A-Z index

Deductions (Claims)

Claiming deductions when receiving PSI
If you received personal services income (PSI) and the PSI rules apply, the rules limit the deductions you can claim against this income.
Claiming tax losses
If you operate a business that makes a loss, you can carry forward that loss and may be able to claim a deduction for it in a future year. The rules differ for different business structures. If you're a sole trader or a partner in a partnership, you may be able to claim business losses by offsetting them against other income - for example, income you earn from salary or wages.
Depreciating assets
You can claim a deduction for the decline in value, depreciation, of capital assets, such as buildings, motor vehicles, furniture, and machinery and equipment. Small businesses with an aggregated annual turnover of less than $2 million can use simplified calculation methods.
Income and deductions for business
You can claim deductions for costs incurred in running your business, provided the expenses are not of a private or domestic nature.
Keeping good records
You must keep records of your business transactions, including expense claims, for five years after they are prepared or obtained, or the transactions completed, whichever occurs later. If you don't, your expense claim may be denied or reduced. You can store records in either paper or electronic form, but they must be readily accessible and available in English.
Motor vehicle expenses
The deductions you can claim for the business use of a motor vehicle depend on the business structure you operate under, the type of vehicle used, and whether you also use it for private purposes.
Overnight business travel expenses
To claim deductions for business travel, you need specific, documented evidence of the expenses.
Repairs, maintenance and replacement expenses
You may be able to claim a deduction for repairs to machinery, tools or premises you use to produce business income as long as the expenses are not capital expenses.
Running your business from home
If your home is also your place of business, you can claim income tax deductions for a portion of the costs of owning, maintaining and using your home for this purpose. When you sell your home you may be liable for capital gains tax.
Salary, wages and super
You can generally claim a deduction for the salaries and wages you pay to employees, and for super contributions you make for them and for certain contractors. If you’re a sole trader or partner in a partnership, you can usually claim a deduction for your own super contributions in your personal tax return.
What you can claim and when
You can claim most expenses you incur in running your business as deductions to reduce your taxable income. As a general rule, you can claim your day-to-day business operating expenses in full, in the year you incur them. However, the costs of capital items (such as buildings, machinery and equipment) are generally claimed over a number of years.