim a total deduction for the expenses incurred in running a motor vehicle that is leased or owned by the business. If you, or an employee, usethe vehicle for private purposes, you could have to pay a fringe benefits tax. Nevertheless the fringe benefits tax (FBT) cost is also tax deductable.

Perhaps your income includes PSI (personal services income). The PSI rule applies in this case, and you may be able to claim deduction for only one car used for business and private use.

A sole trader or partnership operated business can claim a full deduction for buying a business-purpose vehicle or can claim vehicle expense deduction for a vehicle owned, leased or hired under a hire purchase agreement.

  • Business Travel

For claiming business travel deductions, like staying away from home for a night, you need to document specific evidence of the expenses. It is important to record particulars like the nature of the activity, the day and time you started and how long the activity lasted, and the name of the place where you conducted the business activity.

When travel is for private purposes as well as business, you will need to exclude the private expense from the claim. When travel includes private activities and your business is operated as a company or trust; fringe benefits may apply.

  • Capital Allowance / Depreciating Assets

Capital allowance rules permit you to claim deduction for the decline in value of your motor vehicle, plant and equipment, office furniture, computers and other similar capital assets.

Small businesses with a turnover of less than $2 million are given a choice and are able to use a simplified method of calculation, if they choose to, instead of the uniform capital allowances method.

This is also where you claim other business related capital expenses that you can’t claim under any other part of the tax law. These payments, like setting up or closing down a business, are commonly referred to as ‘black hole expenditure’ and can be claimed over a five year period.

  • Salary, Wages and Super

If your business is operated as a company or trust you are able to claim a deduction for any salary and wages payed to you or to other employees, while a partnership run business cannot claim deductions for any wages paid to a partner of the partnership. A sole business trader can’t claim a deduction for salary or wages paid to him or herself. However a deduction can be claimed for salary and wages of other employees.When income includes PSI the amount you can claim for payments to an associate may be limited.

Super contributions made to a complying super fund or retirement savings account for employees (or yourself if you are self-employed) can be claimed, although the amount claimable may be different if your income is PSI.

  • Home office expenses

If you work a full time or part time business from home you may be able to claim deductions on operating expenses, like rent and mortgage interest, and running expenses, like internet fees, depreciation of furniture and equipment and heating and lighting expenses.

You cannot claim occupancy expenses if you carry on your business elsewhere and also do some work at home, even if you have a home work area set aside.

For more information refer to the ATO website or speak with your accountant.


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