Key takeaways
- Expenses must be incurred in running the business and not be private or capital.
- Eligible assets under $20,000 can generally be written off immediately.
- Super for employees is deductible when it's received by the fund.
- Entertainment, fines and private expenses are generally not deductible.
As a general rule, you can claim a deduction for expenses incurred in running your business to earn assessable income. If something is used for both business and private purposes, only the business portion is deductible.
Common deductible expenses
- Stock and materials used in the business
- Wages, and super contributions for employees
- Rent, utilities and other premises costs
- Business-use portion of vehicle costs
- Advertising and marketing
- Business insurance, such as public liability
- Accounting, bookkeeping and legal fees
- Bank fees and interest on business loans
- Software subscriptions, phone and internet (business portion)
- Bad debts written off before year end, where income was previously reported
Assets and equipment
Assets that last more than a year are usually depreciated. Small businesses with aggregated turnover under $10 million can generally immediately deduct eligible assets costing less than $20,000 each under the instant asset write-off — now permanent from 1 July 2026. The asset must be first used or installed ready for use in the year you claim it.
Working from home
If you run a business from home, you can claim the business-use portion of running costs. Occupancy costs such as rent, mortgage interest and rates are generally only claimable if part of your home is set aside exclusively as a place of business — and this can have CGT consequences when you sell.
What you generally can't claim
- Private or domestic expenses
- Entertainment, such as client lunches (and it may attract FBT for employees)
- Fines and penalties
- Capital costs, such as buying the business itself, except through depreciation or other specific rules
- Super guarantee charge amounts
Official sources
General information only. This article doesn't take into account your personal circumstances and isn't a substitute for professional advice. Tax rules and thresholds change — check current details with the ATO or contact us for advice specific to you.
Published by
ANS Taxation & Accounting
Melbourne accounting and tax practice