Many small businesses are experiencing higher-than-normal tax bills in 2024, partly due to the hangover caused by tax concessions provided during the COVID lockdowns in 2021 and 2022.
During the lockdown, both the Federal and state governments provided several tax concessions to reduce the tax burden on small businesses. However, in many respects, the concessions were actually just tax deferrals, and in 2024, many businesses are paying back some of the taxes they previously saved.
For instance, the instant asset write-off allowed the average tradie to write off their Ute, meaning there is no depreciation to claim for tax in 2024. When the Ute is sold or traded, the proceeds from the sale of the old Ute are fully taxable in 2024. This same tax hike applies to all assets previously written off in the COVID era. This measure alone significantly increases small business taxes.
In addition, businesses that previously received cash flow boosts and job-saver grants that might have been tax-free at the time are now paying more tax as shareholders receiving dividends than in the past.
If you would like assistance navigating your 2024 taxes, get in contact with us.