Tax Deductions for Small Business in Australia
Maximise your tax savings with this comprehensive guide to legitimate business deductions
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One of the most effective ways to reduce your tax bill is by claiming all legitimate business deductions. Yet many Australian small businesses leave money on the table by missing deductions they're entitled to, or worse, claim deductions that aren't legitimate and trigger ATO audits.
This guide covers the key deductions available to Australian small businesses, what you can claim, and how to ensure you're maximising tax savings whilst staying compliant.
Common Small Business Tax Deductions
Operating Expenses
Day-to-day costs of running your business are generally fully deductible. This is often the largest deduction category for small businesses.
Commonly Deductible Operating Expenses:
- Rent for business premises
- Utilities (electricity, phone, internet)
- Office supplies and stationery
- Software subscriptions
- Marketing and advertising
- Professional fees (accounting, legal)
Motor Vehicle Expenses
If you use a vehicle for business purposes, you can claim a deduction. The ATO offers two methods: logbook method (requires detailed records) or cents per kilometre (simpler but capped at 5,000km).
Important:
You can only claim the business portion of vehicle expenses. Personal use is not deductible. Keep detailed records including logbooks showing business vs. personal use.
Home Office Expenses
If you work from home, you can claim a portion of home-related expenses. The ATO offers a simplified method (67 cents per hour) or the actual cost method for larger deductions.
Claimable Home Office Expenses:
- Portion of electricity and gas
- Internet and phone costs (business portion)
- Office furniture and equipment depreciation
- Home office repairs and maintenance
Employee Costs
All employee-related expenses are deductible, making staff costs one of your most significant deductions as you grow.
Deductible Employee Expenses:
- Wages and salaries
- Superannuation contributions
- WorkCover insurance
- Training and professional development
- Uniforms and protective equipment
Instant Asset Write-Off
Small businesses can immediately deduct the cost of eligible assets costing less than the instant asset write-off threshold (currently $20,000 per asset for businesses with turnover under $10 million).
Eligible Assets Include:
- Computers and IT equipment
- Office furniture
- Tools and equipment
- Vehicles (under threshold and first used or installed ready for use)
Maximise Your Tax Position
Our tax specialists ensure you claim every legitimate deduction whilst maintaining full ATO compliance. Let's optimise your tax strategy.