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Before you file your taxes, make sure that you’re taking advantage of all the (many) deductions you’re entitled to as a sole proprietor or single-member LLC.
This article is only for educational purposes and does not constitute legal, financial or tax advice. Make sure you consult a professional regarding your unique business needs.
Common Small Business Tax Deductions
1. Advertising
Did you put up a website, buy business cards, or go all out on a billboard? You should be able to write off any advertising expenses.
2. Car and truck expenses
Do you drive a vehicle in the course of your business? These expenses should be deductible, but only with meticulous records. You can find out more about car and truck deductions through the Australian Tax Office.
3. Contract labour
Did you hire a contractor to build your website or handle some excess work? The fees you paid to contractors are generally tax deductible. Make sure you have taken into account whether they are GST registered as well, as you can claim this GST payment back.
4. Depreciating assets
As assets (like equipment or office furniture) get wear and tear, they lose their value and can be a tax writeoff. Find out more about the ATOs general depreciation rules on their website.
5. Employee-related deductions
You can deduct the amount you paid your employees, as well as their benefits (like insurance or nonprofit sharing plans). You can find out more about employee-related deductions with the ATO.
6. Business insurance
Do you own a policy on your business or a piece of equipment? Those insurance costs are deductible.
7. Home office expenses
If you use a portion of your home as an office, you can most likely deduct that expense. This deduction can be complicated, though, so check out this post on the home office deduction for more detailed information.
8. Rent or leases
Rent a workspace? Lease equipment? You can deduct these things as well.
9. Office expenses
Did you pay a cleaner, install air conditioning, or do something else to maintain your office? That’s also deductible.
10. Utilities
The utilities you pay at your rented workspace are tax deductible. Remember, as mentioned above, if you work from home, you’ll have to work through the home office deduction rules.
11. Fees and interest
Did you pay interest on a loan, or pay transaction fees to a payment processor like Square? Those fees are generally tax deductible.
12. Professional services
Did you hire a lawyer, consultant, or other professional for some aspect of your business? You should be able to deduct those fees.
13. Supplies
Everything you use as office supplies — from paper clips to printer paper and your copier — is deductible.
14. Repairs and maintenance
Did you have to repair a piece of equipment or perform routine maintenance to keep it in tip top shape? That’s deductible. But the rules may be onerous. We recommend you consult with an accountant.
15. Taxes and licenses
Did you have to pay business taxes or perhaps apply for a business license? You can deduct those things.
16. Meals and entertainment expenses
Did you take a client to a business dinner? Then you can deduct 50 percent of that expense (as long as you can prove that it was business related and that you expected to get some business benefit from the outing).
17. Travel expenses
Did you travel for business? Perhaps to see a client or attend a convention that would benefit your business? You can deduct those expenses, too.
Pro tips for finding tax deductions
1. Peruse Form SU580
Afraid you’re missing something? Download the complete Profit and Loss Statement form (form su580) from the Australian Government Services Australia. This is a handy tax deduction cheat sheet.
2. Take a picture of your office or workspace
Then show it to your accountant. She may see deductions hiding in plain sight that you never even considered.
3. Ask your accountant
Speaking of your accountant, also ask her if she sees any common deductions from other businesses in your industry. You may be overlooking something.
4. Jobmaker Hiring Credit
The JobMaker Hiring Credit scheme is an incentive for businesses to employ additional young job seekers aged between 16 years and 35 years. Eligible employers can access the JobMaker Hiring Credit for each eligible additional employee they hire between 7 October 2020 and 6 October 2021. The JobMaker Hiring Credit is paid every three months in arrears to employers. It enables you to receive up to $200 per week for hiring eligible young job seekers.
5. Loss Carry Back
A loss carry back is where eligible corporate tax entities with less than $5 billion turnover in a relevant loss year can carry over losses made in the 2019–20, 2020–21 and 2021–22 income years to a preceding year’s income tax liability in the 2018–19, 2019–20 and 2020–21 income years. Tax loss amounts you choose to carry back to previous income years cannot be carried forwards to a subsequent income year.
6. Instant Asset Write-Off
Some businesses can deduct the business portion of the cost of an asset immediately in the year the asset is first utilised or installed ready for use. Instant asset write-offs can be utilised for several assets, if the total cost of each asset is less than the applicable threshold for new and used assets. If your business is small, you must use the simplified depreciation procedures to claim the instant asset write-off. It cannot be used for assets that are not covered by those standards.
7. Claim a write-off for property improvements
You can amend tax returns from 2018 and 2019 and business owners can write off any improvements you’ve made to your facilities.
8. JobKeeper Tax Claims
JobKeeper was a tricky one in 2020-21 but it needs to be included both in company and business tax claims. If you were a sole trader or ABN based business, receiving JobKeeper for your own benefits, you must remember to state this in your tax returns as you will need to pay tax on this amount. If you were an employer, receiving JobKeeper for your staff members, you also need to remember to include all of this. Businesses looking to voluntarily return JobKeeper payments once they are back on track may be able to claim a deduction. The ATO has plenty of information available.
9. Amend your return
Did you read this list after you filed and realise you missed a great deduction? No worries. You can request an amendment.
