New research from Xero has found that 66 per cent of small business leaders in Australia don't understand all parts of a business tax return.
FREMONT, CA: Lonergan Research conducted the study, which polled over 500 small business owners and managers, as well as over 1000 consumers. It discovered that nearly a third of business owners (30 per cent) taught themselves how to file a company tax return online, while a further 12 per cent never learned how to file a tax return. The most perplexing aspects of filing taxes for business owners revolve around tax offsets, asset depreciation, and profit and loss statements. However, the majority of small businesses (76 per cent) seek the assistance of an accountant or tax advisor at the end of the fiscal year. This highlights the critical role they play in keeping businesses tax compliant. The research reveals a concerning but unsurprising education gap for people who run a business during tax season. Most Australians who start their businesses do so out of a sense of passion or opportunity, rather than a love of finance and business administration. This is the reason for small business owners and sole proprietors to use the right people, such as accountants and bookkeepers, as well as cloud tools, to stay compliant and on track. These advisors can help small business owners navigate the EOFY process and set them up for success. They're the key to feeling confident heading into EOFY.
Other key findings for small businesses from the study: 42 per cent do not fully understand tax offsets, and a third (33 per cent) do not understand asset depreciation. 26 per cent do not fully comprehend profit/loss statements, while another 21 per cent do not fully comprehend international transactions. A quarter (27 per cent) double-check what they are eligible to claim online, while only a fifth (19 per cent) consult with an advisor. Only one-third (34 per cent) of small businesses comprehend all aspects of a business tax return. A third of consumers surveyed, like small business owners, learned how to do their tax returns through online research. The majority (84 per cent) of those polled say they will claim deductions on their tax returns this year. However, one-third are unsure about what they can claim, so they will look for answers online, while nearly a sixth (15 per cent) intend to consult with an advisor.
Key findings from a survey of general consumers who are filing a tax return: Only 48 per cent are aware of which deductions they are eligible to claim. The most common deductions are charitable contributions (38 per cent) and work-from-home utility bills (33 per cent). 41 per cent plan to make additional work-related purchases before June 30th. They will be able to claim them in this fiscal year. After completing their tasks, 60 per cent like to reward themselves with something enjoyable taxes. 37 per cent would rather be stuck in traffic than complete their EOFY responsibilities/tasks.
