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With only a few days until the end of the financial year, there are three things small businesses need to know, according to the ATO.
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What tax agents must tell SMEs before 30 June
29 June 2023
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10 minute read
As the EOFY rounds the corner the ATO has advised tax agents of three things small businesses need to be aware of before the new year breaks.
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The first item that the ATO said needed to be on the agenda was understanding the small-business boosts.
The scheme was available for small businesses investing in digital operations or skills and training such as new equipment like technology, cloud computing, e-invoicing, or cyber security.
ATO Assistant Commissioner Emma Tobias said SMEs needed to take advantage of the bonus tax deduction on eligible expenses.
“Small businesses will receive a bonus 20 per cent tax deduction for eligible expenses in their tax return, so for every $100 spent, you’ll get a $120 tax deduction — but there are caps on the total amount that can be claimed,” said Ms Tobias.
“If you’re a small business who invested in technology or digital operations between 29 March 2022 and 30 June 2023, then this boost is for you.
“It’s important to remember, any time you purchase must be first used or installed ready for use by 30 June 2023 in order to be eligible.”
The ATO said training through a registered external training provider in Australia also allowed businesses to claim an additional 20 per cent tax deduction to train new and existing employees between 29 March 2022 and 30 June 2024.
The second was the end of the temporary full expensing on 30 June 2023.
The ATO said SMEs could still claim an immediate deduction for the cost of eligible assets first used or installed ready for use by 30 June in this year’s tax return, but its end meant the cost of assets not already being used or installed by the EOFY was not eligible.
“Even if you’ve paid a deposit or received an invoice, the asset must be installed ready to use by 30 June 2023,” said Ms Tobias.
“If the asset is not installed ready for use by the deadline, you may still be able to claim deductions under the general or simplified depreciation rules.”
The final item that the ATO said SMEs needed to be aware of before 30 June was the change in the deduction rates.
Claiming car expenses changed to the new cents per kilometre rate of 78¢ for 2022–23 with written evidence required to show how the work-related kilometres were figured out, while the car limit had increased to $64,741 for the 2022–23 income year.
The working-from-home deduction methods also changed meaning small businesses could choose one of two methods to claim working-from-home deductions, either the actual cost or the fixed-rate method.
The Tax Office said an entity’s structure could affect the method they could use and the expenses they could claim, particularly if the business is a company or trust.
“If you are claiming car or working from home deductions, make sure to keep good records,” said Ms Tobias.
“This will give you more flexibility to choose the approach that gives you the best deduction at tax time.”
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