Seven essential tax tips for SME and sole traders
There’s no doubt tax time can feel like a time-consuming hassle for anyone running their own business.
Staying on top of tax obligations and avoiding an audit by the regulators can be a constant worry.
And with the COVID-19 pandemic having caused significant disruption for those in business, it’s never been more important to get tax time right and maximise your return.
Here are seven essential tax tips every small business owner, self-employed or sole trader needs to know this EOFY.
1. Keep your accounts up-to-date
Having accurate information about your business at your fingertips can be a huge advantage. That’s why it’s important to ensure you reconcile your accounts regularly.
Using cloud-based accounting software, such as Xero, can make things far easier to keep your records up to date.
This will allow you to see real-time information on your cashflow, your shortfalls, your revenue and your employees (if you have any). Ultimately, this can help you make quicker and better business decisions.
It can also enable you to access the government’s stimulus package like JobKeeper faster, to help you get through this difficult period.
Find out more about the benefits of real-time accounting.
“Having accurate information about your business at your fingertips can be a huge advantage.”
2. Know your GST obligations
A common pitfall that many small business owners make is failing to understand their obligations when it comes to registering for Goods and Services Tax (GST).
You will need to register for GST if your income for the financial year exceeds $75,000.
And, you only have 28 days from the point you earn $75,000 to register. Don’t wait until the EOFY to do it.
Therefore, it is important that you track your income throughout the year. This will help you to know when to register for GST.
Another thing to keep in mind is that if you have registered for GST, then your tax return should include your income and expenses net of GST. The GST component is handled on your Business Activity Statement (BAS) instead.
3. Take advantage of the instant asset write off
Good news. The COVID-19 Government stimulus measure means you can utilise a $150,000 instant asset write off this financial year.
Plus, it has been extended until 31 December 2020… so you can claim 100% tax deduction for any work-related asset purchase now and again later this calendar year.
The scheme is particularly important for self-employed workers with a reliance on tools, cars and other assets.
4. Claim work from home expenses
To claim work from home expenses as a tax deduction, you need to be carrying out income-producing work at home and incur expenses in using your home for that purpose.
Here are some examples of expenses:
- cost of using a room’s utilities, such as gas and electricity
- business phone costs
- decline in value (depreciation) of office plants and equipment, such as desks, chairs, computers. If equipment is also used for non-business purposes, you can claim a portion of it.
- decline in value (depreciation) of curtains, carpets and light fixtures
- occupancy expenses (such as rent, mortgage, interest, insurance, rates). You can claim a portion of these costs that relate to the room or workshop you use as a place of business.
If during COVID-19 you have moved your place of business to your home, the period of time you have worked from home will be used to determine the proportion you can claim.
Find out more about work from home expenses.
5. Don’t forget super contributions
In previous years, it was important to use your $25,000 concessional cap by the end of each financial year. Because of the COVID-19 pandemic, your income may have decreased and you can defer your concessional superannuation cap this year for up to five years, when you expect to earn a higher income.
As long as your marginal tax rate outside of super is higher than the 15% contributions tax, then it will be an effective tax strategy. So if you only contribute $10,000 this year instead of $25,000, you may be able to contribute $40,000 next year.
Find out more about superannuation tax strategies this EOFY.
6. Your income may have changed during COVID-19
Most people have had their take home pay affected by the pandemic in one way or another.
For sole traders receiving JobKeeper payments, you will need to include those payments as assessable income for your business.
Every small business owner will need to make sure they meet their Pay-As-You-Go (PAYG) withholding obligations to claim deductions on salary payments.
This means you need to ensure that you not only pay the wage, but that you also withhold the appropriate tax and include it in your June BAS and PAYG payment summaries.
“Don’t wait until EOFY — you need to know when you hit $75,000 turnover so you can register for GST within 28 days.”
7. No need to go it alone
Most days, running your own business can feel challenging, least of all managing your accounts and tax obligations.
That’s why getting the right advice can help free up time and resources so that you can focus on growing your business.
Seeking professional services can also help you avoid the common tax pitfalls that many small business owners make.
The team at North Advisory is here to help you simplify the process of meeting your tax obligations this EOFY. If you’d like to find out more about how we can assist, please contact us today.
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
Timely, accurate bookkeeping is critical
Keeping your accounts up to date allows you to monitor performance, manage cash flow and stay ready for tax time or unexpected changes.
Understand and act on GST thresholds
Crossing the A$75,000 income threshold for the year triggers a need for GST registration — missing that can lead to compliance issues.
Use asset-write off provisions when eligible
The instant asset write-off can significantly reduce taxable income in the year you purchase business assets — potentially providing financial relief and cash-flow benefits.
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Frequently Asked Questions
When does a sole trader need to register for GST?
If your income for the financial year exceeds A$75,000, you must register for GST — and you have 28 days from the point you hit that threshold to register.
What is the “instant asset write-off” and can I use it?
Under recent government stimulus rules (as of 2020), you can claim a 100% tax deduction via an instant asset write-off for eligible business assets up to A$150,000 — useful if you’re a sole trader relying on equipment, tools or vehicles.
Can I claim work-from-home expenses if I operate my business from home?
Yes. If you use part of your home as a workspace and perform income-producing work there, you may claim deductions for a portion of utilities, depreciation of office equipment/furniture, and occupancy costs (e.g. rent or mortgage interest) relevant to that workspace.
How important is it to keep your accounts up to date?
Very. Regular reconciliation and up-to-date records help you track cash flow, monitor income and expenses, and respond quickly if business circumstances change — which is especially valuable during uncertain times.
Should I consider professional help for my taxes?
Yes. As a sole trader or small business owner, engaging a qualified accountant or adviser can help avoid common mistakes, ensure compliance, and identify all legitimate deductions — particularly if your financial picture is complex.
What are the best EOFY tax tips for SMEs and sole traders?
North Advisory recommends that SMEs and sole traders improve their EOFY tax outcome by keeping accounts up to date (ideally using cloud software like Xero), staying on top of GST registration rules, and using available strategies such as the instant asset write-off, claiming eligible work-from-home expenses, and reviewing super contributions and PAYG obligations—especially if income has changed due to COVID impacts.
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