Do you know what business expenses you can claim?
You can generally claim a tax deduction for most expenses you incur, as long as:
- the expense relates directly to earning your business’s assessable income
- you only claim the business-use portion of an expense that's for a mix of business and private use
- you have records to substantiate your claims.
You can claim deductions for:
- day-to-day operating expenses, such as office stationery and wages, in the year you have to pay (or have paid) for them
- capital expenses, such as machinery and equipment, which are typically of long-term benefit. They can be depreciated over the term of the asset's life. Alternatively, you may be able to claim an immediate deduction through temporary full expensing.
Business expenses may include motor vehicle, travel, legal, digital product and home-based business expenses, and items related to protecting staff from COVID-19 at work such as hand sanitiser and sneeze or cough guards.
You can claim deductions for super contributions. You can also claim deductions for payments you make to workers (including their wages) as long as you’ve complied with the pay as you go withholding and reporting obligations for each payment.
Keep in mind there are some expenses you can’t claim, such as entertainment or private expenses, traffic fines, and expenses that relate to earning non-assessable income.
Remember, registered tax agents can help you with your tax.
It’s a good idea to keep complete records of expenses throughout the tax year (instead of a representative period) to give you more flexibility.
If you’re a sole trader, you can also use the myDeductions tool in the ATO app to keep records of your business expenses.
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Here’s an overview of different types of expenses.Last modified: 12 Aug 2022QC 71351