With a new year comes fresh starts, which includes getting on top of your tax and super obligations. Here are some tips for tradies looking to get the most out of tax time.

New purchase, new measures

Did you purchase or upgrade a business asset between 1 July 2023 and 30 June 2024? If so, you may be eligible for:

• the $20,000 instant asset write-off. Small businesses, with an aggregated turnover of less than $10 million, can immediately deduct the full cost of eligible assets costing less than $20,000 that were first used or installed ready for use between 1 July 2023 and 30 June 2024.
• a 20% bonus deduction under the small business energy incentive. The energy incentive applies to the cost of eligible assets and improvements to existing assets which improve energy efficiency, up to a maximum amount of $100,000, with the maximum bonus deduction being $20,000 per business in the 2023-24 income year bonus period.

Find out more about eligibility and what records you need to keep at ato.gov.au/instantassetwriteoff, ato.gov.au/energyincentive.

Golden rules for claiming deductions

You can claim deductions for most expenses you incur in running your business. But it’s important to only claim what you’re entitled to.

There are three rules to keep in mind:

1. The expense must have been for your business – not for private purposes
2. If the expense is for a mix of business and private purposes, you can only claim the portion that’s related to your business
3. You must have records to prove the expense and show how you worked out the business-related portion.

Find out more at ato.gov.au/businessdeductions.

Business income is not personal income

If you use business income or assets for personal use, there may be tax consequences if you don’t account for the transactions accurately. This could be a payment or reimbursement of private expenses or using business assets for private purposes, like the business car. It’s important to report these transactions correctly and keep accurate records.

Regularly cross-check your records against their original copies. This will help you to track your business’s cashflow and assets and help catch mistakes early.

Find out more at ato.gov.au/businessincome and ato.gov.au/division7A.

What to do with a non-commercial loss

Have you experienced a loss outside of your primary business? A non-commercial business loss is a loss you incur, either as a sole trader or in partnership, from a business activity that isn’t related to your primary source of income.

For example, Logan is a sole trader who has a construction business, this is his primary source of income. In his spare time, Logan refurbishes and sells antique furniture. In the 2023-24 income year, the money Logan spent on purchasing the antique furniture exceeded the income he made from selling the refurbished furniture. Logan made a non-commercial loss from this activity and will need to work out if he can claim the loss in the 2023-24 income year or carry it forward.

The business activity needs to have business-like characteristics and a significant commercial purpose or character. The losses from a non-commercial business activity can’t be offset against other assessable income in the year in which the loss is incurred unless an exception applies, the Commissioner’s discretion is exercised or there is a profit made.

Find out more at ato.gov.au/noncommercialloss.

Do you qualify for capital gains tax concessions?

As a small business owner, there are four capital gains tax (CGT) concessions available to you. If you’re eligible, you can use these concessions to reduce the CGT on selling a qualifying business asset. The way you report the concession depends on your business structure. This means:

• If you’re a sole trader or partnership, in the supplementary section for individuals in your tax return.
• If you’re a company or trust, in the CGT schedule for companies and trusts.

Find out more about the different CGT concessions and eligibility requirements at ato.gov.au/businesscgt.

Don’t forget to register for GST

If you’re carrying on a business, and your turnover is $75,000 or more in 12 months, you must register for GST. You should check each month to see if your turnover is reaching or if you’re likely to exceed the $75,000 threshold.

Once registered, you need to include GST in the price of your goods and services sold in Australia – unless they’re GST-free or input-taxed. The GST rate is 10%. This means GST is 1/11^th of the amount you charge for your goods or services.

You report and pay the GST collected on your sales, and claim credits for GST on your business purchases, by lodging a business activity statement (BAS).

Before you register for GST, you need to have an Australian business number (ABN). You can register for GST at the same time you register for an ABN.

If you already have an ABN, you can register for GST:

• via online services for business
• through your registered tax agent or BAS agent.

You only need to register for GST once, even if you run multiple businesses.

Once you’re registered, the ATO will automatically send you a BAS when it’s time to lodge.

Find out more  at ato.gov.au/GSTregistration.

Keeping good records 

You can keep your records either electronically or on paper. Electronic records may make some tasks easier. While the glove box can be a great place to store loose paper dockets, think about asking suppliers to email your receipts. If you’re a sole trader or employee, you can download the myDeductions tool from the ATO app and use it as your all-in-one record-keeping tool.

Find out more at ato.gov.au/recordkeeping

Small business focus areas

The ATO has released ‘Our focus areas for small business’ to provide transparency of the key risk areas that are of concern. The ATO knows most small businesses do the right thing, however some choose not to and gain an unfair advantage over those who do.

The ATO is actively detecting, treating and addressing concerning behaviours so that all small businesses can operate on a level playing field. By being transparent about what they’re targeting and clear about the consequences of doing the wrong thing, the ATO wants to help you get it right.

Find out more about the ATO’s current focus areas at ato.gov.au/sbfocusareas

Support and resources 

The ATO has a range of tools and services on their website to make it easier for you to get your tax and super right.

Each year the ATO updates the Tax Time toolkit for small businesses. The Toolkit has updated factsheets and a directory of useful links to information, tools, calculators, learning resources and other support and services.

To build your business knowledge, take self-paced courses using Essentials to strengthen your small business. All the courses are free, easy to use and designed for all stages of business.

The Cash Flow Coaching Kit is another great resource to help you better manage your cash flow across the income year.

You can also register your business for eInvoicing with your small business accounting software provider to help streamline your invoicing processes, saving you time and money, and to help keep you safe online. The ATO’s eInvoicing factsheet is a great place to learn more.

You can also subscribe to the ATO’s small business newsletter for keep up with all the latest tax and super information that could affect your business.

Find out more at ato.gov.au/SBsupport.

The ATO knows how hard you work and provides information to help you get your tax and super right. This article gives you the big picture, but if you want more detailed advice that’s relevant to you and your specific situation you can visit ato.gov.au/tradies or speak with a registered tax professional.