As the financial year draws to a close, it's essential for small business owners to start planning their finances for the upcoming year. The 2022/2023 financial year has been a challenging one, with various factors impacting businesses' financial stability, such as inflation, interest rates, fuel costs, and staff expenses. Moreover, the pandemic has significantly affected businesses, causing significant shifts in business operations and personal goals. In light of these challenges, small business owners need to plan proactively for their future.

TaxDigital is dedicated to helping small businesses survive and thrive in the ever-changing environment. We offer comprehensive planning packages designed to achieve financial stability, tax minimization, and success for small businesses. These planning packages cater to a wide range of business needs, including gaining clarity on business performance, tracking KPIs, minimizing taxes, capitalizing on opportunities, addressing challenges, managing cash flow, and protecting business operations.

To ensure small businesses don't pay excessive taxes on their profits, a tax plan is essential. Appropriate tax-saving strategies must be put in place before 30 June 2023. Some of these strategies cannot be implemented after that date. If a small business operates via a trust, TaxDigital will prepare the required ATO trust distribution minute. Additionally, they will also look at some 2023/2024 planning with respect to the small business's goals, pricing, and profit plan.

Small business owners who have been doing well this year and want to ensure they don't give the ATO any more of their hard-earned dollars than they have to should take advantage of TaxDigital's tax planning service.

Planning is crucial for small business success, and every business should have a Business Plan. Business Planning sessions enable business owners to review past performance, clarify future direction, set realistic and measurable goals, and define strategies for achievement. At the end of the session, business owners will have a one-page Business Plan that will act as a guide map to ensure they are on course for success.

The Business Planning session is ideal for small business owners who want to increase their growth, profitability, and cash flow, and it supports them in unlocking their business potential, provides a clear outline of what they need to do to unlock this potential, and a document against which to measure their progress.

Understanding the financial drivers in a business is critical for making informed decisions that impact revenue and cash flow. Financial Awareness Coaching is a great starting point for small business owners to gain confidence and essential business knowledge to lead and manage their businesses successfully. A Financial Health Check enables business owners to fully understand and interpret their financial reports, thereby gaining a solid foundation to manage their cash flow and grow their business.

A Financial Health Check includes an analysis of personal living expenses, ensuring accuracy in the future, a more precise format to aid decision making, informed decisions with a better understanding of the financial implications, managing and monitoring cash flow effectively, managing debtors and creditors, and understanding other information that may need to be captured monthly. For small business owners who want to know how much money they need to have the lifestyle they desire, the profit they're making, and the variables that can improve this, a Financial Health Check is an essential investment.

The end of the financial year is the perfect time for small businesses to plan for their financial future. TaxDigital's comprehensive planning packages can help small businesses achieve their financial goals, minimize their tax liabilities, and thrive in a complex and ever-changing environment. Investing in a Financial Health Check, Business Planning, and Tax Plan will set small businesses on the right path to success. Contact us today at 0407 438 849 or contact@taxdigital.com.au to schedule your planning session.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek personalised tax advice from us at TaxDigital. Information is current at the date of issue and may change.

Get the latest industry and tax information from our small business blog

Small Business Tax Planning in Australia for 2023

Maximise your profits, Minimise your tax. It's essential for small business owners to start planning for the end of the 2023 year now. Our planning packages provide financial awareness and stability in the future.

Maximize Your Financial Stability and Minimize Your Tax Liability

As an Australian small business owner, staying on top of your tax obligations is crucial to avoid any costly mistakes. Here are some common tax mistakes made by small businesses in Australia and how to avoid them.

Failing to keep accurate records: One of the most common tax mistakes small business owners make is failing to keep accurate records. Keeping detailed records of all income and expenses is essential for lodging an accurate tax return. Make sure to keep track of receipts, invoices, and bank statements throughout the year.


Mixing personal and business expenses: It's important to keep personal and business expenses separate. Failing to do so can make it difficult to claim deductions and could result in penalties from the Australian Taxation Office (ATO).


Not registering for GST: Small businesses with an annual turnover of $75,000 or more must register for GST. Failing to register can result in fines and penalties from the ATO.


Failing to lodge on time: Lodging your tax return late can result in penalties and interest charges from the ATO. Make sure to keep track of lodgement due dates and seek assistance if needed.


