Aussie small business owners might be missing out on the $20k tax break this EOFY
New research from Officeworks and H&R Block has found that the majority of Australia’s small business owners are confused about the tax breaks available to them.
In particular, the research showed that a whopping 78% of small business owners don’t fully understand the $20k tax break.
This rule means that, unlike more expensive purchases, which must be depreciated over their lifetime for tax purposes, business related purchases under $20,000 can be claimed as a tax deduction in the year they’re bought.
A quarter of small business owners couldn’t identify a single item that might be eligible under the $20k tax break, despite being familiar with the rule itself. Only one in ten could identify seven or more items that would be covered.
“It’s a shame to see there’s still a knowledge gap around the $20K tax break and subsequent tax-deductible products,” said Jim Berndelis, Officeworks’ National Merchandise Manager.
When it comes to being prepared to fill in their tax return, 50% of small business owners consider themselves well equipped, while 36% claim to be moderately prepared and 15% say they’re not equipped at all.
The aspects of tax time that small business owners found most stressful included paperwork, cash-flow, time management and employee administration.
A majority of small business owners rely on their accountant or bookkeeper to compile their tax return for them, and 46% trust their accountant to proactively search for additional tax break opportunities when doing so.
“A lot of small business owners relegate tax to the ‘too hard’ basket and take little interest in tax matters. However, being more proactive and spending time on understanding the opportunities and overcoming their pain points, will benefit their business in the long run,” said Mark Chapman, Director of Tax Communication at H&R Block.
And there are multiple avenues for business owners who need to brush up on their tax know-how before June 30 rolls around. One launched recently by Officeworks is a curated online space called the Happy Tax Place, providing tips and recommendations on which products small business owners can claim at tax time.
Small business owners can also find some pointers in Mozo’s EOFY Expert tax tips blog.