Small Business Guide to Maximising 2022-23 Tax Deductions

August 11, 2023

The start of the new financial year is the ideal time to organise your business tax return for the year just ended. Your deductible expenses are still front of mind, and you still have plenty of time to comply with lodgement deadlines and avoid penalties. Those deadlines for the tax year ended 30 June 2023 are:

• 31 October 2023 for sole traders or partnerships not engaging the services of a registered tax agent
• Generally, 28 February 2024 for companies not engaging the services of a registered tax agent
• Later dates, if you use a registered tax agent

Here’s a checklist of some of the deduction opportunities to ensure you get the best possible outcome from your business tax return.

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Temporary full expensing

Temporary full expensing ended on 30 June 2023. This means businesses with an annual turnover of less than $5 billion can still write off the total cost of new assets purchased up to 30 June 2023 (instead of only writing off a portion of the cost as an annual depreciation expense during the effective life of the asset). Note: Only businesses with an annual turnover of less than $50 million can utilise temporary full expensing on second hand assets.

Some assets are not eligible for temporary full expensing, such as some primary production assets and buildings. There’s also a deduction limit of $64,741 for the year ended 30 June 2023 for non-commercial passenger vehicles.

From 1 July 2023, depreciating assets must be written off for tax purposes over their effective lives. This means that for small businesses using simplified depreciation, the cost threshold of an asset for instant write-off will revert to $1,000, the first time this has occurred since 2015.

Small businesses with an annual turnover of less than $50 million can claim a 20% bonus deduction over and above the actual cost (excluding GST) of technology assets purchased and technology expenses incurred between 29 March 2022 and 30 June 2023. The bonus deduction applies to:

• Computer and telecommunications hardware and equipment
• Software
• Internet costs
• Digital media and marketing, including web page design
• E-commerce enablement
• Cyber security

For example, if the cost of one of these assets or expenses amounted to $50,000 (excluding GST) for the year, you could claim a total deduction of $60,000 ($50,000 plus a 20% bonus deduction of $10,000). The amount you can claim is capped at $100,000 of expenditure and a maximum $20,000 bonus deduction.

Similar bonus deductions also apply to the cost of external skills and training courses for employees, although the deduction boosts apply until 30 June 2024.

There are many other expenses you can claim. As well as employee wages, you may be able to deduct the business (i.e. non-personal expense) portion of expenses including:

• Office supplies
• Rent
• Telephone
• Advertising
• Vehicle running expenses
• Insurance premiums
• Travel
• Bank charges and interest
• Charity donations

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The best way to optimise your tax return

Changing tax laws and deductions mean lodging your tax return can become complicated. Small mistakes can lead to paying more taxes than necessary or missing out on potential refunds.

To ensure you get the best result, we advise seeking advice from a tax agent or accountant. These professionals are well-versed in the tax code and can guide you through the process, finding deductions and credits you might overlook. Hiring a tax expert can bring peace of mind and potentially save you money in the long run.

This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.