Operating a business that is not yet established presents a number of financial challenges to the business owner. But small scale businesses create employment opportunities for many Australians, thus helping the government to deal with the problem of unemployment. In return, the government offers a number of tax deductions to such business entities in a bid to encourage the spirit of entrepreneurship.
This article discusses a number of tax deductions that small scale business owners need to take advantage of to bring down their business expenditure.
Business Travel Expenses
The government understands that small scale business owners and their employees need to get around as they go about their daily business activities. As such, business owners are allowed to claim tax deduction for expense incurred on business-related travels. Examples of these expenses include the cost of air tickets, taxi, train, and bus fares.
However, there are special rules that apply when claiming deductions for overnight business travel expenditure. For example, employees who spend more than six consecutive nights away from home must use a document such as a diary to record details of all business activities undertaken before the end of the business trip or immediately after. In the same breath, a fringe benefits tax is levied on business entities that operate as trusts or companies if private activities are undertaken during the business trip.
Tax Deductions On Depreciating Assets
Small scale business owners can also take advantage of deductions offered for the depreciation of capital assets such as automobiles, business equipment, and even buildings. It is important to point out that land and items that trade on the stock market are not considered depreciating assets.
The monetary value of this tax deduction will be significantly less for business owners who have had the equipment in question for less than twelve months. Those who owned the equipment prior to establishing their businesses and those who use such equipment for non-business related purposes should expect a significantly smaller amount as the deduction.
Tax Deductions For Repairs And Maintenance
Small scale business owners who pay for repairs to and maintenance of machines and premises used for generation of business income are also eligible for tax deductions on the incurred expenses.
Repairs and maintenance activities for which this deduction can be claimed include painting works, plumbing maintenance, conditioning of gutters, repairs to electrical appliances and repairs to machinery among others.
Small scale business owners should remember to take advantage of the mentioned tax deductions when undertaking tax preparation. For more information or for help preparing taxes, small businesses should also contact a professional tax accountant to help ensure these deductions.