Tax deductions

You can claim tax deductions for most costs involved in running your business. This helps to reduce the income you pay tax on. Find out what expenses you can claim, when to claim, and the records you need to keep.

How tax deductions work

When you do your tax return, you can claim most business expenses as tax deductions to reduce your taxable income.

The Australian Taxation Office (ATO) calculates your taxable income using this formula:

Assessable income – tax deductions = taxable income

Most money you get from running your business is assessable income (income subject to tax).

Expenses you can claim as a deduction

You can claim most expenses involved in running your business. Just make sure:

You may be able to claim deductions for certain business expenses including:

If you're a contractor or a consultant, your personal services income may affect the deductions you can claim.

If you are unsure about what deductions you can claim, contact your accountant, business adviser or the ATO.

Records you need to keep for deductions

If you claim business tax deductions, you’ll need to keep records to substantiate what you claim. Under tax law, your records must explain all transactions and be:

For more information, refer to the ATO’s information on: