Small business tax breaks and deductions

The tax benefits for small businesses are constantly changing. Here are some of the things to consider when you’re completing your business tax return.

Claiming temporary full expensing of eligible business assets (expired on 30 June 2023)

In 2020, the Australian Government introduced temporary full expensing which was an incentive to support eligible businesses by allowing them to claim an immediate tax deduction for the cost of eligible assets.

The temporary full expensing measures were extended as part of the 2021-22 Federal Budget, which was announced on 11 May 2021, and expired on 30 June 2023.

For eligible businesses, eligible assets needed to be first held, and first used or installed ready for use for a taxable purpose between 7:30pm (AEDT) 6 October 2020 and 30 June 2023.

Businesses may have been eligible for temporary full expensing if they had an aggregated turnover of less than $5 billion, or are a corporate tax entity that can’t meet the $5 billion turnover test but can meet the ATO alternative income test for temporary expensing, opens in new window.

Businesses with less than $50 million in aggregated turnover may have also been able to fully deduct eligible second-hand assets purchased in this period.

If your business has met the eligibility requirements, you may be able to claim temporary full expensing for certain asset purchases in your tax return for the 2022-23 financial year. You can find more detailed information from the ATO at Temporary full expensing, opens in new window.

Are there any new small business tax deductions?

Allowable tax deductions change from time to time and, in some cases, the changes can be quite substantial.  For example, to help businesses where employees were forced to work from home by COVID-19, the Government introduced claims for extra home-based business expenses. Anyone left with unsold and unsellable stock as a result of the pandemic or bushfires could also claim a tax deduction on the losses. So it always pays to check for new opportunities to claim, particularly if there has been a major impact on your business that was beyond your control.

Can you claim for business loans and bad debts?

You may be able to claim any fees and interest charges associated with a business loan as a small business tax deduction. You may also be able to claim for unpaid invoices if the outstanding debts were included in your assessable income in the current or previous financial year, and you write them off before June 30.

Are you entitled to a small business income tax offset?

The small business tax offset, also known as the unincorporated small business tax discount, has been reducing the tax paid by some small businesses by as much as $1,000 each year. It was introduced for sole trader or people who have a share of net small business income from a partnership or trust. You’ll find more information on the ATO website about small business income tax offset, opens in new window.

Other tax breaks for small businesses

As a small business owner, you may have access to a range of tax concessions related to income tax, capital gains tax, GST, PAYG and fringe benefits tax.

The ATO website is updated every year with the latest tax information, opens in new window. It’s also vital that you discuss your individual situation with a professional, so you don’t miss out on possible savings or claim deductions for things you’re not eligible for.