What Can Small Business Owners Claim on Tax in Australia?

Who this guide is for: Australian sole traders and small business owners across service, retail and trade businesses.

Last reviewed: 27 April 2026

Quick answer

Small business owners usually start by reviewing operating costs such as software, merchant fees, accounting fees, insurance, rent and other expenses directly tied to earning business income. Vehicle costs, home internet, home-office costs and other mixed-use expenses usually need more care because the business-use split and records matter just as much as the expense itself.

What many owners usually review first

Software, subscriptions, merchant fees and payment-processing costs.
Accounting, BAS, tax-agent and bookkeeping costs.
Rent, utilities, insurance and other operating costs for the business premises.
Tools, equipment and supplies used directly in the business.

What usually needs more care

Vehicle costs, because the work pattern and records need to support the claim.
Home internet or home-office costs, especially where private use is mixed in.
Equipment or fit-out spending that may fall under depreciation or capital rules.
Owner drawings or private spending that should not be mixed into business claims.

Intro: who this guide is for

Small business owners can usually claim most expenses directly connected to earning business income, but only the business-use portion of mixed expenses and only with proper records.

If you run a hair or beauty business, the narrower guide on tax deductions for salon owners in Australia is the best next step for salon-specific cost patterns.

Common deductions this occupation may be able to claim

Common expenses to review

Rent, utilities, business insurance and other operating costs for the business premises.
Bookkeeping software, invoicing tools, CRM subscriptions, website hosting and payment processing fees.
Accounting, BAS and tax agent fees.
Marketing and advertising costs such as social ads, flyers, design work and business cards.
Wages, super, contractor payments and other labour costs that are properly documented and deductible under the rules.
Interest on business finance and eligible bank fees.

Occupation-specific expenses to review

Vehicle costs for business trips, service calls, deliveries or supply runs, using the right record-keeping method.
Home-based business expenses where part of the home is used as a place of business or for genuine business admin.
Depreciating assets and capital expenses such as equipment, furniture, machinery and business-use computers.
Industry licences, professional memberships and compliance costs.
Eligible startup or setup costs depending on the facts and timing.

Other costs that may still matter

Business-use portions of mobile plans, home internet and software bundles.
Merchant fees, refunds processing costs and online marketplace fees.
Training for employees and, in some cases, eligible business training or compliance education.
Record-keeping tools and receipt capture apps.

For the general ATO-style claim tests behind these expense types, see How to Claim Tax Deductions in Australia.

Expenses commonly not deductible

Private spending or the private portion of mixed expenses.
Cash drawings or money you take from the business for personal use.
Fines and penalties.
The GST-inclusive amount when you are entitled to claim a GST credit.
Capital assets in the wrong way or at the wrong time without checking the depreciation rules.

If an expense sits half in work and half in private life, the claim usually gets weaker unless you can clearly apportion it and support that split.

Employee vs sole trader or contractor differences

If you run the business yourself, the focus is usually on business operating costs and record keeping rather than employee-style unreimbursed expense rules.
If you also have employees, remember the business claiming a cost and an employee claiming a personal deduction are not the same thing.
Contractors engaged by the business create a separate layer of payment and record-keeping obligations from your own deductions.

Read the broader employee vs contractor guide if your work structure is not straightforward.

Record-keeping requirements

Keep a clean bookkeeping system for income, merchant fees, software, contractor payments, stock, rent and professional fees.
Separate private drawings and personal purchases from business expenses from the start.
Hold onto invoices for equipment and larger purchases so the correct deduction treatment can be reviewed later.
Retain BAS, bank, payroll and source records in a format that supports the figures you report to the ATO.

Use the record-keeping guide if you need a clearer checklist for receipts, logbooks or mixed-use calculations.

Common mistakes

Mixing personal and business spending and then trying to sort it out at tax time.
Claiming private drawings, private groceries or personal subscriptions as business deductions.
Ignoring the business-use split for vehicles, phones, internet or home costs.
Failing to keep the source documents needed to support bookkeeping entries.

Most weak claims break down because the expense was reimbursed, partly private, poorly recorded or connected to the wrong work structure.

Frequently asked questions

Can small business owners claim software and subscriptions?

Usually yes if the tools are used in running the business and earning assessable income.

Can I claim part of my home expenses for a business?

Often yes for the business-use portion, but the method and what you can claim depend on whether you truly have a place of business and on your structure.

Can I claim a vehicle used for both work and family use?

Yes, but only the business-use portion. Good records are essential.

Related guides

Use these next if you want the broader rules, a closer matching occupation guide, or a more specific topic page.

Related occupation guides

Relevant hub pages

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Small Business category

Broader rules and trust pages

More related guides

If you want a closer occupation match or a narrower claim question, these are the best next steps.

Review note, sources and disclaimer

Reviewed by: Australia Tax Deductions editorial team

Review date: 22 March 2026

How this guide is framed: This page is written in plain English, checked against official ATO guidance, and designed as a starting point for readers who still need to apply the rules to their own records and circumstances.

Methodology: See the Editorial Policy and Review Methodology pages for how the site handles source checking, updates and manual review.

Primary references

General educational information only. Tax outcomes depend on your circumstances, records, business structure and the current ATO rules. Check the latest official guidance or speak with a registered tax professional before acting on any deduction claim.