What You Can Deduct or Write Off in Your Small Business Tax

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A tax deduction reduces taxable income, allowing qualifying businesses and individuals to lower their tax obligations. There are two basic types of tax deduction in Australia: deductions for eligible expenses and tax deductions for specific types of income. If you are preparing your business for tax season, keep in mind that you could get potential tax deductions if you know the right one for you. 

Let this article enumerate some you can use.

The Instant Business Asset Write-Off

The instant asset write-off is available to businesses with a turnover of less than $10 million. The main goal of this is to reduce the compliance burden of small businesses and allow them to invest more in their business assets.

From March 2020, every asset’s instant asset write-off threshold amount is $150,000, significantly higher than the previous $30,000. Businesses are also allowed until 30 June 2021 to first use or install the said asset, which should have been ready for use. The only note is that the asset should have been purchased by 31 December 2020.

This tax deduction is for small businesses with an annual turnover of less than $10 million and allows a depreciation deduction for assets used to generate income. It aims to ensure businesses have enough money to cover the cost of assets and reduce the burden for small businesses.

Your Prepaid Expenses

If you are a small business owner, you may be able to claim a tax deduction on work you have already done. That includes paying a deposit on your business premises or buying stock to be sold in your small business. Remember, though, that your prepaid expenses must help you earn taxable income.

There is one important thing to remember when claiming your prepaid expenses. If you use the cash basis tax system, the prepaid expenses must be paid in the same income year. If you use the accrual basis, you can claim prepaid expenses under the following rules:

You can claim the expenses if they are incurred and paid in the same income year. If the expenses were incurred but not paid in the income year, you could claim the payments in the income year you paid for them. 

Personal Super Contributions Deductions

If you make personal super contributions, you can claim them as a tax deduction. To qualify for this tax deduction, you must make personal super contributions to your super fund, not to your spouse’s super fund. It’s important to note that personal super contributions must satisfy the following:

  • You must not be contribution- or benefit-restricted
  • Your total super must be less than $1.6 million
  • You must have at least 10% of your total contributions in your super fund in the income year

The tax deduction is available for personal contributions up to $3,000 per year, and a maximum of $30,000 over three years. However, if you are over 49 years of age and you meet the above conditions, you may be able to claim a tax deduction for personal super contributions up to $100,000 over a three-year period.

You can claim your tax deduction for personal super contributions in the same income year you made the contributions.


Preparing for taxes can be exhausting. However, one important thing to remember is that your business has some deductions you can take advantage of. When preparing for tax time, you should check whether your small business can claim a tax deduction on your expenses or whether you can claim a tax deduction on your personal super contributions. These tax deductions may save you money come tax time.

If you are unsure of these rules and limits, we can help. SMB Accounting is an accounting firm along the Sunshine Coast that can provide you with your much-needed SMB tax solutions. Contact us today at 1-300-854-159.