Top 10 Tax Deductions for Australian Small Businesses

Running a small business in Australia comes with many moving parts, and managing your tax obligations is one of the most important. Knowing what tax deductions you're entitled to can reduce your taxable income, improve cash flow, and ensure you're not paying more tax than necessary.

Whether you're a sole trader, company, trust or partnership, claiming the right tax deductions can make a big difference. Below, we have included 10 of the most common and valuable deductions available to small businesses.

1. Operating Expenses

These are the everyday costs of running your business and are generally fully tax-deductible in the year they’re incurred. This includes:

• Rent for business premises
• Utility bills (electricity, water, gas)
• Office supplies
• Phone and internet
• Bank fees and merchant fees

To be deductible, the expenses must be directly related to your income-generating activities.

2. Staff Wages and Superannuation

Employee wages, salaries, bonuses, and allowances are all deductible business expenses. In addition, don’t forget compulsory superannuation guarantee contributions; however, note that they must be paid on time to qualify for a deduction.

Contractor payments may also be deductible, but make sure the contractor is not legally classified as an employee under ATO guidelines.

3. Business Vehicle Expenses

If you use a vehicle for business purposes, you can claim deductions for expenses such as fuel, servicing, insurance, and registration. There are two main methods:

• Cents per kilometre (for sole traders or partnerships)
• Logbook method (to claim the business-use portion of actual costs)

Depreciation on the vehicle may also be deductible under temporary full expensing or simplified depreciation rules (if eligible).

4. Depreciation and Instant Asset Write-Off

The instant asset write-off allows eligible businesses to immediately deduct the full cost of qualifying assets. As of recent tax years, this includes assets like tools, equipment, and vehicles purchased and first used during the financial year.

Where assets don’t qualify for immediate write-off, you may still claim depreciation using the simplified depreciation rules for small businesses.

5. Marketing and Advertising

Promoting your business is essential, and the good news is, most marketing costs are tax-deductible. This includes:

• Social media and Google Ads
• Website development and hosting
• Print and radio advertising
• Sponsorships
• Promotional materials (flyers, signs, merchandise)

Just make sure the expenses are directly tied to generating business income.

6. Professional Services

The fees you pay to accountants, bookkeepers, lawyers, or business consultants for services related to your business are generally deductible.

For example:

• Tax agent fees
• Legal advice related to business operations
• Business coaching
• Financial advice (when it relates to your business finances)

Keep detailed invoices and documentation to support these claims.

7. Business Insurance

Premiums on insurance policies that protect your business are deductible. This includes:

• Public liability
• Professional indemnity
• Cybersecurity insurance
• Business interruption insurance
• Workers’ compensation (for employees)

Note: Life insurance and income protection premiums are generally not deductible through a business structure unless held inside superannuation.

8. Home Office Expenses

If you run your business from home, even part-time, you can claim a portion of your home running costs. These may include:

• Electricity and gas
• Internet and phone
• Home office furniture and equipment
• Depreciation on office equipment

You can choose between the fixed rate method or the actual cost method, depending on your recordkeeping and circumstances.

9. Training and Education

Ongoing learning is vital for business success, and certain educational expenses are deductible. This includes:

• Courses, seminars, and webinars relevant to your business
• Industry-specific certifications
• Professional memberships and subscriptions

To qualify, the training must be directly related to your current business (not a new business or future career path).

10. Bad Debts

If a customer hasn’t paid and you’ve made all reasonable efforts to recover the amount, you may be able to write off the bad debt and claim it as a deduction.

To do this:

• The debt must have previously been included in your assessable income.
• You must formally write it off before the end of the financial year.

Tax time can be stressful, but knowing what you can legally claim makes the process smoother and your results more rewarding. Staying on top of your receipts, using good accounting software, and working with a qualified tax adviser can help you make the most of these deductions and stay compliant with the ATO.

Need help with tax planning or preparing your business return? Speak with one of our accountants – we have the best accountants Central Coast, Brisbane, Sydney, Melbourne, and regional Australian small businesses rely on, and we can help to make sure you're not leaving money on the table this financial year.

Important information – Oracle Advisory Group makes no representation or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. The information in this document is general information only and is not based on the objectives, financial situation or needs of any particular investor. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek their own professional advice. Past performance is not a reliable indicator of future performance. The information provided in the document is current as the time of publication.