Tax Time Planning for New Business Owners

Now's the time to invest in upgrading your tech tools and training staff. The 2022-23 federal budget announcement delivered several wins for merchants. Two of the new measures enable businesses that spend on employee training or tech tools to claim a deduction greater than the actual cost — meaning there’s never been a better time to invest in the growth of your business. A new Skills and Training Boost has been introduced in response to critical labour shortages across the country, while technology incentives will enable merchants to upgrade or expand their tech stack. Keep reading to find out more about these temporary tax deductions, and how you can make the most of the new measures to grow your business. Small Business Technology Investment Boost Are your business’s current tech tools helping to streamline processes, remove double handling, and improve the customer experience? It’s likely there’s room for improvement. For many merchants, searching for new tools and software is a task that gets pushed to the end of the to-do list. The new Small Business Technology Investment Boost is designed to nudge merchants to spend on digital tools and software — such as portable payment devices , cloud computing, web design, e-invoicing and accounting. It’s been introduced to help future-proof businesses, and has the potential to accelerate growth after a difficult few years of trading. With the introduction of this measure, merchants can claim an additional 20 per cent deduction for the cost of expenses and depreciating assets up to a maximum of $100,000 per year. It's a ‘bonus’ deduction because it applies on top of the deductions already available to businesses. Here’s how it works: Make an eligible purchase Claim the deduction in your next tax return Any expenses over the $100,000 cap can be claimed as per usual tax processes. The bonus deduction applies to purchases made between 7.30pm on March 29, 2022 and June 30, 2023. Skills and Training Boost The Skills and Training Boost is another measure designed to give small businesses a helping hand by encouraging merchants to train new employees, and upskill existing staff. What that means is that for every $100 eligible businesses spend training employees, they will receive a $120 tax deduction. It’s a win-win. Giving employees the opportunity to take part in training opens up opportunities to take on more responsibilities and grow their role, creating more value for the businesses that they work for. For businesses, upskilling staff will help to bridge gaps in the workforce and circumvent the sky-high costs to attract and train talent in the face of significant labour shortages. What’s the catch? Two conditions have been announced so far. The training cannot be in-house or on-the-job. It must be provided by an external organisation. Courses can be provided in person, anywhere in Australia, or online — so long as that external organisation is a company registered within Australia. The Skills and Training Boost came into effect on March 29, 2022 at the same time as the Small Business Technology Investment Boost, and will extend until June 30, 2024. Both the Small Business Technology Investment Boost and the Skills and Training Boost are available to businesses with an aggregated turnover of less than $50 million a year. More conditions will likely apply when legislation is enacted, so stay tuned.

Make your business dollars work harder for you at tax time. It’s important to understand the deductions and concessions available to you as a trades and services business owner. When it comes to taxation, not all business owners are schooled in the tools of the trade. With the dust settling on another tumultuous financial year, there have also been key changes to what and how much you can claim, so it’s important to stay on top of tax deductions for trades, as well as the current concessions. What you can claim According to the ATO , you can claim the following as work related expenses — on the condition that you haven’t already been reimbursed, the expense is directly related to earning income, and you have proof of purchase. Tradie tax deductions include: Award transport payments (fares allowance) Car expenses Child care Clothing and uniform expenses (including footwear) Driver's licence Fines and penalties First aid courses Glasses, contact lenses and anti-glare glasses Home office expenses Insurance of tools and equipment Laundry and maintenance Licences, permits and cards Meal and snack expenses Newspapers and other new services, magazines and professional publications Overtime meal expenses Parking fees and tolls Phone, data and internet expenses Protective items Repairs to tools and equipment Self-education and study expenses Seminars, conferences and training courses Sunglasses, sunhats and sunscreen Tools and equipment Travel expenses Union and professional association fees To understand the specifics of each deduction in more detail, visit the ATO website . What you can’t claim Put simply, anything purchased for personal use cannot be claimed. This includes travel expenses between home and worksites, and private use of company cars. It’s also important to understand the definition of your vehicle when it comes to claiming deductions. If it’s a one-tonne or more ute or panel van, or a vehicle designed to carry at least nine passengers, you can claim the portion of expenses that you use for work. Similarly, you can’t claim plain work clothing and associated cleaning expenses, or tools and equipment purchased for private projects. A general rule of thumb to remember is that if it isn’t used for work, it can’t be claimed as a deduction. Recent changes to tax depreciation incentives The rules regarding depreciating assets have recently changed. It pays to familiarise yourself with the amendments, and ensure you’re taking advantage of what’s on offer. There are three tax depreciation incentives available to eligible businesses, and it’s highly likely your business could benefit from them. Temporary full expensing Increased instant asset write-off Backing business investment Keep reading to learn more about each of these new measures. 