Tax basics for small business

Allowable deductions

You can claim a deduction for most expenses you incur in carrying on your business and you can generally claim:

• an immediate deduction for expenses that are necessary for the everyday running of your business
• a deduction over a number of years (depreciation) for other expenses - for example, capital assets such as machinery, tools or computers.

You cannot claim a deduction for all expenses you incur. This includes:

• loans the business makes
• money you draw or borrow from the business as the business owner
• private or domestic expenses
• GST you pay if you can claim it as a credit on your activity statement.

If you exchange goods or services for items other than cash (that is, you trade or barter), you must include in your assessable income the value of the goods or services you received in exchange.

For more information, refer to Bartering and barter exchanges (NAT 9748).

Sections within Working out your income tax

• Self-assessment
• Working out taxable income
• Assessable income
• Allowable deductions
• Taxable income
• Working out how much tax to pay
• Making payments towards your income tax