Failing to claim all deductions: Australian tax law allows for a range of deductions that small businesses can claim. Failing to claim all eligible deductions can result in paying more tax than necessary.


Incorrectly classifying workers: Small businesses must ensure that workers are classified correctly as either employees or contractors. Failing to do so can result in penalties and fines from the ATO.


Failing to pay superannuation: Small businesses must pay superannuation contributions for eligible workers. Failing to do so can result in penalties and interest charges from the ATO.

By avoiding these common tax mistakes, small businesses in Australia can ensure they remain compliant with tax laws and avoid costly penalties and fines. Seeking advice from a qualified accountant or tax professional can also be helpful in navigating the complexities of tax law.

If you're a small business owner in Australia, navigating tax compliance can be challenging. At TaxDigital, we understand the complexities of tax law and offer an all-inclusive monthly pricing solution to help small businesses stay compliant. Our services include wages processing, bookkeeping, ASIC compliance, yearly tax preparation, etc., ensuring that your business stays on top of its tax obligations while also managing cash flow. With TaxDigital, you can rest easy knowing that your business is in good hands. Contact us today at 0407 438 849 or contact@taxdigital.com.au to learn more about our services and how we can help your business thrive.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek personalised tax advice from us at TaxDigital. Information is current at the date of issue and may change.

Avoid These 7 Common Tax Mistakes Made by Small Businesses in Australia

Expert Tips for Staying Compliant with Tax Laws and Maximizing Deductions

The ATO has changed how working-from-home deductions can be claimed in your 2023 tax returns. This affects both business owners and employees that complete duties from their homes. Given how tightly stipulated the attached factsheet is, we expect higher scrutiny from the ATO for any working-from-home deductions claimed.

Below is a summary of the new methods. The ATO factsheet provides greater detail and links to further information. The biggest thing to note is that if you wish to claim the revised fixed rate method, you need to be able to prove every hour you work from home after 1 March 2023, and not just a 4-week period. The fixed rate method also now includes phone and internet usage, along with computer consumables and stationery, which used to be separate deductions under the old methods. With these changes, we expect clients’ overall deductions and refunds/amounts payable to be negatively impacted.

Claiming the actual method, whilst you own your primary place of residence, will impact capital gains tax when you go to sell/depart the property. 

What does it include?  Phone, Internet, Electricity, Computer consumables (ink), stationery.

What does it not include? Depreciation, repairs & maintenance on computers and office furniture.

Do I have to have a dedicated home office space? No

Can I claim cleaning? Only if you have a dedicated office space.

What is the rate? Percentage of total costs

What does it include?  Phone, Internet, Electricity, Computer consumables (ink), stationery, depreciation and repairs and maintenance on computers and office furniture.

TaxDigital specializes in helping you claim work from home tax deductions. Our team of experts can review and assist you in calculating the various methods to ensure you get the most out of your deductions while staying compliant. Contact us at 0407 438 849 or contact@taxdigital.com.au to receive personalized advice and assistance on claiming work from home deductions.

2023 Tax Return Working From Home Deductions Changes

Learn about the changes to claiming work-from-home deductions for the 2023 tax returns by the ATO, and the impact it has on both employees and business owners. The revised fixed rate method includes phone and internet usage and requires proof of every hour worked from home after March 1, 2023.

Changes to Working from Home Tax Deductions in FY 2023: What You Need to Know

A Fringe Benefit is something provided to an employee in addition to their wage. Essentially it is a non-cash benefit as a result of their employment. Some examples of this are meal or recreational expenses, personal usage of a business car, car parking expenses, low-interest loans, gym memberships, etc. 

A business could pay an employee for their work in Fringe Benefits and avoid withholding and paying tax by not paying a cash wage. But, of course, the government doesn't like this, enter stage left Fringe Benefits Tax. Because the government sees a Fringe Benefit as a type of employee remuneration, they like to collect tax on that amount. Hence Fringe Benefits Tax. It is essential to understand that Fringe Benefits Tax is a separate tax from regular income tax and salary and wage taxes. In fact, to make things more confusing, the FBT year runs from 1 April to 31 March. 