1. Temporary full expensing For a limited time, you’re able to score an immediate tax deduction for the business portion of the cost of any capital assets you’ve purchased — regardless of how much they cost. The only requirement is that your business has a turnover of less than $5 billion. If you’ve got your eye on new assets to build and grow your trades business and reduce your taxable profits at the same time, now is the time to take advantage of this temporary tax break. You could consider upgrading your: delivery vehicles (noting that limits apply to passenger vehicles) store fittings and fixtures business computers security systems EFTPOS terminal and point-of-sale system Temporary full expensing can be applied to purchases made until 30 June 2023 yet, from a tax-planning perspective, it makes sense to make your purchases before the end of the financial year. 2. Increased instant asset write-off The instant asset write-off is a pre-existing tax depreciation incentive that has changed significantly over time. It’s important to check the eligibility criteria and thresholds that apply to your business depending on when the asset was purchased, first used or installed and ready for use. The simplest way to think about it is if the asset is held and first used (or installed, ready for use) between 7:30pm on 6 October 2020 and 30 June 2023, you should rely on the temporary full expensing measures. For eligible purchases made by 31 December 2020, and first used or installed and ready to use by 30 June 2021, look at the instant asset write-off. The threshold was recently increased from $30,000 to $150,000, so it pays to go back through your receipts. Some examples of assets that could be written off include: a car or ute drills electric sanders electric saws grinders leaf blowers lawn mowers nail guns ladders toolboxes work lights high-pressure water cleaners concrete mixers shelving and storage computers, laptops and tablets 3. Backing business investment When you’re completing your paperwork for the 2019–20 and 2020–21 financial years, make sure to check whether you can deduct the cost of new depreciating assets at an accelerated rate under the backing business investment – accelerated depreciation rules. Temporary deductions to give businesses a boost No doubt, employee retention is high on your list of priorities. Hiring and training new employees is a significant investment — both of time, and money. One of the best ways to retain employees is to provide opportunities for growth. Thanks to the new Skills and Training Boost, announced in the 2022/23 Federal Budget , it’s now more affordable than ever to do so. For every $100 you spend on eligible training courses, you can claim a $120 tax deduction. There’s no limit to how much you can spend on training courses, but there are some rules to consider. The course must be run by an external provider registered in Australia, for example. In-house and on-the-job training is not eligible. A similar scheme has recently been put in place to incentivise business’ uptake of digital technology. The government's Small Business Technology Investment Boost enables you to claim an additional 20 per cent deduction for the cost of expenses and depreciating assets up to a maximum of $100,000 per annum. An example of this would be to upgrade your EFTPOS terminal to a fleet of mobile EFTPOS machines — such as those offered by Zeller — that your staff can take on the road, and accept payment on the go. This will enable your business to get paid faster, and reduce the administrative load of issuing and chasing invoices. Additional tax measures to consider Lower company tax rate All companies are subject to a federal tax rate of 30% on their taxable income, unless they fall into the category ‘small or medium business’ companies. If a company, together with its ‘connected entities’, turns over less than $50 million, a reduced tax rate of 25% applies for the 2021/22 income year. There are a few additional eligibility requirements to be aware of, which ensure that specifically defined passive income makes up no more than 80% of assessable income. Increased small business income tax offset The small business income tax offset can reduce the tax a business paid by up to $1,000 every financial year. Businesses are only eligible if they’re a small business or sole trader, or have a share of net small business income from a partnership or trust that is a small business entity. Compared to 8% in the 2016-17 financial year, the offset increased to 13% in the 2020-21 period, and has risen again to 16% in 2021-22 where it will remain. The net small business income is the sum of the assessable income from carrying on a business, minus any applicable deductions. Use the ATO’s small business income tax offset calculator to work out the exact  amount to enter on your tax return. Preparing to lodge With all of these changes, it’s important to note that tax agents are getting better and better at spotting fraudulent and inflated claims, so it’s vital you only ever claim legitimate work-related expenses, such as the upfront cost of your Zeller Terminal , which you can use to collect on-site, real-time payments. You can’t, however, claim Zeller Account fees or Zeller Mastercard domestic purchase fees – because there are none . Now that you’re across all the tax deductions available to you as a trades and services provider, you can maximise your hard-earned business dollars every financial year. Sign up to our Business Blog to cash in on valuable insights all year round. To fully prepare your business for the end of the financial year, schedule time to speak with your accountant or financial advisor. Please note this article is for educational purposes only and does not constitute advice.

