Top 6 Tax Deductions for Small Business

February 20, 2024
minutes to read
Michael Nuciforo
Table of Contents

As the tax season approaches, small business owners in Australia are hurriedly reviewing their receipts to maximise their deductions and minimise their tax liability. This year, the type of tax deductions businesses claim has evolved, reflecting the changing nature of entrepreneurship. Thriday, a leading small business accounting platform, has researched emerging trends in small business ownership, including the rise of home-based businesses and the integration of innovative technologies like Chat GPT into tax reporting for 2024. In this blog, we'll explore the top six small business tax deductions for 2024, comparing them to previous years and examining how businesses are strategically investing their hard-earned money.

1. Home Office Expenses

In the wake of the COVID-19 pandemic, remote work has become the norm for many small business owners. Consequently, the deduction for home office expenses has significantly increased over the past three years. Thriday's data reveals that 62% of small businesses now leverage this deduction to claim a portion of their rent, utilities, and internet expenses—a 28% increase compared to pre-pandemic averages.

2. Self-Education Expenses

Continual learning is essential for small business owners to remain competitive in today's dynamic business landscape. The deduction for self-education expenses enables entrepreneurs to claim a wide range of professional development courses, conferences, seminars, and subscriptions that enhance their business acumen. This deduction has witnessed a 15% increase in utilisation, with over 45% of small businesses investing in knowledge and skills to drive growth.

3. Car Mileage

The car mileage deduction is a valuable avenue for reducing taxable income for small business owners who rely heavily on their vehicles for business purposes. By meticulously tracking and recording their business-related trips, entrepreneurs can claim a set rate per kilometre for the mileage travelled. Recent data indicates a 22% surge in claims for this deduction compared to previous years, showcasing the increasing recognition of its benefits among small businesses.

4. Bank Fees

Though bank fees may appear insignificant individually, they can accumulate over time, affecting small businesses finances. Thankfully, entrepreneurs can deduct the costs of business bank accounts and credit card transactions, allowing them to retain more of their hard-earned revenue. With over 58% of small businesses availing themselves of this deduction, it has gained significant popularity in recent years, resulting in a 12% increase in claims.

5. Income Protection Insurance

Given the potential market downturns, small business owners increasingly seek protection against unexpected circumstances that could hinder their ability to work, such as sickness, injury, or disability. The deduction for income protection insurance has experienced a remarkable 30% growth in claims, indicating a growing awareness among entrepreneurs about the importance of safeguarding their income and businesses against unforeseen events.

6. Technology Expenses

Small businesses are claiming a record amount of deductions for technology expenses, encompassing software subscriptions and hardware purchases. With an impressive 40% surge in claims, entrepreneurs recognise the need to invest in technology to enhance efficiency and productivity, leading to overall growth. Adopting new software, particularly AI-related tools like Chat GPT has driven this trend in 2024.

How Thriday Automates Tax Deductions

Thriday is a new financial management platform that automates tax deduction claims by allowing you to upload receipts. Once your receipts are scanned, Thriday uses AI to determine how much GST can be claimed and whether the expense is eligible for a tax deduction. If it is, Thriday will record this on your books ready for tax time. Thriday is super simple to use and it only takes a few minutes to get set up. Check out this video to see how it works:

This data highlights the significance of tax deduction data as a pulse check on the small business sector, emphasising that small businesses generate over 50% of Australia's GDP. So if you are a small business owner looking to claim the correct tax deductions for your business, then look at Thriday, Australia's only automated banking, accounting and tax platform.

DISCLAIMER: Team Thrive Pty Ltd ABN 15 637 676 496 (Thriday) is an authorised representative (No.1297601) of Regional Australia Bank ABN 21 087 650 360  AFSL 241167 (Regional Australia Bank).  Regional Australia Bank is the issuer of the transaction account and debit card available through Thriday. Any information provided by Thriday is general in nature and does not take into account your personal situation. You should consider whether Thriday is appropriate for you.

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