New research has revealed that 78% of Australia’s small business owners (SBOs) don’t fully understand the $20K tax break, with 67% of them not making the most of the opportunity in the lead up to June 30.
The national survey, conducted by Officeworks and H&R Block, found that there is still confusion amongst SBO’s, with a quarter admitting they are unsure what is covered in the $20K tax break and only one in ten correctly identifying items that can be claimed as an instant write-off.
Despite this, two thirds of SBO’s wanted the Australian Government to continue offering the $20K tax break – a request that has been met with the recent budget announcement from the Government. However, it’s clear that more needs to be done to help business owners understand the benefits.
Mark Chapman, Director of Tax Communication at H&R Block, said: “A lot of small business owners relegate tax to the ‘too hard’ basket and take little interest in tax matters. However, being more proactive and spending time on understanding the opportunities and overcoming their pain points, will benefit their business in the long run.”
Jim Berndelis, Officeworks’ National Merchandise Manager, said: “It’s a shame to see there’s still a knowledge gap around the $20K tax break and subsequent tax-deductible products. We’re committed to helping Australia’s small business community realise how they can maximise their tax opportunity this financial year, which includes shopping at Officeworks, where everything could be tax deductible.”
What do these findings mean?
The study found seven in 10 Australian SBO’s rely on an accountant or bookkeeper to compile their business tax return, with 22% believing these third parties could look harder for tax planning opportunities which will help their business.
Chapman said: “When identifying tax breaks for our clients, it comes down to the businesses’ preparation and organisation throughout the year. The research found that fifty per cent of small business owners feel they weren’t prepared, so there’s a huge opportunity for improvement.”
Not surprisingly, the survey found that the most stressful aspects around end of financial year are paperwork (39%), cash-flow (37%), time management (30%) and employee administration (24%).
Further research findings:
17% of SBO’s do not know what the corporate tax rate is.
46% of SBO’s believe their accountant is proactive in searching for additional tax breaks for their business
50% of SBO’s consider themselves well equipped for their tax return, with 36% saying they’re moderately prepared and 15% saying they’re not equipped at all
Of those who consider themselves extremely well equipped for their tax return, 61% are business owners aged over 60+
Only 5% of SBO’s track their receipts throughout the year via a digital platform, with 3 out of 10 SBO’s relying solely on physical receipts
Surprisingly, 5% of SBO’s believe the current SME tax rate is too low and should be higher
Australian SBO’s that are based in Victoria feel the strongest towards needing to understand the $20K tax break better (42% of respondents)
Only one tenth of Australian SBO’s are able to identify seven or more items covered by the $20K tax break.
25% of those who are familiar with it cannot identify a single taxable item.
Officeworks’ has curated an online destination which provides tips and advice for SBO’s on how to maximise their tax opportunity, plus highlights a range of products to purchase ahead of June 30 that could be tax deductible.