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.