Just because you provide a Fringe Benefit to an employee doesn't mean that Fringe Benefits Tax will apply. There are many exemptions and reductions available for various industries and types of benefits. 

A common exemption is where the Fringe Benefit provided is something that is used primarily for work purposes. Examples include a laptop, mobile phone, etc. 

Another common exemption is that car parking Fringe Benefits are exempt for small businesses with a turnover of less than $50 million. 

We suggest that if you provide any Fringe Benefits to your employees that you consider lodging a return, even if the taxable value is nill. The reason for this is that from the date of lodgement of the FBT return, the ATO has two years to review it; if you don't lodge a return, they have an opened ended amount of time to review your FBT obligations. 

You can register for FBT online via the Australian Government Business Registration Service. The due date for filing your FBT returns via a tax agent like TaxDigital is 35th June.

Note that when the taxable value of FBT per employee reaches $2,000, you will need to report these amounts on their yearly payment summary via your payroll software. 

Unfortunately, FBT is highly complicated, and many businesses try their very best to avoid it - we would recommend avoiding it where possible. See, the problem is that there are regular changes to Fringe benefits and how they are to be reported. So it can be challenging to stay up to date. At TaxDigital, we assist small businesses in reviewing their employee agreements, remuneration packages, and expense accounts to identify any possible FBT liabilities. If you would like some personalised advice or assistance, feel free to reach out to us on 0407 438 849 or contact@taxdigital.com.au.

Get the latest industry and tax information from our small business blog.

What is Fringe Benefits Tax (FBT)?

A Fringe Benefit is something provided to an employee in addition to their wage. Remunerating employees in non-cash ways could lead to underpaid taxes. But, of course, the government doesn't like this, enter stage left Fringe Benefits Tax!

A Fringe Benefit is something provided to an employee in addition to their wage. Fringe Benefits are taxed seperatly to income tax.

Choosing a business structure can be a daunting task, and trust me, it is something that you want to get right in the first place. Setting up your business in the correct structure can set you up for long term success. Ultimately you can operate your business out of a myriad of structures. However, this article will outline the differences between a trust and a company. 

A Trust is best described as a relationship between the trustee and the beneficiaries, which is outlined in a trust deed. 

Discretionary Trust - The trustee can choose what income or capital can be distributed to which beneficiary

Unit trust - The trustee has no choice over the distribution of the income or capital of the trust. Instead, beneficiaries can purchase "units", similar to how a shareholder can buy shares in a company. 

A company is a separate legal entity controlled by the shareholders and operated by managers/directors. 

Below is a quick outline of some basic principles to help you choose an entity structure. Note that these principles are general rules of thumb and do not apply to all situations. 

Company - Often a choice for operating businesses where your business has increased risk/liability to the owners, and there are no CGT assets being held

Discretionary Trust - Chosen when the entity's primary purpose is to hold CGT assets with low risks, such as commercial properties, shares in companies, etc. 

Unit Trust - Chosen when the entity's primary purpose is the same as a discretionary trust, but the parties require strict distribution and income splitting. (I.e. various parties each contribute a set amount of money to the purchase of the assets)

Do you have a combination of business and investment? Well, it's a good thing you can combine entities and choose a structure that works for you. 

At TaxDigital, we assist small businesses set up their businesses correctly to ensure the best short term and long term outcomes. We do that by having a  structuring session with you. That session would include analysing your business needs, your overall goals and a review of your current risks. We can then handle the set-up of your entities within a few short days. If you would like some personalised advice or assistance, feel free to reach out to us on 0407 438 849 or contact@taxdigital.com.au.

Small Business Structures: Trust vs Company

Small business structures can be daunting. Let's take a closer look at Trusts vs Companies. Trust me when I say it is something your want to get right in the first place.

While the end of the financial year might seem like a mile away, it is never too early to start planning for your tax. It is a good small business practice to start thinking about your tax liability as early as possible. Ultimately the goal is to maximise your benefits while ensuring you have enough cash flow to pay any taxes when they come due. 

There are two golden rules when it comes to tax planning: 

Now that you have the two golden rules, let's take a look at some common tax planning strategies for small businesses. When it comes to tax planning, even implementing simple strategies can reap huge benefits at tax time.

