Maximizing your tax deductions is one of the most effective ways to reduce your business's taxable income and improve cash flow. Yet many Australian business owners leave money on the table by overlooking legitimate deductions simply because they are unaware of what's claimable. Here are the deductions you should not be missing.
Home Office Expenses
If you run your business from home or work remotely part of the time, you can claim a portion of your household expenses. Many business owners only claim the basic 67 cents per hour fixed rate method, but you may be entitled to additional deductions for specific work-related items like office furniture, computer equipment, and higher energy consumption. Keep detailed records of your work-from-home hours and receipts for any home office purchases.
Motor Vehicle Expenses
Travel between workplaces, client visits, and business-related errands are all claimable. You can use either the cents-per-kilometer method (up to 5,000 business kilometers) or the logbook method if your business travel is more extensive. The logbook method generally produces a larger deduction if you use your vehicle heavily for business purposes. Remember that commuting from home to your usual place of work is not deductible.
Superannuation Contributions
Contributing to your own superannuation fund is not just a smart retirement strategy—it is also tax-deductible. Personal super contributions are deductible provided you notify your super fund and claim the deduction in your tax return. The annual concessional contributions cap is $30,000 for the 2025-26 financial year, which includes compulsory employer contributions and any additional personal contributions you claim.
Professional Development and Subscriptions
Courses, workshops, conferences, and professional memberships that maintain or improve your skills in your current business activities are deductible. This includes industry journals, professional association memberships, and software subscriptions necessary for your business operations. If you are upskilling for a new career direction, those costs may not be deductible, so ensure the training relates to your existing business.
Depreciation on Business Assets
Many business owners forget that even assets not eligible for the instant asset write-off can still generate deductions through depreciation. The simplified depreciation rules for small businesses allow you to pool assets and claim a 15% deduction in the first year and 30% in subsequent years. This applies to assets costing more than the instant asset write-off threshold but less than $150,000.
Insurance Premiums
Business insurance premiums, including public liability, professional indemnity, and workers compensation insurance, are fully deductible. If you have income protection insurance in your personal name, that premium is also deductible. However, life insurance, trauma insurance, and critical care insurance premiums are not tax-deductible regardless of who holds the policy.
Interest and Bank Fees
Interest charged on business loans and overdrafts is deductible, as are monthly account fees and merchant service fees for processing card payments. If you have borrowed money partly for business and partly for personal use, you must apportion the interest accordingly.
The Importance of Record-Keeping
The Australian Taxation Office requires you to keep records for five years. This is not just about holding onto receipts; it means maintaining detailed descriptions of what you purchased, the business purpose, and dates of transactions. Cloud accounting software makes this significantly easier, allowing you to photograph receipts and store them digitally matched to bank transactions.
Need help identifying every deduction available to your business? At Lloyd & Co Accountants in Hawthorn, we work with Melbourne businesses to ensure no legitimate deduction is overlooked. Contact us to review your tax position before June 30.
