Tax Deductions for Businesses in 2024

Managing your business finances requires understanding tax regulations and claiming deductible expenses. There are positive changes on the horizon in 2024. So what are they, and how can you keep the books clean to maximise deductions? Read on to learn more.

What expenses are tax deductible in Australia?

Capital expenditure deductions allow for depreciation claims on long-term asset investments. This includes equipment purchases, with key concessions like a 50% reduction in capital gains on active assets and some exemptions. Following the ATO's depreciation rules, businesses can strategically claim these deductions, optimising their tax return profiles.

The costs for necessary business operations are called direct business expenses. These include goods or services production costs, direct labour, superannuation and raw materials.

Finally, indirect operating costs help operations stay afloat but cannot be assigned to a specific good or service. These expenses comprise occupancies such as rent and utilities, office supplies, insurance and marketing costs.

Maximise deductible income with asset write-offs

Introduced in the 2023-2024 financial year, the $20,000 instant asset write-off initiative will extend until the 30th of June, 2025. This scheme allows businesses to immediately deduct the total cost of assets under $20,000 purchased after the 30th of June, 2023. The write-off can apply to multiple assets.

Any assets valued at $20,000 or more cannot be immediately deducted but, under the small business simplified depreciation pool, can depreciate at 15% in the first income year of use and 30% in each subsequent year.

The instant write-off improves cash flow by reducing taxable income. Remember to keep detailed records of asset purchases and ensure you meet the criteria set by the Australian Taxation Office.

Tips to help you with tax deductions

As you consider your tax deductions for 2024, here are a few tips to help:

• Keep your records straight: Always keep an accurate record of asset purchases to claim all eligible deductions. In addition, stay updated with tax law changes to maximise deductions and avoid accidental claims.
• Home deductions: If you run your business from home, you can make claims on hybrid-use items – but remember to only claim for the portion of an asset or service attributed to business function. This includes office equipment, utilities and occupancy costs.
• Ask for help when you need it: One of the best ways to keep your records straight and claim maximum deductions is to work with a professional accountant. WMC Accounting offers expert business advice to help you manage taxes accurately and without stress. Get in touch with our team for customised guidance and make the most of tax deductions in 2024.