Sole trader tax deductions Australia: what you can claim without the jargon

The golden rule from the Australian Taxation Office (ATO) is simple: you can claim a deduction for any expense you paid to earn your business income, as long as it is not private or domestic. You also need a record to prove it.

Home office expenses

If you work from home, even part of the time, you may be able to claim part of your household costs. The ATO offers two methods:

• Revised fixed-rate method: a set rate per hour for each hour you genuinely work from home. This covers electricity, gas, phone, internet, stationery and computer consumables.
• Actual cost method: claim the real portion of your expenses that relate to your business use.

You can also depreciate larger items like desks, chairs, monitors and printers over time, or use the instant asset write-off if you are eligible.

Vehicle and travel expenses

Trips between home and a regular place of work are generally not deductible. But travel to visit clients, pick up supplies, or attend off-site meetings usually is. You can claim vehicle costs using:

• Cents per kilometre: up to 5,000 business kilometres a year based on a set rate.
• Logbook method: keep a 12-week logbook to work out your business-use percentage, then claim that portion of fuel, registration, insurance and servicing.

A simple vehicle logbook is one of the easiest ways to maximise this deduction. LedgerSnap has a built-in logbook so you can record trips as you go.

Tools, equipment and technology

The tools you use to do your job are usually deductible. Think laptops, phones, cameras, software subscriptions, tools of trade, and protective clothing. If an item costs more than $300 and lasts several years, you normally claim depreciation over its useful life. Items under $300 can often be claimed outright.

Professional development and subscriptions

Courses, workshops, books, industry magazines and professional memberships can be deductible if they relate to your current business. The key is that the expense helps you earn income in your existing work, not a new career.

Marketing and website costs

Money spent promoting your business is generally deductible. This includes business cards, flyers, social media advertising, Google Ads, website hosting, domain names, and the cost of building or refreshing your website.

Accounting, bookkeeping and legal fees

Fees you pay to a registered tax agent, BAS agent, bookkeeper or lawyer for business advice are deductible. That includes the cost of preparing and lodging your tax return and BAS. Software that helps you manage your books, like LedgerSnap, is also deductible.

Insurance and superannuation

Business insurance premiums, such as public liability, professional indemnity and income protection, are usually deductible. Personal life insurance is not. You may also be able to claim personal super contributions you make as a sole trader, provided you notify your fund using a valid notice of intent to claim form.

Other common deductions

• Bank fees and charges on your business account
• Interest on money borrowed to produce business income
• Client gifts and entertainment, within ATO limits
• Postage, courier and freight costs
• Cleaning costs for a dedicated business premises

Records you need to keep

For every deduction, keep a receipt, invoice or bank statement showing the supplier, date, amount and what was purchased. For meals and travel, note the business purpose. The ATO requires you to keep records for five years.

The easiest way to stay on top of this is to snap a photo of every receipt as soon as you get it. That is exactly what LedgerSnap is built for.

GST-registered? Do not forget your BAS

If you are registered for GST, you can generally claim GST credits on business purchases. This comes back to you through your Business Activity Statement. Make sure you separate the GST portion from the total so your BAS is accurate.

Make tax time calmer with LedgerSnap

LedgerSnap helps Australian sole traders capture receipts, sort expenses, track GST and see a simple Profit & Loss statement, all from a phone. No accounting jargon, no spreadsheets, and your records are ready whenever BAS or tax time rolls around.