Keep more money in your retail business by learning where you can reduce tax. Running a retail business comes with many expenses. There are the initial costs of starting a shop — such as buying or renting equipment and obtaining necessary licenses — as well as ongoing costs, including staff salaries, inventory, rent or mortgage payments, and much more. Bringing in a profit after all of these expenses can feel nearly impossible at times. However, familiarising yourself with all of the tax deductions potentially available to you will help to keep as much money as possible in your business, while complying with tax law. Here are eight categories of retail tax deductions you should be aware of. 1. Product purchases Everything sold in your store is tax deductible as a cost-of-sale. These products need to be purchased from somewhere, and the cost of stocking a store can be significant. Whether you buy the products from a distributor as they are, or purchase the materials to make the products yourself, the purchases are tax deductible. Associated costs, such as packing and delivery costs, are also deductible. Make sure to also write off any lost or damaged stock in order to claim a tax deduction. 2. Advertising and marketing costs Advertising or marketing activities you undertake to publicise your retail store and sell stock are generally tax deductible, whether that’s social media ads, billboards, flyers, or another form of advertising that connects with your target market. Even business cards are tax deductible. If you’re considering opening a retail store, or growing your existing retail store, it’s also worth noting that the cost of hiring a marketing consultant is also tax deductible. One commonly missed deduction is the cost of advertising vacancies. Many retailers will have accumulated costs for finding and hiring new employees post-lockdown — these can be claimed as a deduction. 3. Business insurance Business insurance is an essential expense for many businesses. However, there are many different types of insurance. For example, general liability insurance covers some of the costs a business may face in fighting a lawsuit, whereas loss of income insurance protects a business when an unexpected event or tragedy forces a business to close its doors and lose out on profits. Visit the Australian Government website to learn more about the different types of business insurance and what they cover. Whether or not your business insurance expense is tax deductible will depend on your individual situation. As a general rule, retail business owners can claim a deduction for most operating expenses . Insurance premiums, including fire, burglary, accident or disability, professional indemnity, public risk, motor vehicle, loss of profits, or workers’ compensation are included in the definition of operating expenses. Just make sure the insurance policy is owned by the entity responsible for paying the expenses (i.e. you or your business). 4. Property costs The rent you pay for the store itself is tax deductible. If you own the property the store operates from, the mortgage is a tax deduction — as is the land tax. Water, electricity and rates are also tax deductible expenses. For retailers operating a solely online retail store, it’s worthwhile doing the maths to work out which of your home bills contain a portion of tax deductible expenses. Occupancy expenses, running expenses, as well as expenses involved in using your car to travel for business purposes — such as sourcing new stock — are all tax deductible. 5. Capital expenditures A capital expenditure is something that improves existing business assets or overall business operations, and for that reason is usually tax deductible. Capital expenditures for retail stores can include: cash registers EFTPOS payment terminals store fittings and fixtures in-store security systems accounting software and more. The temporary full expensing scheme allows business with a turnover of less than $5 billion to immediately deduct the business portion of the cost of eligible depreciating assets. Those assets need to be first held, used or installed ready for use by 30 June 2023. 6. Staff salaries (including superannuation) Retailers need staff to cover the floor, serve customers, process new stock arrivals, arrange merchandise and take inventory. The cost of staff can be considerable, especially if you require more senior employees such as floor managers and supervisors. Salaries should be competitive — otherwise, potential candidates will likely choose to work elsewhere, and you may find yourself spending time regularly hiring and training new staff. Luckily, staff wages are tax deductible. As an employer, you are also required to pay any workers earning at least $450 per calendar month a contribution to their superannuation fund. These super contributions are also tax deductible. Sole traders can even claim a deduction for their own super contributions, through their personal tax return. It’s also important to note that the 2021/22 Federal Budget contained a significant change to superannuation. On 1 July, the super guarantee will increase by 0.5 per cent. It will continue increasing by 0.5 per cent until it reaches 12 per cent, in 2025. It's important to note that the, according to the ATO, all JobKeeper payments are treated as  ordinary income and should be declared as such. Where wages are paid on top of government payments, the normal rules for deductibility apply . 