• Tax time is fast approaching. Do you know what that means? It means that there are quite a few tax deduction tips you should know about if you want to make the most out of your tax return.
• As a business owner, you can claim tax deductions for a lot of things you probably didn't know about.
• That includes the accountant fees you've been spending without realising they are deductible, self-education expenses and more, much more.

It’s almost tax time, which means that your business should be gearing up to lodge its tax return in the coming months.

The taxation system is notorious for being complex, with a myriad of confusing rules as well as loopholes and “hacks” that can dramatically reduce your tax bill.

What Tax Deductions Can Small Businesses Claim?

While there are thousands of potential deductions that your business can claim, here are the seven 7 most overlooked deductions which you can use to instantly reduce your tax bill this year:

1. Accountant fees (all of them!)
2. Accounting software
3. Deferred income
4. Union fees
5. Home office bills
6. Home office furniture
7. Self-education expenses

1. Accountant Fees (All of Them!)

It’s rather ironic that the cost of completing your tax return is actually tax-deductible, so it’s not surprising that it’s a deduction that a lot of people forget about. The fees you pay to an accountant to assist with your business tax return are tax-deductible the following year.

However, while a lot of people remember to claim the cost of completing their tax return, they often forget that they can also include the cost of any additional meetings or appointments that are necessary for managing their taxes.

This all falls under the cost of managing your tax affairs.

1. So, dig out the receipts from your accountant last year and be sure to claim all of the costs as a business expense.
2. Similarly, make sure to keep your receipts from any meeting with your accountant this year and claim those costs as a deduction next year.

2. Accounting Software

Online, cloud-based accounting software such as Xero is an effective way to keep on top of your business expenses and accounting throughout the year. It can help you manage all of your business invoices, bills and purchase orders, plus it keeps track of your payments in one handy platform, usually for a monthly service fee.

Businesses can be so focussed on getting all their expenses and deductions in order with the help of their online accounting system that they often forget that they can claim the cost of the accounting system itself as a deduction.

Again, it all falls under the cost of managing your tax affairs.

3. Deferred Income

Okay, this one isn’t a deduction, but it is an important strategy to consider at tax time to lower your taxable income. If your business has recently received a large payment for goods or services that you haven’t yet provided, the payment could potentially be considered “income in advance.” 

This means that the income shouldn’t be taken into account as part of this year’s tax return, which in turn will lower your taxable income and save your business hundreds or even thousands of dollars.

The logic behind this rule is that income is considered in the same tax year that the service was provided. Make sure you check with your bookkeeper or accountant to see whether your business has any income that could potentially be deferred until next year’s tax return.

An example could be if your business has already been paid for an event or conference that it’s holding later in the year.

4. Union Fees

A lot of people are part of a work-related union or a member of an industry group. These bodies are great as they protect workers’ rights as well as provide ongoing workplace support, networking opportunities and educational resources. You might have been a part of a union for many years already and never thought about claiming the cost of this on tax. Well, you can.

Union and other membership fees are considered work-related expenses as they help you perform your job and are sometimes even required to work in a certain industry. You can fork out hundreds, even thousands, in fees for these groups, so don’t forget to claim the full cost when filing your tax return this year.  

5. Home Office Bills

Most people are aware that if you work from home, even occasionally, you can claim some of your Internet and phone line costs as a tax deduction.

But it doesn’t stop there.

You may also be able to claim a portion of your electricity bill as an “occupancy cost,” including the cost of heating and cooling your home office, and don’t forget lighting.

Your accountant can help you calculate what percentage of your electricity bill you can claim on tax, depending on how much time you spend working from home.

For example, if you work from home 50 per cent of the time, at least half your bill still needs to be attributed to personal use and cannot be claimed as a deduction.   

6. Home Office Furniture

Along with energy, Internet and phone bills, you may also be able to claim some of your home office equipment and furniture. For example, if you bought a desk and ergonomic chair for your at-home work station, these can be classified as work-related expenses, meaning you can claim their depreciation costs.

The same goes for personal items that you may use for work from time to time, like your personal mobile phone or computer.

7. Self-Education Expenses

Business owners are constantly educating themselves and upskilling to stay on top of their game and ahead of the pack. The good news is that if you do a course that’s directly related to your field of work and will likely help you increase your income, you can claim the cost as a tax deduction.

This is because the government wants to encourage people, particularly small business owners and sole traders, to continue to learn and increase their earning potential.

So if you’ve completed a course, a workshop or even attended an industry conference, bring your receipts along with you to your accountant’s office this year.  

These strategies are simple yet highly effective ways for you to save hundreds or even thousands of dollars on your business tax return.

And these are just the tip of the iceberg. Make sure to speak with your bookkeeper or accountant about other ways to reduce your business’s tax bill this year.

And don’t forget to claim the cost of that advice, of course!

Editor's Note

We hope this article has helped you learn more about what tax deductions you can claim as a business. If you'd like to learn more about how you can reduce taxes, head to the Taxation group where you can connect with taxation experts and other businesses who are talking about saving taxes.