If you are asking what can I claim on tax as a business owner, the short answer is most expenses that are genuinely and directly related to running your business, from vehicle and home office costs to insurance, marketing and professional fees. The deciding element is whether the expense was for business use rather than personal use, and whether you have kept proper records to support it.
Before getting into specific categories, it helps to understand the general rules that apply to every claim. The expense must be for business purposes, not private use. If an expense is used for both business and personal purposes, you can only claim the business portion. And you need records, such as receipts, invoices or bank statements, to support your claim. These rules apply whether you are a sole trader, running a company, or operating through a trust. The ATO sets these out clearly in its guide to business deductions.
When clients ask us what can I claim on tax, these are the categories that come up most often. Motor vehicle expenses apply where you use a vehicle for business trips, deliveries or client visits. Home office expenses cover a portion of electricity, internet and depreciation on equipment if you work from home. Marketing and advertising costs include your website, signage and paid campaigns. Professional fees, such as accounting, bookkeeping and legal costs directly related to the business, are also deductible. Insurance premiums covering your business assets, income protection or professional indemnity generally qualify too, along with tools, equipment and software required to operate your business, including instant write off options for eligible assets.
Every business is different, so not every category will apply to you, and some will need to be apportioned between business and private use. Business.gov.au also runs through the main tax deductions available to Australian businesses if you want a second reference point.
Generally, yes, although the ATO does allow some flexibility. Bank and card statements can sometimes support a claim where a receipt has been lost, and there are simplified record keeping methods for things like small cash expenses. As a general rule, the safest approach is to keep a receipt or invoice for anything you plan to claim, since it removes any doubt if the ATO ever asks you to substantiate a deduction. A simple habit, such as photographing receipts as they come in rather than saving them for tax time, makes this far less of a chore when your return is due.
Some setup costs are deductible, even if you paid them before you officially started trading. This can include professional advice on setting up your business structure, costs of registering your business name, and certain licence or permit fees. Not every pre trading cost qualifies, and the rules differ depending on your structure, so it is worth keeping records of everything from day one and letting your accountant work out what is claimable once you lodge your first return.
Yes, to an extent. The general categories of what you can claim are similar across structures, but how you claim can differ. Sole traders include business deductions in their individual tax return alongside their business income. Companies claim deductions in a separate company tax return, and directors need to be careful not to mix up business expenses with personal ones paid through the company. Trusts follow a similar principle to companies, with deductions claimed at the trust level before profit is distributed. If you are unsure which category applies to you, it is worth checking with your accountant rather than assuming your structure works the same way as a friend’s business.
We regularly see two issues cause problems at tax time. The first is trying to claim personal expenses that only have a loose connection to the business, which the ATO looks at closely. The second is not apportioning correctly between business and private use, particularly with vehicles and home offices, which can result in an overclaim.
Good record keeping throughout the year solves most of these issues before they become a problem. Keeping receipts, using accounting software to track expenses as they happen and reconciling your accounts regularly all make tax time far less stressful. Our bookkeeping services are built around exactly this kind of ongoing record keeping.
Rather than guessing what can I claim on tax each year, or scrambling at tax time it is worth having a proactive accountant review your expenses throughout the year. This helps you claim everything you are entitled to while staying fully compliant.
Book a free consultation with our team, or find out more about our accounting and tax services.
