If you’re a small business owner, you should currently be working alongside your accountancy team to begin preparing your Year End Tax Accounts for the last financial year (2021/2022). If this is the case, there are few important things you will need to be aware of when it comes to completing your income tax returns – particularly when it comes to what the ATO are focusing on when reviewing small business tax returns for 2021-2022.
The ATO have recently stated that their main focus areas for small business tax returns for the 2021-2022 financial year include correctly declaring all business income and only claiming business related deductions.
Correctly declaring all business income
When submitting your business’ year end tax return, it is crucial that you include all income, including cash, coupons, EFTPOS, online payments, credit or debit card transactions, and income from platforms such as PayPal, WeChat or Alipay. The ATO wants to remind small businesses that all non-business related income also needs to be included in your tax returns – this includes salary and wages, or income, from investments. In addition to this, businesses that received government payments or financial support as a result of COVID-19 need to include these payments as taxable income in their tax returns. The ATO website contains a list of how COVID-19 support payments should be declared.
Only claiming business related deductions
When accumulating business related deductions for the previous financial year, you must ensure you only claim what you’re entitled to. Each business’ structure affects it’s eligibility when it comes to deduction entitlements and obligations, so please check with your accountant with regards to what is and isn’t classified as a business deduction for your business.
On the ATO website, it states that they accept a valid business deduction as:
- an expense that has been for the business, not for private use.
- an expense that has been purchased for business and private use – however only the business proportion of the expense can be claimed.
- an expense that has proof of purchase and use.
The ATO ‘Small Business Toolkit’
The ATO have stated that they want to continue to support small businesses at tax time and throughout the year – so they have established a ‘Small Business Tax Time Toolkit’ which is available through the ATO website. They take the time to review this toolkit each year to ensure the fact sheets and information provided to small businesses is up to date and reflect what small businesses need to know.
The toolkit includes:
- a helpful directory of links to help small businesses find information, tools, calculators, learning resources and other support and services.
- small business guides, including: home based-business expenses, motor vehicle expenses, travel expenses, digital product expenses, using money and assets, and, pausing or permanently closing your business.
In summary, if you’re a small business owner now is the time to jump on to the ATO website and review their support tools to help you make the most of your tax return this year. Remember to also consult with your accountant to ensure you’re declaring all income and only claiming business related deductions.
For all your accounting needs, feel free to contact Lana and her team at Matovic Business Accountants
Email us at info@matovicaccounting.com.au or call (07) 3557 5721.
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