What can my Business Claim as a Tax Deduction?

Running a business is costly. That’s why it is important to take advantage of any tax-deductible expenses. Here’s a handy summary to help you get the most out of your upcoming tax return.  

What Qualifies as a Tax-Deductible Expense? 

If a business expense directly relates to earning your assessable income, then it is tax deductible.  

Aside from daily operating and supply costs, this also includes capital expenses, such as the cost of depreciating machinery or equipment.  

Rules for Claiming a Tax Deduction 

  • The expense must be an allowable deduction 

  • The expense must be for your business and not solely for private use 

  • If the expense is a mix of business and private use, you can only claim the portion used for your business 

  • You must have records to prove your expense 

What Can I Claim? 

Interest on money borrowed 

Interest incurred on loans used for: 

  • Producing assessable income (e.g. interest on a loan to buy an income producing asset such as a machine) 

  • Income tax obligations, super contributions, late payment, or lodgement of tax 

Bank fees for business bank accounts may also be tax deductible. 

Lease expenses 

Rent or costs of hiring equipment or machinery used to produce assessable income.  

Examples: 

  • Motor vehicles 

  • Machinery and equipment 

  • Commercial premises 

Digital product expenses 

Digital products used to produce assessable income. 

Examples (non-capital): 

  • Internet service provider fees 

  • Software subscriptions 

  • Maintenance of website 

  • Cloud storage 

  • Lease payments 

Examples (capital): 

  • Computers and computer accessories 

  • Phones and tablets 

  • Point-of-sale machines 

Insurance 

Examples: 

  • Business insurance 

  • Income protection insurance – must be separate to your superannuation fund 

  • Car insurance – use log book method to calculate the portion of your car used for business 

  • Home insurance – the business portion of your home insurance if you operate your business from home 

  • Tax audit insurance 

Fees charged by statutory bodies and membership fees 

Examples: 

  • ASIC annual fees 

  • Union fees 

  • Subscription fees to trade, business, and professional memberships  

Staff employment costs 

Includes: 

  • Salaries and wages 

  • Super contributions 

Travel expenses 

Travel expenses related to your business. 

Examples: 

  • Flight, train, tram, bus, taxi, or ride-sourcing fares 

  • Car hire fees  

  • Accommodation 

  • Meals – if you are away overnight 

Refer to the Australian Tax Office below for more information. 

Alicja Gibert