What are small business tax deductible items?

Most of the costs that are incurred when running a small business can be claimed as deductible items in order to reduce the amount of income that will be assessed. The rules do vary depending on the business structure you are operating under along with the nature of the expense involved so it is important you check out your tax return with your tax accountant or agents of which there are several in the Brisbane, Cairns and Gold Coast area.

What is important is that any expense incurred has to be directly related to earning assessable income, before it is claimed as a deduction. Your tax accountant will also be able to advise you of the limits on the amount that can be claimed for specific expenses. It is also worth noting that if you are claiming for items that you use for both personal and business use, such as a car for example, then you can only claim a deduction when you are using it for business purposes. If you only use an item for certain parts of the year for work purposes, then again you will have to restrict your claim to the time period that it was used for work.

Otherwise, the common deductible items for a small business can be divided into three areas:
• running expenses
• staff related deductions
• premises or assets bought or used

Running expenses

There are a number of deductible items that are linked to running a small business, however it is important to note that some of them, such as establishment costs and legal fees for example, can be deducted over time and some deducted immediately. You will need to check with your tax agents when preparing your tax return 2014 which ones have a time frame attached to them. As well as the normal fees and bills associated with running a building, such as fuel bills, council rates and fees, telephone bills, office expenses and stationery, you will need to make a list and account for other costs as well. Any licenses or registrations that you need to operate, public liability insurance, banking fees, accountancy and bookkeeping costs can also be deducted. If you are paying interest rates on a business loan or bank fees and charges, then this should be offset against the cost of running the business as well.

If you run a business vehicle then travel costs can be claimed back along with costs for trucks, cars and other vehicle charges including maintenance and fuel. You can also deduct money for advertising and marketing costs and stock and materials and if you are paying out for income protection insurance, then this too is a deductible item.

Staff related deductions

There are a number of deductible items that come under the heading of worker-related and this applies to contracted or sub-contracted hire, as well as the wages or salary of your employees. Costs linked to recruiting staff and labour hire fees can be deducted, along with any staff training you have paid for or charges for professional fees or registrations. Superannuation guarantee contributions are deductible, along with any work related allowances, commissions or performance bonuses you pay out. If you provide tools or uniforms then you need to put this down as a deduction and you are able to claim a small amount of money for laundry costs. If you provide any fringe benefits for your staff then again this can be deductible but it is always best to check with a tax accountant before submitting these as part of your tax return.

Premises or assets bought or used

These are very tangible items and often the ones that people are most comfortable claiming against their tax return because it includes items of equipment such as computers as well as the rental amount or leasing costs of the building they are operating from. However, if you run a home office, which many small or micro business owners do, you can claim for expenses associated with this as well.

It is also important not to forget those items linked to the assets you own or lease such as computer hardware and any software or operating software you have to buy. Again any insurances linked to maintaining these items can be deductible, along with services and repairs. Fees linked to any business loans also come under this heading as does the depreciation of cars, trucks, plant and equipment and your tax accountant will be able to advise you how to work out this costing.

Finally, it is worth remembering to keep and record all your expenditure in date order and clearly numbered along with receipts, service logs and insurance documentation so that you have evidence to back up your claims, and consulting with an experienced tax professional will ensure you maximise the deductible items on your 2014 tax return.

If you do not want to leave anything to chance when it comes to your business tax, look up The Income Tax Professionals (ITP) in Queensland. They have been in the business for over 35 years providing unique, quick, reliable and affordably priced service to assist you in all your business taxation needs. Click here for more information.