Most expenses you incur in running your business are tax deductible. You claim these deductions in the annual tax return for your business or, if you’re a sole trader, in your personal tax return.
What you can claim
You can only claim expenses that are directly related to earning your assessable income.
If you make a purchase or use an asset for both business and private purposes, you can only claim a deduction for the business portion of the expense. If you use an item in your business for only part of a year, you may need to restrict your claim to the period it was used for the business.
What you cannot claim
You can't claim a deduction for the goods and services tax (GST) component of a purchase if you can claim it as a
GST credit on your business activity statement. You also can't claim:
- private or domestic expenses, such as childcare fees or clothes for your family
- expenses relating to income that is not taxable, such as money you earn from a hobby
- expenses that are specifically non-deductible, such as entertainment and parking fines.
Rules that apply to personal services income (PSI) may limit the deductions you or your business can claim. See Personal services income (PSI) .
End of attention
Most expenses you incur in running your business can be claimed as deductions to reduce your taxable income. You can’t claim private or domestic expenses, such as childcare fees. If you incur an expense that relates to both business and private use of an asset, you can only claim the business portion.