ATO Tax Deductions for Australian Small Businesses
One of the biggest advantages of running your own business in Australia is the ability to claim legitimate tax deductions on business expenses. Every dollar you deduct reduces your taxable income — which directly reduces the tax you owe the ATO.
The golden rule: you can deduct expenses that are directly related to earning assessable income, provided they are not private or domestic in nature. Here's a comprehensive breakdown of the deductions available to Australian small businesses and sole traders in 2026.
Operating Expenses
Day-to-day running costs of your business are generally fully deductible in the year you incur them:
- Advertising and marketing
Google Ads, Facebook Ads, website costs, business cards, flyers, and any promotion of your business.
- Bank fees and charges
Monthly account fees, merchant fees for credit card processing, and bank charges on your business account.
- Software subscriptions
Invoicing software, accounting tools, project management apps, CRM systems, cloud storage, and other SaaS tools used for business.
- Phone and internet
The business-use portion of your phone plan and internet. Keep records of your usage split if you use them for both personal and business purposes.
- Stationery and office supplies
Pens, paper, printer ink, postage, and other consumables used in your business.
- Professional subscriptions and memberships
Industry association fees, professional body memberships, trade magazines, and journals relevant to your business.
Home Office Expenses
If you work from home, you can claim a portion of household costs. The ATO offers two methods:
Fixed rate method: 67 cents per hour
Claim 67 cents for every hour you work from home. This covers electricity, phone, internet, stationery, and computer consumables. Keep a record of hours worked at home. You can still claim a separate deduction for the work-use portion of phone and internet on top of this rate since 1 July 2022.
Actual cost method
Calculate the actual expenses attributable to your home office based on floor area and usage. More complex but may yield a higher deduction. Requires a dedicated workspace and detailed records.
Vehicle and Travel Expenses
Business travel and vehicle use are deductible, but you must exclude personal use:
- Logbook method: Keep a 12-week logbook to establish business use percentage, then claim that % of all car running costs (fuel, registration, insurance, repairs, depreciation)
- Cents per km: Claim 88 cents per km for up to 5,000 km of business travel per year (no logbook needed, but you must have a basis for your estimate)
- Public transport: Fares for business travel (client visits, work-related trips) are fully deductible
- Accommodation and meals: When travelling overnight for business, accommodation is deductible and so are reasonable meal costs
- Flights and hire cars: Business flights and car hire are deductible. Keep all receipts.
Professional Services
- Accounting and bookkeeping fees: Your accountant's fees, tax agent fees, and BAS agent fees are fully deductible
- Legal fees: Legal costs related to business contracts, disputes, and operations (not personal legal matters)
- Consulting fees: Payments to consultants and contractors for business purposes
- Recruitment costs: Job advertising, agency fees, and onboarding costs
Small Business Instant Asset Write-Off
For the 2025-2026 financial year, small businesses (turnover under $10 million) can immediately deduct the full cost of eligible depreciating assets costing less than $20,000. This covers equipment, tools, computers, furniture, and other business assets.
Assets over $20,000 must be depreciated over their effective life using the general small business pool. Check the ATO website for the current threshold as this can change with each Federal Budget.
Education and Training
- Courses, workshops, and seminars directly related to your current business or profession
- Business books, journals, and online learning subscriptions
- Conference attendance fees and travel to conferences
- Note: Education costs for a new career or profession are generally not deductible
Insurance
- Public liability insurance
- Professional indemnity insurance
- Business income protection insurance (premiums are deductible)
- Workers compensation insurance
- Business contents and equipment insurance
Claim every deduction you're entitled to
BillMate automatically categorises your business expenses so you never miss a deduction at tax time. Generate expense reports in seconds and go into EOFY fully prepared.
Start Tracking Expenses