For businesses that make use of a discretionary trust to distribute income amongst beneficiaries, a trust distribution minute must be drafted before 30 June. ATO legislation dictates that trust income should be calculated prior to 30 June, and should the ATO request this documentation, a signed trust distribution minute will satisfy their requirements. 

At TaxDigital, we prepare these trust minutes on behalf of our clients to ensure they are compliant with the ATO and avoid large penalties. If you want to prepare your own trust distribution minute, you can find a template on our resources page.

The best tax planning strategy starts by talking to us. We will take the time to understand your current business, your overall goals and even what is holding you back, before we dive into tax savings. A typical tax planning strategy meeting with us will look like this:

At TaxDigital, we assist small businesses with tax planning strategy sessions up to 30 June 2021, ensuring they have the necessary information and plan in place to maximise their tax savings. We recommend booking a session with us early as possible to ensure you have enough time to enact your tax saving plan and manage your cash flow effectively. 

If you would like some personalised advice or assistance, feel free to reach out to us on 0407 438 849 or contact@taxdigital.com.au.

Small Business Tax Planning 2022

When it comes to tax planning for small businesses, even implementing simple strategies can reap huge benefits for the 2022 tax year.

When it comes to tax planning, even implementing simple strategies can reap huge benefits at tax time.

Whether you're hiring your first employee to help with your small business or you're a well-seasoned employer, it is essential to know your obligations. Many issues ranging from tax and minimum pay to employee codes of conduct that an employer needs to be familiar with. Let's take a closer look at some of the issues an employer needs to consider:

As an employer, you are responsible for withholding tax from your employee's wage and paying it to the Australian Taxation Office (ATO). In recent years, the government has developed the Single Touch Payroll (STP) system, which allows for timely reporting of employee wages and the tax withheld. 

Register for PAYG Withholding (PAYGW) with the ATO.

Obtain relevant employee information (withholding thresholds, super details, etc.).

Report wages and withholding amounts via STP and Business Activity Statements (BASs).

Pay the PAYG withheld to the ATO on time.

Lodge an annual finalisation report via STP before 14 July each year.

You can find more information directly from the ATO on PAYG Withholding.

As an employer, you must make Superannuation Guarantee (SG) contributions for your eligible employees. Currently, the minimum employer contribution amount is 10% of ordinary times earnings. Note that superannuation is not payable on overtime but is payable on bonuses and commissions. 

Between the ages of 18 and 69, and are paid more than $450 (before tax) per month in wages. 

Employees under 18 must work at least 30 hours per week to be eligible for SG contributions.

Employed full-time, part-time, casual or on contract. (Contractors are eligible for superannuation if they are paid wholly or principally for their labour skills.)

Employers must make contributions by the 28th day following the end of the quarter.  If you don't pay your SG contributions by the due date, no tax deduction will be allowed, penalties do apply, and a director can be personally liable. Note that these penalties will accrue until you lodge SG Charge statements with the ATO. Therefore, TaxDigital recommends dealing with any unpaid SG contributions as soon as possible to avoid any build-up of penalties. 


In cases where an employee does not provide you with their choice of a superannuation fund, you can obtain their current information via the ATO's business portal. There are no excuses for not paying an employees SG contributions by the due date. 

The Fair Work Commission dictates the minimum amount an employee can be paid. These amounts are reviewed each year on 1 July. When hiring a new employee, it is essential to decide on the person's employment status (full-time, part-time or casual).  You can find the minimum pay rates, penalties and allowances that apply to an employee on the Fair Work website. 

An employer must issue an employee a payslip within one working day of payday. A payslip is required to contain:

the employer's Australian Business Number (ABN), if any

the pay period beginning and end dates (e.g. 23/8/21 to 29/8/21)

any loadings, allowances, bonuses, commissions, penalty rates, or other separately identifiable entitlement paid.

We recommend using accounting software with inbuilt payroll functionality to deal with payslips and STP reporting obligations. Our pick is Xero!

Employment contracts are designed to protect not only your employee but you as a business owner. A good employment contract will cover off on conditions you must provide to your employee and also set outs your expectations for your employee. 

The Australian Government has developed an employment contract tool that will prepare a complying employment contract.

