With 30 June approaching, now is one of the most valuable times of the year to sit down and review your business expenses. Many small business owners either miss deductions they are entitled to claim, or claim them incorrectly and invite ATO scrutiny. A thorough pre-EOFY review can make a genuine difference to your tax bill — but it needs to happen before the financial year closes.

Prepaid expenses

If your business is a small business entity — broadly, one with an annual turnover under $10 million — you may be able to prepay certain expenses before 30 June and claim the full deduction in this financial year, even though the service period extends into next year. This includes things like insurance premiums, subscription renewals, rent paid in advance, and professional memberships. The prepayment must cover a period of no more than twelve months starting within the same income year.

Asset purchases and the instant asset write-off

The instant asset write-off allows eligible businesses to immediately deduct the cost of certain depreciable assets rather than writing them off over several years. If you have been thinking about purchasing equipment, machinery, tools, or technology that your business genuinely needs, doing so before 30 June may allow you to bring that deduction forward. The $20,000 Instant Asset Write Off was announced as becoming a permanent part of our tax laws.

Home-based business expenses

If you run your business from home, or use a home office for business purposes, you may be entitled to claim a portion of your home running costs — things like electricity, internet, and phone — as well as the decline in value of furniture and equipment used for work. The ATO has specific methods for calculating these claims, and record keeping is important. If you have not been tracking your home office use, now is the time to start.

Vehicle and travel costs

Business-related vehicle use is one of the most commonly underclaimed deductions for sole traders and small business operators. If you use your personal vehicle for work purposes — travelling to clients, visiting suppliers, attending business meetings — you are generally entitled to claim those kilometres. The ATO’s cents-per-kilometre method allows you to claim up to 5,000 kilometres without a logbook, though a logbook provides a more accurate claim if your work-related driving is significant.

Don’t leave money on the table

Other commonly missed deductions include bank fees on business accounts, accounting and bookkeeping software, professional development and training relevant to your current business activities, and income protection insurance premiums where the policy covers loss of business income. Advertising and marketing costs, business-related subscriptions, and the cost of professional advice are also deductible. The key is keeping receipts and records throughout the year — not scrambling at tax time. Your accountant can help you identify every deduction your business is entitled to before 30 June.

Getting your deductions right before 30 June can make a real difference to your tax position. Get in touch with us and we will help you identify everything your business is entitled to claim.