Blog

You can claim a wide variety of tax deductions as an Australian business owner, and our team are here to help you understand all of them while also ensuring that we have you in the best possible tax outcome for your unique situation.

While you don’t want to risk an ATO audit by claiming anything that you are not entitled to, you certainly don’t want to miss the lesser-known tax deductions that could ultimately save a heap on your tax bill. 

Below is a summary that we have created to help you understand and consider the tax deductions that may be relevant to you.

Travel costs

You can claim the cost of travel if you’re required to travel overnight and therefore don’t attend your usual work location. This will include a situation in which you have travelled to a remote location to perform your job in which case costs such as meals, bus/train/plane fares, accommodation and similar incidentals will all be all (or in part) tax deductible. You may also be able to claim regular travel costs provided these are for work-related purposes- including taxis, Ubers, tolls and parking. 

Tools, equipment & software

You can claim tax deductions for all tools, equipment and software that you use to perform your job. If you use something for both work and private purposes, you can only claim the work-related portion. It is important to note that if your tool/piece of equipment is used more than 50% of the time for your own personal use, then you can’t claim this as a tax deduction. For example, if a gardener purchases a lawn mower but mostly uses it to mow their own lawn, that would not count as a deductible expense.

If your tool or equipment costs more than $300, then you can claim a deduction for the decline in value of the asset over a number of years. These are known as depreciating assets. If you spent $300 or less, you can claim an immediate deduction for the whole expense. If you are an eligible business that chooses to use “temporary full expensing,” then there is actually currently no $300 threshold. In this case, you may be able to immediately write off the value of any tools purchased up until the end of the current financial year.

Car expenses

What you can claim:

You’d be surprised just how much tax you could actually save as a business owner just by owning and using a car for work purposes!

You can claim your car expenses if you need to travel from client job to job. If the car you use is less than one tonne and designed to carry fewer than nine passengers, you can claim the following costs:

• Fuel and oil
• Repairs and servicing
• Loan interest
• Lease payments
• Insurance premiums
• Registration
• Depreciation

What you can’t claim:

You can’t claim car expenses if you only drive between your home and workplace, even if you work in an unusual location. However, there are exceptions.

In limited circumstances, you can claim the cost of driving from home to work if you have shifting places of employment – i.e. if your workplaces regularly shift during the day before you return home.

If you’re required to carry bulky tools and equipment, have no safe place to store your tools at your workplace, the equipment is too awkward to transport by any other means, and the tools are essential to earning your income, you can claim your car expenses whilst transporting those tools.

If you are claiming car expenses in your tax return, you’ll need to claim using the cents per kilometre method or the log book method. You’ll need a log book to show your work-related percentage or show the Australian Taxation Office (ATO) the reasonable way you calculated using the cents per kilometre method.

Clothing/laundry

You generally can’t claim clothes that are private in nature, even if you do wear them for work. This one gets a lot of our clients quite regularly! Included in this category are: corporate office wear, black pants, jeans, sneakers, and other everyday shoes and high heels.

There are a few situations, however, in which you can claim clothing and laundry costs.

Firstly, protective clothing can be claimed as a tax deduction provided that you need to wear it to avoid injury and guard against risk or danger. Such attire must be a safety requirement for your job and have protective features or functions. Examples include hard hats or steel-capped boots. 

Compulsory uniforms can also be claimed provided that they are unique to a workplace and easily identify your job. For example, the clothing worn by nurses or chemists.

Home office costs

Many small business owners work from home, which opens up a wide range of allowable tax deductions. Claimable home office expenses may include running costs, such as electricity and gas, the decline of equipment and furniture, and phone and internet expenses. You may even be able to claim a portion of your rent or mortgage interest against your taxable income. This link explains in more detail the wide range of tax deductions available to you if you are self-employed and work from home. 

Learning, research and self-education

As a small business owner, you’ll want to be sure to keep on top of what is happening in your industry. Any kind of course, seminar or educational tool aimed at helping you improve your small business skills is most certainly tax-deductible! Note of warning though – you can’t claim a course that does not directly relate to what you do in your business. For example, if you are running a Virtual CFO business, you cannot deduct the cost of a course you’ve undertaken to learn Cryptocurrency because this does not directly relate to your core business activity.

Can I claim anything else?

You may be able to claim some (or all) of the below expenses in your tax return provided that you retained your receipts and incurred the cost within the relevant financial year. 

• Marketing costs
• Software subscriptions
• Consulting fees
• Legal fees
• Accounting & bookkeeping fees
• Bank fees & interest
• Insurance premiums
• Bank loan interest
• Union fees
• Industry journals and magazine subscriptions
• Repair and maintenance of your work equipment

How to obtain the BEST possible tax outcome

Obtaining the best possible tax outcome involves carefully considering deductions relevant to your business as well as taking into account other situational factors such as whether you’ll be applying for business finance or seeking investors in the near future. 

Every situation is different and there really is no “one size fits all” which is why we strongly encourage you to engage our friendly team to assist in the preparation of your income tax return.

Once we receive your tax request, you’ll be introduced to your accountant and we’ll be in touch with you to run through all of the factors unique to you. Get started here! You’ll be surprised how clear and simple our tax preparation system can be. The best part is, you don’t need to leave the comfort of your own home!