Running a business in Australia comes with plenty of expenses, but not all of them have to weigh heavily on your bottom line come tax time. With the right knowledge of tax deductions, small business owners and brokers can make strategic decisions that help reduce businesses’ taxable income and improve their cash flow.
Whether you’re a newer broker or an SME owner reviewing your tax strategy before EOFY, understanding what’s claimable and what’s not can make all the difference.
Tax Deductions Explained
Tax deductions are one of the most effective tools for cutting down your business costs.
The Australian Taxation Office (ATO) defines a tax deduction as an expense you incur while earning your income.
Lowering your taxable income means you’ll pay less tax overall, which puts more money back into your business.
However, not all business expenses are claimable. Only those that meet the ATO’s criteria for work-related use can be claimed.
Eligibility
To be eligible for a deduction, the expense must meet three basic rules:
- It must be directly related to earning your income.
- It must not be a private or domestic expense (e.g. personal groceries or home rent).
- You must have a record to prove it.
Recordkeeping is essential here. Whether you’re claiming deductions for fuel, equipment, or memberships, you’ll need to hang on to receipts, invoices, bank statements, and written evidence showing the business connection.
Good recordkeeping can also reduce the risk of delays, penalties, or missed opportunities during tax time.
If you’re unsure whether an expense qualifies, you can refer to the ATO’s detailed deductions guide, which outlines many of the most common and uncommon deductible items.
Categories Of Eligible Expenses
While most business owners know they can claim costs like office rent or equipment, other lesser-known categories are also worth exploring, depending on the business industry.
Here are a few expenses that may apply:
Personal Protective Equipment
You can claim these items as deductions if your work requires you to wear Personal Protective Equipment (PPE), such as face masks, gloves, or high-visibility vests.
This is particularly relevant for businesses that need PPE to meet health and safety requirements during work.
PPE must be directly linked to income-producing activities. Therefore, it won’t apply to everyday wear or generic use.
Keep your receipts and note when and why you use each item.
Financial Adviser Fees
Paying for financial advice directly related to managing your income or investments can be a legitimate deduction.
While this doesn’t extend to general wealth-building or lifestyle planning advice, it includes fees for managing business finances, superannuation, or investment portfolios to support your professional income.
Note that upfront fees for setting up financial strategies aren’t always deductible immediately. Depending on the structure, business owners may need to claim these expenses over time.
Professional Membership And Union Subscription Fees
If you pay annual fees to maintain membership in a professional body, those costs are often tax-deductible.
The same applies to union fees as long as the memberships relate directly to your current occupation.
These expenses show how staying accredited, informed, and connected to your industry can benefit your business and can be tax-deductible.
For a broader view of deductible categories, it’s worth reviewing the ATO’s complete deduction list, which outlines everything from home office use to motor vehicle expenses.
Work-Related Phone And Internet Use
Using your phone or internet for work purposes? You may be able to claim a portion of these costs based on your business use. For example, if 75% of your phone usage is work-related (e.g. calls to clients, business apps), you may be able to claim 75% of your bill.
Maintaining a four-week diary sample to estimate your average usage is one way to support your claim. Brokers who rely on mobile devices for client contact, email, and CRM access may want to take special note of this category.
Training And Education
Self-education expenses are deductible when directly related to your current business or job. This can include industry webinars, licensing updates, continuing education courses, and relevant certifications.
Education that helps business owners or employees upskill in their existing profession is generally eligible. However, it’s important to note that studying for an entirely new career path isn’t.
Marketing And Advertising
The good news about promotional costs is that many of these expenses are tax-deductible, as they’re key to growing any business.
Whether you’re paying for Google Ads, boosting social media posts, printing business cards, or hiring a freelance copywriter for your website, these expenses can be claimed during tax time if they’re aimed at generating income.
Even branding and rebranding efforts, such as logo design or email marketing subscriptions, can also count.
Excluded Expenditures
Of course, not everything you buy for your business or while working can be tax-deductible.
The ATO maintains strict rules about what’s considered personal versus business-related.
Here are a few categories you may want to avoid claiming.
- Watches and smart watches (with exceptions): These are generally considered personal items and not deductible. Even if you use your smartwatch to check emails or manage appointments, the ATO usually classifies these items as private.
- Personal grooming and cosmetics: Expenses for makeup, haircuts, and other appearance-related services are personal expenses unless your job requires a specific look (such as an actor in costume or a news anchor on TV).
- Childcare Expenses: While you may need daycare or a nanny to continue working or running your business, these costs are not considered directly linked to earning income and are, therefore, not deductible.
Conclusion
Tax deductions can do more than just reduce your bill at the end of the financial year. They’re a strategic way to keep your business lean, profitable, and compliant.
Small business owners can stretch their dollars further by understanding what’s deductible, keeping strong records, and avoiding common mistakes.
SMEs may also want to consider checking in with a registered tax professional or accountant, especially when claiming in niche areas.
A little expert help can go a long way in claiming your tax deductions without crossing into risky territory.