You’re probably paying more tax than you need to. Here are the deductions that could put money back in your pocket.
Nobody likes paying tax. But what’s even worse is paying more tax than you’re legally required to because you didn’t know about a deduction you could have claimed. It happens more often than you’d think, especially among newer business owners who are still getting to grips with the system.
The Australian tax system offers a genuine range of deductions for small businesses. The catch is you need to know what’s available, keep good records, and claim correctly. Here’s a rundown of the big ones that every Aussie business owner should have on their radar.
Operating Expenses
Most of your day-to-day business expenses are deductible. Rent, utilities, phone and internet, office supplies, postage, cleaning, and repairs, if it’s a legitimate cost of running your business, you can generally claim it. The key is keeping receipts and records. The ATO can ask to see evidence of any deduction you claim, so a shoebox full of crumpled receipts isn’t going to cut it. Use accounting software or even a simple app to capture expenses as they happen.
Vehicle Expenses
If you use your car for business purposes, you can claim the business portion of your running costs. There are two methods: the cents-per-kilometre method (for claims up to 5,000 business kilometres per year) or the logbook method, which lets you claim the actual business percentage of all vehicle costs including fuel, insurance, registration, servicing, and depreciation. The logbook method often results in a larger claim, but it requires you to keep a logbook for a 12-week period.
Home Office
If you work from home, even part of the time, you can claim a portion of your home expenses as a business deduction. This can include electricity, internet, phone, depreciation on furniture and equipment, and even a portion of your rent or mortgage interest if you have a dedicated home office space. The ATO has specific methods for calculating these claims, so talk to your accountant about which approach gives you the best result.
Equipment and Assets
The instant asset write-off has been a game-changer for small businesses. It allows you to immediately deduct the cost of eligible assets, tools, equipment, vehicles, computers, furniture, rather than depreciating them over several years. The thresholds and rules have changed several times in recent years, so check the current limits with your accountant. This deduction alone can make a significant difference to your tax bill, especially if you time your purchases strategically.
Professional Development and Training
Investing in your skills or your team’s skills is deductible if the training relates to your current business activities. Courses, workshops, conferences, books, and online learning, these all count. It’s one of those deductions that’s doubly beneficial: you get a tax break, and you get a more capable team.
Professional Services
Fees paid to accountants, bookkeepers, lawyers, business advisors, and consultants are all deductible. This is worth remembering when you’re weighing up whether to invest in professional help, the after-tax cost is lower than you might think.
Insurance
Business insurance premiums are deductible, including public liability, professional indemnity, income protection (for self-employed), and workers’ compensation. Given how much insurance costs, this deduction can be quite significant.
Don’t Leave Money on the Table
The common thread across all of these is records. Keep them, organise them, and make sure your accountant sees them. The difference between a good tax outcome and a great one is often just a matter of claiming everything you’re entitled to. And if you’re not sure whether something is deductible, ask. That’s what your accountant is there for.