And just like that, we are in a new financial year. The start of 2020 has been bumpy for lots of individuals and businesses, throwing a curveball and affecting not only professional but personal lives as well.
Tax deductions can be overwhelming: what to claim, and how much? What about COVID-19, JobKeeper and JobSeeker stimulus? Questions may be many but here at QC Accountants, we are ready to make your tax deduction easier.
Let’s start with your cost and expenses.
Do you think these two terms are the same? Well, yes and no. In day to day conversation, we usually use these terms and consider them equal. In business and accounting life, cost and expenses have different meanings.
An expense is money spent or cost incurred in an organisation’s efforts to generate revenue. Here belongs everything which helps you to run your business and create revenue, your marketing efforts, your rent, utility bills. These expenses are ongoing payments that are deducted from your gross income to get your profit.
When it comes to tax deductions you can claim most of your costs that are involved in running your business and they can reduce your taxable income.
The ATO calculates your taxable income using this formula:
Assessable income – tax deductions = taxable income
It’s important to note that any expense you claim must be “business” in nature. All expenses must be business-related and you must justify what you are claiming. Under Australian law, all your records must be in English, in electronic or physical form and must be kept for 5 years.
For more information about record keeping visit the ATO.
In order to reduce your tax liability, claim everything to which you’re entitled and which is related to running your business. It can be everything from car expenses, operating expenses, business travel, maintenance, wages, salaries but also most recently working from home expenses and JobKeeper and JobSeeker subsidies. Both stimulus packages need to be considered as taxable income and treated as a regular wage or salary.
How can QC Accountants Help?
If you find yourself or your business in a very confusing situation due to COVID-19, let us know. QC Accountants understand that this year has been like no other. We are here to help you start off the new financial year on the right foot so you can focus on the future. Meanwhile, review our tips for saving money that can be your first step in your new journey.
We are available on email ([email protected]) or telephone (07 5593 6060).