The Australian Tax Office allows Australians who work at or from their home to claim a deduction for the additional expenses they incur from running their business.
Generally speaking, the deductible expenses that can be claimed are divided into two categories; occupancy expenses and running expenses.
Occupancy expenses: relate to ‘the place of business’, i.e. where part of an individual’s home is used solely for income producing activities. Examples of occupancy expenses include:
mortgage interest
rental costs
insurance
security
To be eligible to claim a deduction for an occupancy expense, the area of the home used for business activities must have the ‘character of a place of business’. The ATO has stated that the following shows an area of a home is ‘a place of business’ where:
the area is clearly identifiable as a place of business
the area is not suitable for private or domestic use
the area is used exclusively for carrying on a business
the area is used regularly for visiting customers
Running expenses: are costs that relate to the use of facilities in the home to run the business, such as:
the cost of electricity and gas to heat, cool or light up a room
business phone costs
the decline in value of plant and equipment, such as chairs, bookcases and computers
the decline in value of furniture and furnishings, such as curtains and carpets
the cost of repairs to furniture and furnishings
cleaning costs
Individuals can only claim a tax deduction for the amount of running expenses’ usage from the business, not general household expenses.
Strategic planning for businesses ensures resilience and continuity in adversity.
While businesses often focus on growth and expansion, preparing for potential disruptions and emergencies that could threaten operations is equally essential.
This is where disaster management, crisis, and continuity plans come into play.
Disaster Management Plans
Disasters can strike without warning, ranging from natural calamities like floods, earthquakes, and hurricanes to human-made incidents such as cyberattacks, data breaches, or supply chain disruptions.
Disaster management plans outline strategies and protocols for responding to and recovering from such events swiftly and effectively. These plans typically include measures for ensuring employee safety, protecting critical assets and infrastructure, and minimising downtime.
By having a comprehensive disaster management plan, businesses can mitigate the impact of disasters and expedite the recovery process.
Crisis Management Plans
While disasters are often external events beyond a business’s control, crises can arise from internal factors such as leadership failures, product recalls, or reputational issues.
Crisis management plans are designed to address these unexpected challenges and mitigate their impact on the organisation’s reputation, brand equity, and bottom line. These plans outline communication strategies, escalation procedures, and decision-making frameworks for managing crises promptly and transparently. By proactively addressing crises and demonstrating resilience, businesses can preserve stakeholder trust and emerge stronger from adversity.
Business Continuity Plans
Business continuity plans focus on maintaining essential functions and operations during and after disruptive events to ensure minimal disruption to business operations.
These plans identify critical processes, resources, dependencies, and alternative strategies for sustaining operations during a crisis or disaster.
Business continuity plans encompass remote work arrangements, data backup and recovery procedures, and alternative supply chain routes.
By prioritising continuity and preparedness, businesses can reduce downtime, protect revenue streams, and uphold their commitments to customers and stakeholders.
Benefits of Comprehensive Planning
Risk Mitigation: By anticipating potential threats and developing proactive strategies, businesses can mitigate the impact of disruptions and minimise associated risks.
Resilience and Adaptability: Comprehensive planning fosters organisational resilience, enabling businesses to adapt and respond effectively to changing circumstances and emerging challenges.
Stakeholder Confidence: Demonstrating preparedness and responsiveness instils confidence in customers, employees, investors, and other stakeholders, strengthening relationships and fostering loyalty.
Regulatory Compliance: Many industries have regulatory requirements mandating development and implementation of disaster management, crisis, and continuity plans. Compliance with these standards is essential for avoiding penalties and legal liabilities.
Competitive Advantage: Businesses prioritising resilience and preparedness gain a competitive edge by differentiating themselves as reliable partners and service providers.
Disaster management, crisis, and continuity plans are integral components of strategic planning for businesses seeking to enhance resilience and ensure continuity in the face of adversity.
By investing in comprehensive planning, businesses can mitigate risks, maintain essential operations, and safeguard their reputation and bottom line.
In today’s volatile and uncertain business environment, proactive preparedness is not just a best practice but a strategic imperative for long-term success and sustainability. Need assistance with strategic planning as we approach the end of the financial year? Speak to one of our trusted business advisors.