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Running a business in Australia comes with many responsibilities—and tax time is one of the most important. But it’s also an opportunity. Understanding what expenses you can legally claim can help reduce your tax bill and improve your bottom line. Whether you’re a sole trader, partnership, company or trust, this guide breaks down everything Australian businesses can claim at tax time.
Understanding business tax deductions
A tax deduction reduces your business’s assessable income, which lowers the amount of tax payable.
To claim a deduction:
- The expense must be incurred in the course of running your business
- It must be connected to earning assessable income
- You must have records (invoices, receipts, bank statements) to support the claim
Keep in mind, if you are a sole trader, you report business income on your individual tax return. Read more about what you can claim as an individual here.
If you run a company, you must lodge a separate company tax return. Read on to discover company-specific deductions.
Common tax deductions for Australian businesses
Operating expenses (day-to-day running costs)
These are the bread and butter of business tax deductions, including:
- Rent or lease payments for business premises
- Utility bills (electricity, gas, water) – business premises
- Phone and internet expenses
- Office supplies and stationery
- Advertising and marketing
- Business insurance (public liability, professional indemnity, etc.)
Employee costs and superannuation
- Salaries and wages
- Superannuation contributions (must be paid by the due date to be deductible)
- Fringe benefits tax (FBT) expenses
- Training and development costs for staff
Business vehicle and travel expenses
- Fuel, maintenance, registration and insurance
- Lease or loan interest on vehicles
- Depreciation on owned vehicles
- Business-related travel (airfares, accommodation, meals)
Note: You cannot claim private or commuting costs. A logbook or travel diary is essential for accurate claims.
Home-based business deductions
If you run your business from home, you may be able to claim:
- Portion of utilities (based on floor space)
- Rent or mortgage interest (only if your home is a place of business not just a base)
- Depreciation on home office furniture and equipment
- Internet and phone (business-use percentage only)
Capital expenses and depreciation
Assets that cost over $1,000 (e.g., machinery, computers, tools) are not claimed immediately but depreciated over time unless an immediate deduction applies.
As of the 2024–25 income year:
- The Instant Asset Write-Off threshold is $20,000 per asset for small businesses (aggregated turnover under $10 million)
- Depreciation rules vary depending on business structure and asset pool limits
Professional services and advice
- Legal fees directly related to running the business
- Accounting and tax agent fees
- Business consultancy or advisory services
Banking, loans and financial costs
- Interest on business loans and overdrafts
- Merchant and EFTPOS fees
- Lease finance charges
- Business-related bank fees
Repairs and maintenance
- Repairs to income-producing assets (buildings, equipment, vehicles)
Keep in mind, it must be considered maintenance not an improvement (improvements are capital)
Bad debts
- If an invoice remains unpaid and is deemed uncollectable, you may write it off and claim it as a bad debt deduction (must be included as income previously)
Software and technology subscriptions
- Cloud storage and cybersecurity tools
- Project management tools (e.g. Trello, Asana)
- Website hosting and domain costs
- Cloud storage and cybersecurity tools
Industry-specific deductions
You can refer to the ATO’s occupation and industry-specific deduction guides for more tailored advice.
Record keeping requirements
To claim any deduction, your records must:
- Be in English (or easily translatable)
- Clearly show the nature and amount of the expense
- Be kept for at least 5 years
Use accounting software or cloud storage tools to keep digital copies of receipts and invoices.
What you can’t claim
- Personal expenses (e.g. personal travel, non-business entertainment)
- Fines or penalties (e.g. speeding tickets)
- Expenses not directly tied to earning income
- Any private portion of a business expense (must apportion accordingly)
Tax tips for businesses
- Use cloud-based accounting to track deductions year-round
- Consider prepaying expenses (up to 12 months) before 30 June to bring forward deductions
- Review your asset register and write off obsolete items
- Talk to a registered tax or BAS agent, like the team at BG Private, about tax planning and cash flow
Final thoughts
Tax time is a valuable opportunity for Australian businesses to optimise their financial position. By understanding what you can claim and keeping accurate records, you can significantly reduce your tax burden and invest those savings back into your business.
Disclaimer: This article is general in nature and not financial advice. Always consult a registered tax agent or the ATO for information tailored to your business.