The tax deductions every small business owner needs to know for 2022
One of the most common reasons small business owners don’t want to sign up with digital marketing agencies is because of the cost. Being ‘cash poor’ is the ‘go-to’ excuse because they fail to see marketing as an investment. “I can’t afford it!” But can you afford not to grow your business? Can you afford not to have a presence on social media? But most importantly did you know that you may be eligible to claim back your digital marketing costs as a tax deduction?
Under general expenses, the ATO allows SMBEs to claim some marketing expenses back on their annual tax return. Website development and maintenance can be classified as a capital expense (depreciating over time) or running cost (general operating expenses).
If you advertise on Facebook or Instagram, invest in a digital marketing strategy or hire an agency to manage content creation, create Google Ads or SEO you should be able to claim back some of the money as a tax deduction. We recommend using a certified accountant to ensure you’re maximising your tax return.
Tax deductions for 2021-2022 you may be eligible to claim this EOFY
- Car expenses
Should you need to attend a strategy meeting or catch up with your digital marketing team or be present at a digital marketing shoot, you can charge for kilometres driven.
- Mobile and data expenses
If you’re expected to use your own phone for creating and uploading reels, community engagement and content creation, you can claim for that providing you’re not reimbursed for the costs. Keep in mind if you deduct more than $50, you’ll be expected to provide records for the work-related usage.
- Digital marketing
Digital marketing is a fairly broad term and encompasses a lot of different marketing services to grow your business’s online presence. Providing your digital marketing strategies are aimed to bring in new prospects or ongoing costs for an ecommerce site, then you are eligible to claim a portion back. Any expenses to promote reaching new customers from services such as Google Ads, SEO, Email Direct Marketing (EDMs, also known as newsletters) and blogs can be tax-deductible. Even professional video content could see you get some cash back.
- Job-specific self-education or training
If you invest in self-education or job-specific training that results in a professional qualification you can use to further the growth of your business, you can claim back training materials, courses or coaching fees.
- Subscriptions or tools directly related to marketing your business
Magazine or app subscriptions used for work purposes, or any tools not provided by your work such as software like Adobe Creative Suite, scheduling software for socials or video editing software are tax-deductible for the work-related portion.
- Website-related costs like domain name registration and annual hosting fees can be claimed. A complete website redevelopment may fall under asset depreciation. This is in addition to a 120% tax rebate for eligible SMBEs providing they meet the strict set of ATO guidelines, recently proposed by the new Federal Government.
Are you eligible for a small business technology investment boost?
If your business has an aggregated annual turnover of less than $50 million you will be eligible to claim back an additional 20% of the costs incurred on business expenses and depreciating assets (website in a depreciating asset) that support the ability to build your online presence. The amount you can claim back is capped at $100,000 for each year your business qualifies.
An annual $100,000 cap will apply to each qualifying income year. Businesses can continue to deduct expenditures over $100,000 under existing law. This technology investment boost applies until June 2023.
Example: If you were to engage Boost Social Digital Marketing to build you a new e-commerce website and you spent $9,000, you should be able to claim a tax deduction of $10,800 (120% rebate).
To claim this back you’ll need proof, such as an invoice or a receipt/
Once you get your tax return back, it’s a wise idea to invest it back into your digital marketing.
Here are some ways you can invest your tax return into digital marketing for the 2022-23 income year.
- Website Development. Get a revamp or a brand new website build, our team of experts can combine your requirements with our creative ideas.
- Social Media Strategy. A comprehensive analysis of what you’ve been doing and how you can improve it with direction on what to do next from our creative director and account managers.
- Email Campaigns. Strategies using lead generation and email chains that grow your prospective audience and increase your ROI.
- Search Engine Optimisation. Our SEO team can help optimise your website so that you have more chance of being found in search engine results.
Tax time is just around the corner, so it’s time to start thinking about your digital marketing strategy for the financial year ahead. Be sure to speak to a certified account so that you can maximise your tax return and use the funds to invest in your digital marketing for 2022-23.
*The information provided in this article is general information and should not replace the advice of a certified professional.