Talking Cents

Which Business Costs Are Tax-Deductible? 5 Expenses Small Owners Forget to Claim

This is a crucial question many sole traders and small companies in Australia ask as the end of the financial year approaches. While most know about the usual claims like rent, office supplies and motor vehicle costs, many valuable deductions slip through the cracks.

If you’re running a small business in Sydney or nearby Zetland, understanding these lesser-known deductions can make a big difference to your tax bill. Here are five often-missed business costs you can legally claim.

Are You Maximising Your Business's Tax Potential?

Everyday, our customers face decisive moments but we deliver deep impact when it matters most. Don't let valuable deductions slip away. Every overlooked deduction is money left in the ATO's pocket instead of yours.

Here, ensuring you claim all eligible business costs is a cornerstone of our smart business accounting services and crucial for your long-term success.

1. WFH Actual Cost Method

Many small business owners use the simplified fixed rate method to claim home office expenses. For the 2024-25 financial year (and likely continuing into 2025-26 unless further changes are announced), the revised fixed rate method allows a claim of 70 cents per hour for each hour worked from home.

This covers electricity, gas, mobile and home phone expenses, stationery, and computer consumables. However, all this is possible only if you keep proper records. Consider switching methods if you work from home regularly and use business-only equipment. Visit this ATO page to find out how.

2. Home Office Depreciation of Assets

A significant number overlook the depreciation of physical assets within the home office. If you bought a new desk, an ergonomic chair, a monitor, or even a bookshelf specifically for your home office, these items are depreciating assets.

The 70 cent/hr rate in 2024-25 covers electricity, gas, phone and internet expenses, and stationery. Depending on their cost, they can be instantly written off under the $20,000 instant asset write-off (until 30 June 2026).

The key is that these assets must be primarily used for business purposes. On your part, keeping a detailed asset register can help ensure you don't miss these deductions. Speak to our small business accountant in Melbourne or Sydney to review past years and recover missed benefits.

3. Professional Development Not Directly Related to Current Role

Most business owners know they can deduct expenses for training that directly improves skills in their current role. However, did you know that certain professional development courses, even if they seem tangential, could be deductible?

If the course maintains or improves specific skills or knowledge needed for your current or anticipated business activities, it's often claimable. For instance, a tradesperson undertaking a course on basic website design to market their small business more effectively, or a retail owner attending a seminar on supply chain optimisation.

However, it is important to ensure they have a clear link to generating your business income. This falls under broader self-education expenses.

4. The Early Bird Gets the Deduction!

If your business pays for services or goods in advance that cover a period extending beyond the current financial year, you might be able to claim a portion of that expense earlier.

Experienced accountants in Sydney know that most businesses operate on a cash basis. ATO allows small businesses to claim an immediate deduction for certain prepaid expenses if the service period is 12 months or less and ends in the following income year. This means you could potentially bring forward a deduction for a portion of that expense into the current tax year.

It is however, important to ensure that the expense directly relates to your business operations and you have the appropriate documentation.

5. Are Startups Costs Deductible Too? Yes!

Many entrepreneurs are so focused on launching that they fail to properly track these initial outlays, mistakenly believing they are not deductible. Here, certain startup costs incurred before your business officially commenced trading can be deductible.

This includes legal fees for setting up your business structure, accounting service fees for initial advice, market research costs and even some advertising expenses incurred to generate initial interest. Visit this ATO page to learn more.

But which business accountant does Zetland trust today? Is there any reliable firm that provides small business accounting services to help you save more?

Small Businesses Claim Big with M.A.S. Partners

At M.A.S. Partners, we specialise in small business accounting in Sydney and Melbourne, helping clients make the most of legitimate deductions.

We have offered expert small business accounting Sydney trusts since 1961. Our team of experienced business accountants specialises in guiding through the complexities of tax deductions, ensuring you claim everything you're entitled to.

We are ready to help you get your records in shape, avoid costly mistakes and stay ATO-compliant, while maximising every cent you can legally deduct. Contact M.A.S. Partners today.