Tips for small firms to make correct claims

THE Australian Taxation Office (ATO) is lending a helping hand to nearly four million small businesses to get their tax right this tax time.

Assistant Commissioner Peter Holt says the ATO understands that small businesses have a lot on their plate with the day-to-day running of their business.
“That’s why we’re focusing on addressing common issues we see when small businesses lodge their returns so that we can support them to get it right,” he said.
The top three issues that the ATO sees when small businesses lodge their tax returns are: Failing to report all of their income; Not having the necessary records to prove small business expenses claims; and Claiming private expenses as business expenses.
“For example, you’re a sole trader landscape gardener who usually works in Perth but took on a job in Broome,” Mr Holt said.
“While you’re up in Broome, you do some sightseeing. That’s a private expense and you can’t claim the cost of that in your tax return.”
He says there are three golden rules to remember about claiming deductions.
“One, the expense must have been for your business not yourself,” he said.
“Two, if you use something for business and private purposes, you can only claim the portion that is related to your business, and three, you need a record to prove it.”
The top tip for small business operators is to ensure that your records are kept up-to-date.
Good record keeping will help you complete and lodge your tax returns, manage cash flow, meet your tax obligations and understand how your business is doing.
Mr Holt said when they see businesses operating well, they see that they get the basics right.
“They keep good records, they run their business with the help of technology (such as point of sale software and accounting systems), and they seek advice from a tax professional when they need it,” he said.
The ATO also offers various digital tools and learning resources for small business operators to understand their tax and super obligations and get it right, including small business webinars and workshops.
For example, sole traders can use the myDeductions tool in the ATO app to keep records of their income and expenses. Then, at tax time, they can send a copy to their registered tax agent or upload their data into their tax return.
Small businesses can also chat with the ATO one-on-one through their Live chat and After-hours call back service. They can also answer general questions via social media or you can join the discussion in their peer-to-peer forum, ATO Community.
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