An employee is entitled to take leave for many reasons, including going on holiday, because they are sick or a family member is sick, they are on maternity, are in a family and domestic violence situation, to name a few. 

All employees except casual employees are entitled to paid leave each year. Typically an employee can take four weeks annual leave for every 12 months of annual service. In the case of part-time employees, the amount is pro-rated for a full-time equivalent role. Note that you cannot unreasonably refuse an employee's request for leave as an employer. In addition, full-time and part-time employees can take ten days of personal leave each year.
It is also essential to recognise that an employee may be eligible for flexible working arrangements. 

We recommend you familiarise yourself with employee leave entitlements details on the Fair Work website.

Each new employee is to be provided with the Fair Work Information Statement before they start working for you. The statement includes information regarding an employee's minimum employment conditions. Note that there are two different information statements (one for casual employees and one for all other employees). 

As an employer, you are responsible for employee safety while at work and are required to have various workplace health and safety (WHS) measures in place. You must provide your employee with your specific WHS information and emergency procedures. 

This is by no means an exhaustive list of an employer's obligations. There are several additional items to consider:

Various HR and employment policies and documents

Record-keeping requirements, up to 7 years

At TaxDigital, we assist businesses in meeting their payroll obligations and ensuring they are compliant. We do this by offering our comprehensive bookkeeping services, including employee management. TaxDigital can also act as your intermediary when dealing with the ATO and Single Touch Payroll obligations, so you don't have to. 

If you would like some personalised advice or assistance, feel free to reach out to us on 0407 438 849 or contact@taxdigital.com.au.

Know your obligations as an employer

Whether you're hiring your first employee to help with your small business or you're used to hiring employees, it is essential to know your obligations. TaxDigital assists businesses by offering comprehensive bookkeeping services, including employee management.

Whether you're hiring your first employee to help with your small business or you're a well-seasoned employer, it is essential to know your obligations.

As a small business, knowing when to register for GST is crucial to ensure that you remain compliant. By being ahead of the curve and registering early, you may boost your cash flow in those early stages of business when things are a bit tight. Firstly, let's take a look at what GST is and what it means to be registered for GST. 


Goods and Services Tax (GST) is a form of consumer tax that is added to most prices in Australia. The current rate of GST in Australia is 10%. As a business, if you are registered for GST, you must charge your customers GST and pay it to the Australian Tax Office (ATO). 

For example, if you sell a laptop for $1,000, you would need to charge an additional 10% of GST; the total sale price will be $1,100. The additional $100 you collect from your customer will need to be paid to the ATO. 

The great bit about being a business is that you can offset the amount you owe the ATO by the amount of GST your suppliers have charged you. 

For example, if the same laptop above costs you $880 ($800 + 10% GST), you can offset this $80 of GST against the $100 you would owe to the ATO. Now you only have to pay $20 ($100 less $80) to the ATO; you can pocket the rest. 

Not every business needs to be registered for GST. However, businesses that meet the following criteria must be registered for GST:

It is important to note that a business that does not meet the above criteria can still register for GST. However, if they register for GST, they must stay registered for a minimum of 12 months.

There are two main reasons a small business would voluntarily register for GST:

Right or wrong, often, other businesses and financial institutions will automatically assume that your sales are at least $75,000. This gives the impression that you are well established and have a proven track record.

In the early stages of operating a small business, you may find your expenses are greater than your income. By being registered for GST, you will boost your cash flow by getting a GST refund.

What does it mean to be registered for GST?

If you're a GST registered business, you must add GST to your prices and also need to issue GST invoices to your customers. In addition, you will need to lodge a Business Activity Statement (BAS) with the ATO. A BAS declares how much GST you have collected from your customers and paid to your suppliers. Don't stress about this, as modern accounting systems like Xero, can calculate these amounts for you. 

At TaxDigital, we assist small businesses with their obligations, ensuring they have the tools to achieve success. We do this by offering our comprehensive bookkeeping and accounting services, which includes strategic advice regarding GST and other statutory registrations. TaxDigital can also act as your intermediary when dealing with the ATO for your BAS/GST obligations, so you don't have to.

When To Register For GST?

As a small business knowing when to register for GST is crucial to ensure that you remain compliant. By being ahead of the curve and registering early, you may boost your cash flow in those early stages of business when things are a bit tight.