7. Fringe benefits Providing fringe benefits is one way some businesses attract and retain quality employees. A fringe benefit is a perk offered to a person specifically because they are a valued employee. These perks provide an additional incentive to work for a particular employer. Fringe benefits can be anything from insurance bundles to tuition reimbursement, or a parking space — which is generally highly valued by workers. The cost of providing fringe benefits is generally tax deductible, so businesses can leverage this opportunity to attract and keep staff. If, like many Australian merchants, you are struggling to find and retain staff since reopening doors — keep this in mind for the next financial year. 8. Tax expenses There are often costs associated with lodging taxes, including the price of hiring an accountant or bookkeeper to keep track of cash flow throughout the year, or working with a tax agent to lodge the necessary paperwork. Having a Business Activity Statement prepared is also tax deductible, as are the costs of complying with an ATO tax audit and objecting to a tax assessment you think is incorrect. Bonus tax deductions for retailers Considering upgrading your business' tech tools? If you've noticed inefficiencies in your tech stack, now's the time to make changes. The government's Small Business Technology Investment Boost enables you to claim an additional 20 per cent deduction for the cost of expenses and depreciating assets up to a maximum of $100,000 per annum. If your EFTPOS terminal frequently drops out, for example, it might be time to upgrade to a machine that supports both Wi-Fi and 4G connectivity. Zeller Terminal protects against internet outages by offering the ability to connect to Telstra's 3G and 4G network via Zeller Sim Card, so no matter where business takes you — you can accept payments from customers. There are also new bonus deductions to help you train new employees and upskill existing staff. For every $100 you spend, you can claim a $120 tax deduction through the Skills and Training Boost. Both of these new measures were announced in the 2022/23 Federal Budget . Tips for retail workers We’ve gone over some of the expenses retail business owners can claim as tax deductions to save money when tax time rolls around — but what can employees of retail stores claim? A retail employer should inform their employees about all of the deductions retail workers can claim on their income tax returns. Below are some expenses that often apply to retail workers. Uniforms: If a retail worker has to purchase a job-specific uniform for work, that is considered a business expense, and it is often tax deductible. Clothes bought to match a dress code, such as khaki pants and a polo, are not tax deductible. However, more industry-specific items like a chef’s coat, police uniform or protective gear are generally tax deductible. Learn more about the qualifications for tax-deductible clothing items. Travel expenses: Any transportation or lodging cost that a worker incurs for their job is considered a travel expense. These expenses are often tax deductible, whether it’s paying for a parking space or a hotel room for a work conference. Equipment: Any equipment a retail employee must purchase for their job is a business expense, and likely tax deductible. Equipment can include something as expensive as a tablet or something as affordable as a clipboard. Educational expenses: If an employee spends money on improving their knowledge and expertise within their field of employment, the money they spend could be considered an educational expense. This can range from conferences and seminars to classes and textbooks. For example, if you run a flower store, your employees might want to take part in a floristry course. Home office expenses: Given the nature of a retail worker’s day to day tasks, this deduction may only apply to your managers and senior staff. Any staff expected to work from home can likely include deductions for costs associated with setting up their home office. This includes internet and telephone fees that are work related, as well as the cost of equipment like a desk, monitor, keyboard and more. Preparing your business for tax time The general rule of thumb is that most expenses incurred in the running of your business can be claimed as retail tax deductions — whether the costs are incurred in an effort to generate a profit, or protect the business’ assets. The above guide is a brief overview of what both your retail business and your employees could be claiming. Make sure to consult a financial advisor or accountant to discuss your specific circumstances. To fully prepare your business for the end of the financial year, schedule time to speak with your accountant or financial advisor. Please note this article is for educational purposes only and does not constitute advice.