5 Easy Ways to Save on Taxes as a Small Business Owner in Australia for FY 2023

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As a small business owner, it’s important to stay on top of your income tax obligations to ensure you’re not paying more than you need to. Here are five specific aspects to watch out for in the FY 2023 tax code in Australia and tips on how to reduce your tax expenses:

01. Capital allowances:

The FY 2023 tax code includes changes to the capital allowances for small business entities. These changes allow small businesses to claim an immediate deduction for assets that cost less than $150,000 (previously $1,000). For example, a small business owner purchased a new computer system for $120,000 on July 1st, 2022, the new rules allows the business owner to claim an immediate deduction of $120,000 in the 2022-2023 financial year instead of depreciating it over a number of years.

02. Depreciation:

Depreciating your assets can also help you save on income tax. Make sure to keep track of your assets and their depreciable values, so you can claim the correct amount of depreciation on your tax return. For example, a small business owner purchased a delivery van for $30,000, the van has a useful life of 5 years, the business owner will be able to claim $6,000 depreciation each year for 5 years.

03. Business expenses:

Be sure to keep accurate records of all your business expenses, as you may be able to claim deductions for them on your tax return. This can include things like office expenses, travel expenses, and employee benefits. For example, a small business owner runs a consulting firm and travels to meet clients regularly. They keep all receipts for transportation, lodging, and meals. At the end of the financial year, they can claim a deduction for these expenses on their tax return.

04. Superannuation:

As an employer, you are required to make superannuation contributions for your employees. However, these contributions are tax-deductible, which can help reduce your tax expenses. For example, a small business owner who owns a retail store has 3 employees, they are required to make superannuation contributions of 9.5% of each employee’s salary. The total amount of contributions made is $22,500, the business owner can claim a deduction for this amount on their tax return.

05. Tax planning:

Consider seeking the advice of a tax professional or an outsourced accounting service to help you plan your tax strategy for the upcoming financial year. They can help you identify opportunities to reduce your tax expenses and ensure you’re complying with the latest tax laws. If you’re a small business owner in Australia, finding ways to minimize your tax liabilities on your own can be a daunting task. But with the right guidance, it can be done. For example a small business owner runs a boutique clothing store and was concerned about her high tax bills. After consulting with Fintec, they received tailored advice on various tax deduction strategies that were applicable to their business. They ended up purchasing new equipment for the store and setting up a Self-Managed Super Fund, ultimately reducing the taxable income and lowering the tax bill. During the initial onboarding assessment, the Fintec accountant recommended that the business owner consider incorporating their company to benefit from the lower corporate tax rate, which significantly reduced their tax bill. The key takeaway? Consult with a professional accounting firm to get tailored advice on tax planning strategies that are specific to your business needs.

It is important to note that these are just examples and the actual tax deduction and situations will vary based on the individual business. It is also important to double check with the ATO (Australian Taxation Office) for the latest tax laws and regulations, and seek professional advice if you have any questions.
By keeping these five points in mind and utilising them, you can reduce your tax expenses and keep more of your hard-earned money. Remember to stay updated on the latest tax laws and regulations, and don’t hesitate to seek professional advice if you have any questions.

For small business owners in Australia, Fintec provides end-to-end financial accounting solutions through flexible multi-tier subscriptions. Our financial controller services are designed to efficiently manage all financial operations, and we also offer additional support for tax return preparation and submission. Our team works closely with your business to streamline processes, ensuring accurate and timely compliance reporting for income tax returns while helping you reduce your tax liability.

We understand the importance of a strong financial foundation for your business. That’s why we offer a complimentary consultation to help you discover how our comprehensive financial management services can benefit your company. Contact us today to schedule your free consultation and find out how Fintec can help you take control of your finances.

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January 23, 2023