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Claiming petrol on your tax return and fuel tax concessions for small businesses

Date posted: Friday, April 3, 2015

Enter a car, truck, vehicle or any other kind of heavy equipment into the equation, and your tax can get complicated – whether you’re a small business or an individual at end of the financial year.

Luckily, we can shed some light on any confusion you want to get out of the way before tax time rolls in again.

For individuals

You can claim travel expenses – including your car’s petrol and public transport costs – as long as they’re directly connected with your work. However you can’t claim travel between home and work, as this is considered a private expense.

When you use your own car in the course of performing your job however, there are quite a few instances where claiming is all a-go, including:

• carrying bulky tools or equipment
• attending conferences or meetings
• delivering items or collecting supplies
• traveling between two separate places of employment (for example, when you have a second job)
• travelling from your home to an alternative workplace and then to your normal workplace or directly home (for example, if you travel to a client’s premises)
• perform itinerant work.

For businesses

As a business, there’s a federal tax placed on all fuel you purchase (not nice). To help you out, the government has in place a fuel tax credit scheme that allows you to claim back that tax (nice).

Usually included as part of your usual Business Activity Statement (BAS) – much the same way other taxes like GST are claimed – the fuel tax credit scheme applies to most fuel used in the course of carrying on trade, including driving machinery and running plant, equipment and heavy vehicles.

To be eligible, your business needs to be registered for GST, registered separately again for fuel tax credits, undertaking an eligible activity. It also needs to meet several environmental criteria – for example, emission standards for heavy diesel vehicles.

At Pakenham Taxation + Accounting we’re experts in all the details of personal and business taxation. Make this end-of-financial year easier for yourself and contact our team for further questions about what you can and can’t claim on tax.

5 tax-minimising tips for small businesses

Date posted: Monday, November 10, 2014

How can a small business save on their tax? Well, returns for companies may not be due until February next year, but in our experience working with SBEs, there’s no such thing as getting on top of things too early or having too much help.

It’s no big secret that tax is one of the biggest worries for small business owners, so we’ve outlined our 5 top tips keep in mind when preparing your return.

• Pay your super early

Any superannuation you pay to your employees before June 30 can be deducted in that financial year – this is one of the best and easiest ways to reduce your tax bill. And don’t forget to contribute to your own super! Not only is it important to build up your own next egg, but super contributions are only taxed 15%, rather than the 45% income tax they would otherwise be slugged on.

• Delay your income

Another really simple way to help you at tax time is to defer income until the next financial year, so you don’t have to pay the tax on it this year. This means reviewing term deposit maturity dates or just delay sending out invoices until July.

• Get onto those tax concessions

As a small business (the legal definition by the way is an annual turnover of less than $2 million), there are a heap of special laws and exemptions that make life a bit easier for you, so it’s important you’re not missing out. They include GST and Capital Gains Tax concessions, deductions on interest payments and simplified depreciation rules – for example, did you know if you buy a business asset for less than $6,500 you can get it immediately written off on your tax? The more you know!

• Bulk buy your expenses

It’s a good idea to deck out the office with all your every day stationery, subscriptions and business expenses so you can claim their tax deductions this financial year, not next. It may not seem enough to be worth it, but have you seen the price of ink lately? All those little expenses add up and can make a huge difference on your tax bill.

• Bad debts? Write them off

If your cash flow’s been a bit under the weather, you might have a bad case of bad debts – i.e. clients that are behind on payments, or that may never even to be able to pay you. Such is life – but not all is lost. If you write these debts off now, they’ll become tax deductible and also reduce your taxable income.

So if you’re a small business who’s still wrangling with their 2013-14 return, stop stressing and give us a call – we’re here to make your tax time a regular walk in the park.

Double check your deductions

Date posted: Thursday, October 23, 2014

For many, tax time is just a painful reminder of why the word ‘taxing’ exists. The looming BAS deadlines are often a source of frantic stress and for others it’s a veritable bonanza.  Working out what you can and can’t claim and how much is deductable can be the difference between getting a great refund or not. A common question we field at Pakenham Taxation and Accounting is…

How do some people manage to get such great refunds when others don’t?

Mainly, they know exactly what kind of tax deductions they’re eligible for and understand how to work the system to their advantage.

While you always need to keep personal and work expenses separate (and the ATO is currently cracking down on suspicious returns), you’d be surprised what you can claim, depending on the kind of job you have.

For example,

• Journalists can claim on sunglasses if they work outside
• Performers can claim stage make up and tinted contact lenses
• Workers in the adult industry can claim back on lingerie
• Policemen can claim bulletproof vests and
• If you work from home you can even claim on energy bills.

Even if you have a stock standard office job, it’s definitely worth checking out the ATO’s full list of deductible expenses, separated into the needs of each industry.

And remember, keep all your receipts in one place so next year isn’t the stressful scramble is usually is!

Contact us for support on how to get the biggest refund within your entitlements and to manage your tax accounting better.