Top 10 Tax Tips When Running A Business in Australia

Follow These Tax Tips To Run your Business Successfully in Australia

When it is the tax time in Australia, there are just a few small business owners who are confident about their finances, expenses and tax obligations. For these business owners, the end of the financial year is like the end of every other month. But for most of the business owners during the end of the financial year, it is like the skies are darker and whenever the phone rings, the heart of every Australian taxpayer skips a beat. It is because most of the taxpayers have to collect faded receipts and he needs to find out how much deductions can be claimed before the 1st of July. So here we are to inform you about the tax tips that are needed to run successful businesses in Australia.

1. Immediate Deduction

If your business costs less than $20,000 then you can immediately deduct the business portion of most purchased assets. This is a good strategy for small business owners in Australia. There is an option of instant write off provision. This option can be used for new as well as second-hand assets with which you can claim all of the appropriate deductions. All you have to do is, make sure you are claiming every suitable deduction. These deductions can include rent, repair for business, accounting and legal advices, utilities and professional advices. It is also recommended by tax agents that the small businesses take out as many expenses as they can before the financial year ending. The rent and repair expenses should be paid beforehand. However, in Australia, the tax experts, as well as the ATO (Australian Taxation Office), ask the justification of expenses. The small business owners, however, are not entitled to standard deductions, because for these they have not spent the money.

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2. Instant Asset Write Off

As of Australia, the small business owners can claim up to $20,000 worth of assets. The business owners, although have made many calls to the government officials to make this instant write off, a permanent fixture, the government has extended this scheme for small business owners for just 12 months for now. Basically according to the instant asset write off, if you purchase an asset for your business like a coffee machine or anything, you can immediately claim a deduction for the business portion of that asset up to $20,000. This asset writes off is more important to the workers who are self-employed and have to rely on tools, cars and different assets.

3. CGT Changes

In Australia, the government is very clear as to how the small business owners in the country can get capital gains tax (CGT) concessions. And with this, the government has also explained how the small business capital gains tax concessions will be changed after the owner sale their business. There are requirements which every small business owner has to carry before the CGT event or selling event. It should be determined whether the CGT asset is active or not. However, the business owners have to pass a $6 million net asset test, in which it should be assured that their net assets are less than $6 million, and they are not the only one to pass this test, the business also needs to pass the same test.

4. Get Your Head in the Cloud

Another tax tip for Australian business owners is time-saving. And among the biggest time savers for small business owners is the cloud-based accounting program. This has worked quite well for tackling tax time. It helps in managing financial data, staffing, invoicing and inventory. So get your head in cloud for time efficiency and easy management. The cloud software is highly helpful and collaborative. With the help of this software, the clients allow their respective business advisors as well as accountants to access the business records and work on them at the same time. You can stay at top of your finances with this system. So whenever you have to lodge your tax return, cloud software comes to the rescue.

5. Income Tax Offset

There is a benefit for sole traders and people who have shared in net small business income from either partnership or trust. This benefit is applied if the small business is unincorporated. In that case the owner is likely to be eligible for small business income tax offset. This offset can get you around $1,000 off on your tax bill, only if your revenue is less than $5 million. For now, this offset is just 8% of the payable tax on your business income. It is expected that this offset will increase to 16% in upcoming years. During the early growth stages of business, these offsets are very important for micro business owners. When these entrepreneurs are supported through this offset in income tax, they are motivated to increase productivity and bring innovation in economy of Australia.

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6. Audit Your Clients

Another tax tip for Australian Business owners is auditing the clients. Whenever a financial year ends, you should take a look over the client base and then the decision is on you, whether to work with those clients in the coming years or not. Some clients are always better than other clients. It is a sure thing that more than 80% of the business is due to only 20% of the clients. Remember that when you look at your clients and audit them seriously and stop working with the clients who are not much beneficial for you, you are making a way for yourself to move forward. With this, you give a direction to your business. This also helps in letting you focus on the clients, whom you are actually comfortable in working with.

7. ATO’s Watch List

Australian Tax Office informs the Australian business owners about the things they are overseeing. Every year when the tax time comes, ATO informs its watch list to the people. Business owners just have to keep this watch list in mind. During this year, the ATO is keeping its eye on work expenses for car use, home offices and laundry. Interestingly, if you work from home, you can sometimes claim for a deduction for the work furniture, heating and cooling of room, computers and the equipment you have used in your home office. But this case is possible only if all these things are present in a separate home office where you work. You can only claim this deduction if you work from a separate or designated area. Usually, people who work from home, do not have a designated area for office work, they just work from anywhere, and such business owners cannot claim any deductions. At the watch list of ATO, cryptocurrency is at the top. After the immense gains from these digital currencies in the market, the ATO has now warned the investors in Bitcoin and Ethereum that the office has systems which help them to match the data from bank and financial institutions to the online exchanges.

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8. File Sharing

One of the most amazing tax tips for successful business in Australia is sharing. You should set up a shared online storage folder like Dropbox which will store all of your bank statements, advises of financial management accountant, invoices, contracts of your accountants, as well as deductions. Moreover, you should carefully name every folder on your Dropbox so that your accountant can easily access these folders. This will not only save your hours long tracking of the mails, you will not be required to ask additional information from anyone because you have everything in just a click away. You can also make a joint Excel document with your accountant on Google Drive, where you can record your yearly expenses and incomes. Both of you can add comments in the document and can save it for future use. Another thing which you can do is download the Australian Taxation Office App in your smartphone through which you can record the receipts and the logbook activity for all of your work-related travels.

9. Company Tax Rate

Australia has changed the company tax rate, which is good news for incorporated small business owners. All businesses which have a turnover of less than $10 million will have a 2.5% cut in the tax rate. The businesses which have a turnover of around $25 million, they will have an extended cut in tax rate. The business owners which fall in this tax rate threshold can defer the invoices before the end of financial year. By doing this, the profits or income will fall in the new tax year and the taxes will now be 27.5% instead of the usual 30%. The cut in the company tax rate of small business owners will affect the rate of free dividends so that the owner can reward himself with dividends.

10. Balance The Loans

The way you can achieve a successful business in Australia utilizes a lot of tax tips. Among the most important of these tax, tips are balancing the loans. If you have a small business set up, your company will have to decide about dealing with the director’s loans, which is when a director withdraws cash outside of his wage and the loan cannot be returned before the end of the financial year. In this case, interest will be applied, but tax will not be deducted from it.

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Australia is a country which is a hub of small business owners. Tax is one of the things which is always on the mind of small business owners, but it never is a headache in Australia. All you have to do is learn about the basics of the Australian taxation system, which will also help your business to flourish as well as remain uncomplicated.


This article provides only general, and not personalised financial advice, and has not taken your personal circumstances into account.  Please remember that investments can go up and down. Past performance is not necessarily indicative of future returns. Australia Unwrapped does not guarantee the performance of, or returns on any investment. This article should be enjoyed only for informational and entertainment purposes. I am not an accountant and please just use this article for your own enjoyment, take any questions to an accountant.

Fun Fact

How do small businesses avoid paying taxes?

Employ a Family Member, One of the best ways to reduce taxes for your small business is by hiring a family member. The Internal Revenue Service (IRS) allows for a variety of options, all with the potential benefit of sheltering income from taxes. You can even hire your children.

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Dave P
Dave P
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