Running a business in Australia comes with many costs — but the good news is that most of them can help reduce your taxable income. Understanding what you can legally claim as tax deductions is essential for keeping your business compliant and financially healthy. The Australian Taxation Office (ATO) allows deductions for any expense that is directly related to earning your business income. Let’s explore which costs qualify and how to make the most of your tax deductions.
1. Operating Expenses
Most everyday costs of running your business are tax-deductible. These include rent, utilities, phone and internet bills, office supplies, and software subscriptions. If you run your business from home, you can also claim a portion of your household expenses such as electricity, internet, and cleaning costs — provided you have a dedicated workspace.
2. Business Travel and Vehicle Costs
If you use your car or travel for business purposes, you can claim those expenses too. The ATO allows deductions for fuel, registration, servicing, insurance, and depreciation of your vehicle when used for business. For travel, you can claim flights, accommodation, and meals — but only when the travel is directly related to business activities. Always keep detailed records such as receipts and a travel diary.
3. Employee and Contractor Expenses
Payments to employees or contractors are also deductible. This includes wages, superannuation contributions, bonuses, and professional development training. If you hire freelancers or consultants, their fees can also be claimed as part of your business expenses.
4. Marketing and Advertising Costs
Every dollar you spend on promoting your business can generally be claimed as a tax deduction. This includes social media ads, Google Ads, website hosting, graphic design, printing, and even business cards. Marketing is an essential expense that directly supports your business income.
5. Professional Services and Fees
Fees paid to accountants, lawyers, tax agents, and business consultants are all deductible. These services are considered necessary for managing your business operations, staying compliant with regulations, and maintaining accurate financial records.
6. Equipment and Asset Depreciation
If you buy new equipment, tools, or technology for your business, you may be eligible for an immediate deduction or depreciation over time. The ATO’s instant asset write-off and temporary full expensing schemes allow small businesses to claim the full cost of eligible assets in the same financial year.
7. Insurance and Licences
Business insurance premiums — such as public liability, professional indemnity, and income protection — are tax-deductible. You can also claim licence or registration fees necessary to operate legally within your industry.
To maximise your business tax deductions, keep accurate and organised records of every transaction. Use accounting software or hire a professional to track your expenses throughout the year. The ATO requires businesses to keep records for at least five years.
Knowing what you can legally claim helps you save money, stay compliant, and grow your business with confidence. If you’re unsure about any expense, consult a registered tax agent for professional advice tailored to your situation.
