A guide to submitting your business tax return

We’ve talked to our best accountants to bring you this business tax guide for FY2021/22

This year, changes in the economy and places of employment provided the opportunity for many to start their own business and work from the comfort of their home. One of the tasks that might be confusing for a new business owner might be how and when to file your taxes. Filing taxes is something that most do not enjoy, and you want to get it finished so that you can get back to doing what you love most, running your business. Here are a few of the basics that you need to know about filing your tax return in Australia. 

Important Dates

Your tax return due date primarily depends on your lodgement history and whether you are registered with a Tax Agent. There are some important dates to remember when it comes to lodging your income tax return.

May – June – Contact a Tax Agent prior to financial year end to ensure you understand what tax concessions and business deductions you could claim. According to Dexterous Group, it is crucial for businesses to be proactive and not reactive at tax time specifically when it comes to paying superannuation, writing off bad debts and claiming any instant asset write-offs.

30th June – financial year end and the cut-off date for claiming business deductions, or any instant asset write-offs.

31st October – the due date for lodging your income tax returns (if you’re not registered with a Tax Agent)

15th May* – the general due date granted to Tax Agents to complete your income tax return on your behalf. Please note this may vary depending on a number of factors so please contact a Tax Agent for confirmation of your due date *following year

“Be proactive, not reactive when it comes to tax time.”

– Nick Urry from Dexterous Group

Handy apps to have at tax time

• ATO: The Australian Taxation Office has its own smartphone app which is free to download and use,  here you can access relevant tax and super information for small businesses
• E-sign apps for digital signatures e.g. Docusign, HelloSign – the ability to sign remotely is very helpful in the tax return process according to Dexterous Group
• Oneflare: an app that connects you with the best accountants in your local area by providing personalised quotes from businesses
• Etax: an app with third-party tax service providers

What information do I need to provide in my business tax return?

What you need for your large or small business tax return depends on the structure of your business.

Sole trader: As a sole trader, your business income counts as your individual income. You may claim deductions for any eligable expenses and must include all income you have made in the financial year in your tax return. As a sole trader, you are required to lodge the following:

• The business and professional items schedule for individuals
• A tax return for individuals, including the supplementary section

Partnership: As a partnership, you are required to submit a partnership tax return to report net income. You may deduct any allowable expenses, which then leaves the assessable income. 

As well as this, any individual partner must also file an individual tax return to report:

• Your share of any partnership net income or loss
• Any other assessable income you have earned, such as wages and salary, dividends and rental income

Note: With a partnership, each partner must pay tax on their individual share of the partnerships net income.

Trusts: In a trust business structure, the trustee lodges a trust tax return to provide the following:

• The trust’s net income or loss for the financial period

Note: an individual tax return must also be lodged by each beneficiary of the trust

Companies: If your business operated under a company structure, you are required to lodge a company tax return to provide the following: 

• Taxable income
• Tax offsets and credits
• PAYG instalments
• Tax payable amounts or refund receivable amounts

Note: if you are a company director, you are still required to lodge an individual tax return. 

What can my business claim as tax deductions?

As a business, there are many expenses and deductions that you can claim. This list is a few suggestions of things that your business may be eligible for but it depends on what type of business you operate and your specific circumstances, for example as a tradie you are eligible for deductions like transport costs. If you are in doubt, you should contact your tax professional or the ATO to answer questions about whether your business is eligible. Here are a few things that you may be able to claim on your business:

• Advertising costs
• Interest paid on business loans
• Travel expenses for business
• Renting or leasing your place of business
• Electricity related to business operations
• Internet and phone expenses
• Cost of starting and operating a website
• Wages to employees
• Super contributions for employees
• Vehicle Expenses
• Office costs, such as computer, printer supplies

Note: If you have been working from home during the financial year, your tax return may be different to previous years, you may be eligible for additional deductions. Consult your tax professional to get information for your circumstances.

What are the business tax rates?

The best place to find tax rates for filing your ATO business tax return is on the ATO tax table. As a sole trader, you submit an individual tax return and do not have to pay tax on the first $18,200 that you earn, (see table below for individual income tax rates). Different business structures will have different tax rates. This is just a guideline, and you should consult a professional for advice tailored to your business.

Methods for lodging

• Online through the myTax portal: You can file your small business tax return online if you meet certain requirements. This is only allowed for simple returns. 
• With a registered tax agent: Any person or business can file with a registered tax agent. The cost of hiring a tax accountant can be between $75-220, but there are many advantages of doing so. It saves you time, ensures all the right deductions are made, and extends the time you have to file. The biggest mistakes that are made by businesses, according to Dexterous Group is incorrectly claiming deductions. Some businesses aren’t fully aware of all the deductions they are eligible for based on their industry, business type and related deduction thresholds, which can lead to; mistakes, an increased tax bill or even penalties.
• As a hard copy:  You can fill out the tax return yourself and send it through the mail. You might have extended processing time if you choose this method. 
• Using SBR enabled software: Certain third-party applications are available that allow you to file online yourself. One of the most important things to consider if you use this method is to verify the registration of the software with the ATO.

Other important documents to consider at tax time

It is good to have the following documents available when you lodge your tax return, regardless of whether you plan to do it yourself or by a professional. It is better to have the record and not need it than to need it and not have it. Nicholas recommends storing digital copies of receipts, by simply taking a photo and storing them in a folder on your phone or computer.

• Copies of any payments received
• Invoices for any business expenses
• A list of debtors
• A list of creditors
• Bank records
• Employee and contractor details
• Any capital gains events (e.g. buying or selling business assets)

How to hire an accountant

The Australian tax code can be complicated, especially if you are a new business. The last thing that you would want to do is to make a costly mistake. Fees and fines can be pretty steep if you make an error or miss a deadline. Hiring an accountant takes the worry off you and is often cheaper than the time it takes to do the research and file the return yourself. 

The cost of a small business tax return usually depends on the type of business you have and how complex the return is to file. You should compare rates and service reviews, but the most important thing is that you make sure they are a legitimate accountant and registered agent.

Licencing and qualifications

An accountant must be a Registered Tax Agent, BAS agent, or Tax Adviser. Agents must be registered to specialise in individual or company taxes. You need to make sure that the professional you hire knows how to handle the type of taxes you need to file. It is also a good idea to find someone who has many years of experience.