Today, there are so many tools we can use to make life simple. 

This is true even when it comes to running a small business. Sure, there’s still plenty of competition in the market, but unlike at any time in the past, simplifying your day-to-day management is much easier.

Bookkeeping, specifically, is one of the most important things you can do to make sure your business is running smoothly. 

What we see happening, though, is that accounting is often relegated to a secondary, less important concern compared to your core operations. The truth is that it’s anything but. 

When done right, small business bookkeeping can tell you many things. It’s easier to analyse your financial health, create reports, comply with taxation regulations, and it helps you plan how to run your business. 

If you’re not sure how to go about this or what you can do to make this process more efficient, take a quick look at some of our go-to bookkeeping tips.

Keep personal and business finances separate

One of the biggest mistakes we see when it comes to small business bookkeeping is mixing your personal expenses with your business finances. While this may seem tempting, especially if you’re just starting out, it can become a headache down the line. 

It’s not only harder to get a correct picture of your income and expenses but it’s also riskier. You restrict your personal finances and compromise your business revenue in the long run.

As a small business, you may be juggling multiple priorities. In the process of getting your operations off the ground, you may neglect to keep detailed records of your expenses or even the money coming in.

Down the line, this can become a bigger problem, especially when you’re creating reports or calculating expenses you can be reimbursed for. 

The good news is that there are ways to simplify this process. 

For instance, you can scan and digitise your receipts so there’s always a detailed record of money coming in and going out. You can also get a corporate debit or credit card so that all, or at least a chunk, of your expenses are recorded in one location.

Make small business bookkeeping easy with automation

Remember how we mentioned that there are so many things out there that make life easy?

When it comes to bookkeeping, and even accounting in general, software can cut down on the time and effort you spend on maintaining your records, dramatically. Platforms like Xero and QuickBooks, for example, can streamline how you record your transactions and analyse your income and expenses. 

By doing just a little bit of research and finding a tool that works for you, small business bookkeeping can become one of the things you’re best at!

Even if you know just how important bookkeeping is to the work you do, you may still neglect to maintain your records when you’re pressed for time.

The result of this are figures that don’t tally up, overdue invoices, and cancelled payments. It’s also much more complex, frustrating and time-consuming to sit down and deal with bookkeeping requirements you’ve been putting off. 

While certain companies do their bookkeeping on a quarterly basis, you can look into a timeline that works for you. 

Don’t just record—reconcile every transaction

Reconciling your income and expenditure is all about cross-referencing your records against what’s sitting in your bank account. If your numbers don’t tally up, you need to do a little investigating into why that may not be the case.

Again, set a schedule for doing this. Depending on the volume of transactions your business handles, set a time to pour over your records on a weekly, monthly or quarterly basis. 

This process is also very important when it comes to submitting your tax returns. If this is new to you, start by finding out more about small business tax planning.

Financial success comes from effective small business bookkeeping—are you up for it?

Here at TaxDigital, we believe that business success is not just about putting out a great product or service. Sure, it has a lot to do with that but it’s not the only thing.

Your success also has very much to do with being backed by the right processes—including your bookkeeping activity. Invest in the right tools and get the support you need to make sure that this is the cornerstone of your financial success.

Small business owners can manage their finances better by knowing a few bookkeeping tips. Here are some tips on business bookkeeping to get you started.

Small Business Bookkeeping Tips For Beginners

Small business bookkeeping tips for beginners

The first thing you need to understand is that the universal concept of double-entry bookkeeping which uses debits and credits is originally a made-up system. The whole idea is to create a balance between two sides of a transaction. (i.e. when you purchase an item the money has come from the bank: the item purchased should balance with the bank transaction). Ultimately each transaction must be done in exchange for something of equal value. 
 
You may Remember the old t-ledgers as school, which are used to visualise the balance of a transaction. (Debits are always on the left, credits are still on the right). Consider the following transaction, $220 paid to ABC Advertising for website expenses. 

The Advertising Expense is increased by $200

The GST amount refundable from the ATO is debited to the GST account. 

The question that often comes next is; How do you know if it should be a Debit or Credit?


