Important Tax Tips For Your Small Business Tax Return 2021

August 9, 2021    Taxagent Perth

The financial year will soon be over, and so it is an excellent time to have a look at both the expected taxable income (calculated by deducting the allowable deductions from the assessable income) for the financial year 2020-21 and the expected taxable income for the next financial year, 2021-22. It will help you to do adequate planning to lodge your small business tax return.

Are you expecting to get a higher income in this tax year in comparison with the expected revenue in the next financial year? If so, you should discuss it with your tax accountant.

Read More:- Points To Consider While Preparing Your BAS

General Small Business Tax Return Tips

Your registered tax agent will help you to do the following:

  • You may prepay some costs from the year 2021-22 like insurance, rent, or subscriptions to any journal or magazine. Expenses incurred in the 12 months of the upcoming year will get eliminated in the current financial year.
  • You may take advantage of measures like temporary full expensing, which will allow you to deduct the business part of the expense of depreciating assets first held and used or launched to use for a taxation purpose in a time between 6 October 2020 and 30 June 2022.
  • You can review and postpone a few of your invoices for the ongoing financial year.
  • You can deduct any start-up costs like costs associated with receiving the accounting or legal advice for your business structure and fees related to establishing and registering the entity.

And if you expect to get a higher income in the next tax year, you have to consider the following as per your tax agent’s advice.

  • If there is any due scheduled work in the current financial year that you will need to carry out in the next financial year, you have to bring out any invoicing.
  • You have to pay the due expenses instead of making advanced pre-payments during the ongoing financial year.
  • You may have to buy any essential equipment or business assets in the current year. If you want to purchase business assets, you should take this decision based on your business requirements.

For example, you may require to buy a car or any other vehicle to deliver items by which you can expand your business operations to meet business objectives, or it may be because it is per the business plan.

Additional Small Business Tax Tips

Here we list some more tips that you will get from your tax agent.

  • It will be better to avoid spending money on business assets to claim tax deductions. In most cases, to save 30 cents in tax, you may have to pay an amount of $1, according to the standard business tax rate.
  • Has your business met with a loss? If so, you will be able to claim a tax deduction for it in the future financial year or present it as a loss incurred in the current year. You can also carry back the loss.

For newer updates, you may check into the official website of ATO.

Read More:- Do You Need A Tax Agent To Prepare Company Tax Return?

Additional Tax Tips for Small Business Owners

In this section, we discuss some additional tax planning tips if you have a small business.

Accounting for GST in the cash form

If you account for GST on a cash basis instead of accruals, you can pay the GST to the Australian Taxation Office while receiving the actual payments and not while issuing the invoice. Accounting GST on a cash basis is also effective if you want to improve your cash flow.

Restructure Rollover for Small Business

If you want to change your business structure from a family partnership to a trust, this small business income tax strategy will benefit you. You can transfer a productive asset of your small business (such as goodwill) to another small business structure as a part of a good business restructure if there is no change in the assets’ ownership. It means that there will be expected capital gains available. However, the state transfer tax may be applicable here.

Temporary Full Costing

The Australian Government offers temporary full expensing stimulus measures that will allow you to do the following things.

  • You can deduct the business part from the expense of the eligible new depreciating assets first held and used or launched to use for a taxable purpose between 6 October 2020 and 30 June 2022.
  • You can also deduct the business part of the eligible second-hand depreciating assets.
  • You can apply the temporary full expensing to the business part of the improvement costs for the eligible depreciating assets.


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