After working with countless small businesses across Australia, I’ve noticed that many hardworking owners are leaving money on the table by overlooking perfectly legal tax deductions. Today, I’m sharing some of the most commonly missed opportunities that could significantly reduce your taxable income.
1. Home Office Expenses – Beyond the Basics
Most small business owners know they can claim a portion of rent or mortgage interest for a home office, but many stop there. Don’t forget about the ATO’s simplified 80 cents per hour method (which increased during COVID and remains a valuable option), a portion of your internet and phone bills, electricity and heating/cooling for your workspace, home office equipment under $300 (immediate write-off), and depreciation on office furniture and equipment over $300.
2. Vehicle and Travel Deductions
This area is a goldmine of missed deductions: business-related car expenses using either the logbook or cents-per-kilometre method, parking fees and tolls for business trips, public transport costs for business meetings, and accommodation and meals when travelling overnight for business.
3. Professional Development Is Fully Deductible
Investing in yourself is both good business and good tax planning. Consider courses, seminars, and workshops related to your current business, professional subscriptions and memberships, business-related books, journals, and magazines, and industry conferences (including travel costs to attend).
4. Technology and Software Subscriptions
The digital tools powering your business are typically deductible, including cloud accounting software, CRM systems, project management tools, website hosting and maintenance, and anti-virus and cybersecurity software.
5. Marketing and Advertising
Every dollar spent promoting your business is potentially deductible: social media advertising, website design and updates, business cards and promotional materials, sponsorships with a commercial purpose, and professional photography for your business.
6. The Instant Asset Write-Off
This continues to be one of the most significant tax benefits for small businesses, yet many don’t maximise it. Business assets under the threshold can be written off immediately, including vehicles, equipment, tools, and technology. Temporary full expensing measures have expanded these benefits for eligible businesses.
7. Superannuation Contributions
As a small business owner, don’t miss out on tax deductions for contributions to your own super (if you’re self-employed), the potential tax advantages of salary sacrificing, and the government co-contribution scheme if you qualify.
8. Insurance Premiums
Almost all business-related insurance is tax-deductible, including professional indemnity insurance, public liability insurance, workers’ compensation insurance, commercial property insurance, and income protection insurance.
9. Bad Debts
If you’ve made a genuine attempt to recover a debt but have been unsuccessful, write off the debt before the end of the financial year, document your attempts to recover the amount, and claim it as a deduction in your tax return.
10. Professional Services
The costs of running your business smoothly are deductible, including accounting and bookkeeping fees, legal expenses for business matters, consultant fees, and business coaching.
The Bottom Line
Tax planning shouldn’t just happen in June – it’s a year-round strategy that can significantly impact your business’s financial health. Being proactive about understanding and claiming all eligible deductions isn’t about taking shortcuts – it’s about not paying more tax than you legally need to.
Remember, the ATO expects you to maintain proper documentation for all claimed deductions. A good rule of thumb: if you can’t prove it, you can’t claim it.
If you’re unsure about any potential deductions, I always recommend consulting with a qualified tax professional. The cost of their advice is tax-deductible, and they’ll likely save you far more than their fee.
What tax deductions have you discovered that made a significant difference to your small business? Share in the comments below!
Until next time, keep growing your business and keeping more of what you earn!
Written by Michael Andrew Bankier