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  • Claiming a tax deduction for other operating expenses

    Operating expenses are the expenses you incur in the everyday running of your business. Examples include office stationery, renting premises and purchase of trading stock. These expenses are sometimes called working or revenue expenses.

    You can generally claim a tax deduction for most operating expenses in the same income year you incur them. Ensure you keep good records of these expenses as they occur.

    On this page:

    General business operating expenses

    Operating expenses that are common in business include:

    • purchases of trading stock, including delivery charges
    • advertising and sponsorship costs
    • public relations expenses
    • legal expenses, such as those incurred defending future earnings, borrowing money, discharging a mortgage or obtaining tax advice
    • tender costs, even if the tender is unsuccessful
    • bad debts
    • bank fees and charges
    • insurance premiums, including accident or disability, fire, burglary, professional indemnity, public risk, motor vehicle, loss of profits insurance, or workers compensation
    • interest on money borrowed for
      • producing assessable income or purchasing income-producing assets
      • income tax obligations, employer super contributions, or late payment or lodgment of tax
       
    • luxury car lease expenses
    • stationery expenses
    • costs for running a commercial website, such as site maintenance, content updates and internet service provider fees
    • transport and freight expenses
    • waste removal and recycling expenses
    • parking fees (but not parking fines)
    • small-value items costing $100 or less.

    Other expenses

    As a business owner, you also able to claim deductions for some business expenses that are the same as those that can be claimed as a deduction by employees, including:

    • union dues and subscription fees to trade, business or professional associations
    • clothing expenses (corporate wardrobes or uniforms and occupation-specific and protective clothing)
    • expenses relating to education and technical or professional qualification
    • subscription costs for business or professional journals, information services, newspapers and magazines
    • costs for sunglasses, sunhats and sunscreen when your business activities require outdoor work
    • gifts and donations to organisations that have a deductible gift recipient status.

    See also:

    • DGR table for types of organisations that have a deductible gift recipient status

    Expenses from employing people

    Expenses associated with employing people including:

    • salary and wages
    • fringe benefits, including the cost of any fringe benefit provided and the associated fringe benefits tax
    • travel expenses for relocating employees
    • losses due to misappropriation of money by an employee or agent, for example, fraud, theft or embezzlement.

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    Business premises operating expenses

    Business premises operating expenses include:

    • electricity expenses
    • phone expenses
    • water expenses
    • renting or leasing business premises
    • rates
    • land tax.

    Tax-related expenses

    Tax-related expenses include:

    • registered tax agent and accountant fees
    • tax-related expenses, such as    
      • having a bookkeeper prepare your business records
      • preparing and lodging tax returns and activity statements
      • objecting to or appealing against your assessment
      • attending an ATO audit
      • obtaining tax advice about your business
      • credit card/charge card payment fee associated with paying a business tax liability, for example, GST liability.
       
    Last modified: 19 Jun 2019QC 33867