Don’t Risk An ATO Audit By Believing Too-Good-To-Be-True Tax Myths. Meridian Accounting & Business Services Can Help You Legally Minimise Your Tax
Have you heard a tax myth that sounds so good you want it to be true? There’s plenty going around! Here we list just a few of the most common small business tax myths so you can lodge an accurate tax return, legally minimise your tax — and avoid the wrath of the ATO.
So, you’re attending a conference or an important meeting that’s not in your region. Good for you! But don’t think that you can tack on a few extra days of travel, hotel bills and food & beverage expenses and claim it as a deduction.
Just as you would have to determine how much of your phone bill is business or private use, so too will you have to prove that your 7-day trip to the Whitsundays was essential for your business. Have a chat with our team BEFORE you go making those “business trip” plans so we can ensure you’re going to be fully covered at tax time.
For business owners of companies with an incorporated business structure, the decision to pay yourself a particular wage is an important factor in how much tax you will have to pay. While sole proprietors don’t have to face this issue, other business owners may be tempted to lower their salary in order to reduce their taxable income or even claim the tax-free threshold.
It’s best to speak with your accountant to determine the best path to take with wage distributions: as you could run the very real risk of ATO auditing if your wage appears too low when compared with the profits of your company.
Keeping an accurate record of receipts is just part and parcel of running a business. You can’t show a bank statement or credit card statement to prove that a purchase was made for your business — you have to keep the receipt.
While you won’t be required to produce a receipt for standard expenses (such as $150 for laundry or 5000 km for car-related expenses), you will have to get organised (via apps or accounting software) to ensure your receipts are all on file. That way, when it comes to tax time, you won’t have to spend extra time collating your business expenses.
If you’d like to benefit from tax minimisation strategies (instead of relying on a bunch of tax myths), get in touch with Meridian Accounting & Business Services. We’re located in Central Queensland with offices in Rockhampton and Emu Park. Get in touch today by phoning Rockhampton on (07) 4927 4625 or Emu Park on (07) 4938 8262.
* The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organisation, employer or company.