5 Tax-Saving Strategies for Small and Medium-Sized Businesses
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5 Tax-Saving Strategies for Small and Medium-Sized Businesses
Small and medium-sized Australian businesses cut their tax bill through five main levers: maximising eligible deductions, using small business tax concessions such as the instant asset write-off, planning capital gains tax around the 12-month discount, choosing the right business structure, and keeping accurate records year-round. Applied together, these strategies can meaningfully lower what a business pays each year, though exactly what to claim and how depends on your specific circumstances.
Although they say taxes are one of the absolute certainties of life, they shouldn’t weigh your business down. At Finance & Tax Consultants, our specialised team of expert accountants, tax agents and advisors is here to help you navigate the process of managing your taxes. In this article, we share five effective tax-saving strategies tailored specifically for your business.
1. Maximise Your Deductions
Understanding the tax deductions available to your business is key and make sure you are claiming all relevant deductions, such as:
– Business Expenses: Operating costs like rent, utilities, office supplies, and advertising can be claimed as deductions.
– Capital Expenses: These include equipment, machinery, and other assets needed for your business operations.
– Depreciation: The decline in the value of your assets, such as vehicles and technology equipment, can be claimed as deductions over the years.
It’s best to consult with our expert tax advisors to ensure you take full advantage of the deductions available to your business and say goodbye to unnecessary expenses!
2. Utilise Small Business Tax Concessions
The Australian Government offers various tax concessions to eligible small businesses. Some of these include:
– The Instant Asset Write-Off: This allows eligible businesses to claim an immediate deduction for new or secondhand assets costing less than a set threshold, currently $20,000 for the 2025-26 income year for businesses with an aggregated turnover under $10 million. This threshold is set year by year, so confirm the current figure with the ATO before making a purchase.
– Simplified Depreciation: This involves pooling assets into a general small business pool, which can simplify the claiming of depreciation deductions.
– The Small Business Income Tax Offset: This can reduce the tax payable by an eligible small business owner by up to $1,000 per year, based on 16% of the tax on net small business income, for sole traders and individuals with a share of income from a partnership or trust with an aggregated turnover under $5 million.
Don’t worry too much about this. Our experienced tax consultants can help you identify and utilise any tax concessions your business may qualify for.
3. Plan Your Capital Gains Tax (CGT)
Capital Gains Tax (CGT) is the tax you pay on any capital gain from selling an asset, such as property or shares. Here are some helpful ways to get you started:
– Wait at least 12 months before selling an asset to potentially benefit from the 50% CGT discount, which is available to individuals, trusts and complying super funds. Companies are not eligible for this discount.
– Claim eligible CGT concessions for small businesses, such as the small business 15-year exemption or the small business active asset reduction.
Consulting with our tax experts can help you take advantage of CGT planning strategies that best suit your business.
4. Utilise Effective Tax Structures
Choosing the right business structure (sole trader, partnership, trust or company) can significantly impact your tax obligations. Each structure has different tax implications, and choosing the one that most appropriately suits your business needs can help you save up on money. It doesn’t have to be too stress-inducing. Our experienced tax advisors at Finance & Tax Consultants (FTC) can guide you through this decision-making process, helping you choose the optimal structure to minimise your tax liabilities.
5. Keep Accurate and Timely Records
Although mistakes happen, they can be devastating for businesses, especially tax-wise. Maintaining thorough, accurate and up-to-date financial records is crucial for managing your business’s tax obligations. Proper record-keeping helps you track your income, expenses, and other relevant financial information, making it easier to complete your tax returns accurately and claim all eligible deductions. A bookkeeper can help you streamline this process so your records stay audit-ready year-round.
Partner with Finance & Tax Consultants (FTC) for Expert Support
For small and medium-sized businesses seeking to minimise tax liabilities and maximise profits, it’s crucial to take the right steps! The specialised Finance & Tax Consultants (FTC) team is dedicated to supporting your business through this complex process, offering expert advice and tailored solutions.
Disclaimer: This article contains general information only and does not constitute financial, legal or tax advice. It has been prepared without regard to your objectives, financial situation or needs. Tax and superannuation laws change frequently, and the information in this article may not reflect the current law or may become inaccurate over time. Before acting on anything in this article, you should consider its appropriateness to your circumstances and seek advice from a registered tax agent or qualified adviser.
Frequently asked questions
How much can the small business income tax offset save me?
Up to $1,000 a year. The offset equals 16% of the tax payable on your net small business income, capped at $1,000 per person, and it applies to sole traders and individuals with a share of income from a partnership or trust with an aggregated turnover under $5 million.
What can I claim as a tax deduction for my business?
The main categories are operating expenses such as rent, utilities and advertising, capital expenses for equipment and machinery, and depreciation on assets like vehicles and technology equipment. A tax adviser can confirm which apply to your business each year.
Is the $20,000 instant asset write-off still available?
It applied for the 2025-26 income year to businesses with an aggregated turnover under $10 million. The government has proposed making the $20,000 threshold permanent from 1 July 2026, but that measure had not passed Parliament, so confirm the amount that applies to your current income year with the ATO before committing to a purchase.
Do companies get the 50% CGT discount?
No. The 50% CGT discount is available to individuals, trusts and complying superannuation funds that have held the asset for at least 12 months, but companies are not eligible for it.
Does my business structure affect how much tax I pay?
Yes. Sole trader, partnership, trust and company structures each carry different tax rates, thresholds and obligations, so the right structure for your business can materially change your tax position. It's worth reviewing this with an adviser rather than assuming your original setup is still the best fit.
Why does record-keeping matter for tax planning?
Accurate, up-to-date records let you substantiate every deduction you claim and complete your tax return correctly the first time. Poor records are one of the most common reasons businesses miss out on deductions they're otherwise entitled to.
About the author
Andrew Romano
Director, Taxation & Strategy at Finance & Tax Consultants (FTC)
Chartered Accountant, Registered Tax Agent and SMSF specialist, and an active investor himself. Andrew works with investors, trustees and business owners across property, entities and super.
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