There is an acronym that has stuck with me since grade 8 accounting: DEALOR. 
DEALOR represents each type of transactional account and identifies the increasing nature of an account type. 

To increase the bank account, a debit entry would exist, to decrease the bank account, a credit entry would exist. 

The opposite applies to a bank loan, as it is Credit by nature, then reducing the loan is a debit transaction. 

This makes sense – if you take money out of the bank and pay your loan, your bank is decreased (credit transaction) and your Loan decreases (debit transaction). I.e. Credit = Debit the transaction is balanced.

Let's take a closer look at the transaction account types using the acronym. (DEALOR)

These accounts represent the money paid out of yearly profits or retained profits to shareholders, beneficiaries of trusts and partners in partnerships. 
 You may see some of the following names in your financial statements:

These are costs related to the day to day operation of a business.

Some examples of "Expense" accounts are::

Assets are items that provide a future economic benefit to a company. 

Liabilities are the obligations that and entity is required to pay, such as supplier invoices.

Some examples of "Liability" accounts are:

These accounts represent the net asset of the entity (i.e. Assets minus Liabilities = Owners Equity)

Examples of "Owners' Equity" accounts are:

These accounts represent the income earned from the sale of goods, services and/or income from various investments.

Modern accounting systems, like Xero really, actually make it possible to do your bookkeeping without fully understanding your debits and credits. When things go wrong, and yes, even things can go wrong in an online accounting system, it is handy to be able to go back to the debits and credits of a transaction. 
TaxDigital offers training solutions for modern accounting systems, and we can also help you understand how those systems deal with Debits & Credits. We look forward to nerding out with you! 

Debits & Credits Explained

What you need to know about Debits and Credits in business bookkeeping and what do they have to do with accounting. Read our blog post to learn more info.

Debits And Credits In Business Bookkeeping

So you hear your accountant or bookkeeper speaking about Debits and Credits, but what are they?

Everybody loves a good tax deduction! And here at TaxDigital, we are no different. With the increase in people working from home this year and those that already do, make sure you're aware of the items you can legally claim on your tax return. 

First of all, there are three main conditions a deduction for working from home must meet the following conditions:

You must have a record of the expense (i.e. an invoice); and

The expense is directly related to earning your income.

You can't claim a deduction for something provided by an employer or something that another person paid for. 

If your employer has paid you an allowance to cover the cost of your expenses then you:

Must include the allowance income in your return; and 

Claim a deduction for the actual cost of the expense you incurred. 

Let's take a closer look at some tax deductions you may be able to claim.

If you work from home chances are you use your own phone and internet for work purposes, if you do, then you can claim a deduction for the work-related percentage of the expense. 

For a deduction totalling more than $50, you need to keep records for a four-week representative period during the tax year. Records can include diary entries, including electronic records, and bills from which you can identify the work-related costs. 

There are many different types of phone plans and bundled packages which make record keeping a pain. The ATO has laid out some handy information to help in those situations: ATO – Claiming mobile phone, internet and home phone expenses. 

You can claim electricity costs associated with the area you are working from such as heating/cooling, lighting, computer and consumable power supply, etc.

To calculate you're your deduction, you will be required to keep receipts showing the amount you spent on electricity (i.e. utility bill). There are three options when working out the deduction amount of your electricity costs:

the total annual hours used for work-related purposes.

You can claim the costs associated with cleaning a dedicated working area. Expenses can include materials and supplies or even a cleaner. Note that you can only claim the costs associated with your work area and not your whole home. 

To calculate you're your deduction, you will be required to:      

Keep receipts showing the amount you spent on the assets; and

Apportion the expenses for private costs. 
I.e. You will need to apportion your costs based on the floor area of your dedicated workspace compared to the total area of your home. Also, you need to take into consideration any personal use of your home office and the use of the home office by other family members.

Where you purchase consumables to be able to complete your work such as printer paper & ink, stationery, etc. you can claim a deduction for those costs.

To calculate you're your deduction, you will be required to keep receipts showing the amount you spent on the assets.

If you have purchases equipment including computers, printers, phones, furniture and furnishings to perform your work duties, you can:

Working From home Tax Deductions

Tax deductions are a universal benefit every business owner or taxpayer loves. Here is how you can legally claim tax deductions when you work from home.

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