1. Declare all income
While it may be obvious to some, all income, including cash and online sales, must be declared in your tax return.
Income may also include profit gained from contributing to the ‘sharing economy’, defined by the ATO website as “[connecting] buyers (users) and sellers (providers) through a facilitator who usually operates an app or a website”.
Examples of the sharing economy may include renting out a room or house short-term, renting out a parking space, or paid personal services ranging from graphic design or website creation to odd jobs like cleaning, assembling furniture or making deliveries.
2. Don’t forget about deductions
Another obvious point: make sure to claim your deductions, and claim them right.
Most items, such as stationery and wages, can be declared in the year in which they are received.
Capital expenses, such as machinery, equipment and buildings, can be claimed over a longer period of time, as long as they are purchased to replace an existing asset, or if you make a capital improvement to an existing asset.
It’s also worthwhile to consider that if you work at home, you can claim the portion of your expenses spent on maintaining your business, such as costs relating to business phone calls, cleaning, and heating and cooling.
3. Personal services income
For those who are self-employed and earn more than 50 per cent of their income from their own skills, this can be classified as personal services income and must be claimed as such.
Small businesses with an aggregated annual turnover of less than $2 million are eligible for the ATO’s simplified depreciation rules.
These rules allow small business owners to immediately write off assets purchased for the business that cost less than $20,000, and have been either used or installed for use.
This threshold of $20,000 applies from 7.20pm, 12 May 2015 to 30 June 2017.
If you are considering simplified depreciation, keep in mind that if the balance for your depreciated assets is less than $20,000 before any depreciation deductions take place, the full amount must be deducted in your tax return.
5. Lodge on time
Small business owners looking to submit their own returns must do so by 31 October.
If you are using a registered tax agent for the first time, or have switched to a new agent, you need to let your agent know this before 31 October.
Small business owners with employees need to log their PAYG payment summary annual report by 14 August.
For individuals and sole traders who file their own tax returns, myTax has replaced e-tax for lodging tax returns online.
Various tools are available to those who use myTax, including the depreciation and capital allowance tool for calculating the deductible amount on a depreciating asset, and the capital gains tax (CGT) record-keeping tools to calculate capital gains events.
Using myTax isn’t necessary, however, and tax agents for individuals and sole traders can still be used.