Business Expenses List: What Small Businesses Can Claim in Australia

Business expenses are the costs of running your business. Some may be tax-deductible if they directly relate to earning business income, are not private or domestic, and you keep records to prove them.

The basic rule is simple: if the expense is for the business, it may be claimable. If it is partly business and partly personal, you generally need to split it. If you do not have records, it may be hard to support the claim.

This is a quick reference for Australian small business owners. It covers common business expense categories, what you may be able to claim, what you usually cannot claim, how mixed-use expenses work, and where business insurance fits in.

What Are Business Expenses?

Business expenses are costs your business incurs to operate, sell products, deliver services, manage risk or earn income. Common examples include rent, wages, insurance, marketing, accounting fees, software, vehicle costs, stock, equipment and home office costs.

Not every business expense is automatically deductible. The ATO’s general guidance is that deductions usually need to be directly related to earning assessable income, not private, and supported by records. You can check the ATO’s guidance on business deductions.

What Business Expenses Can Small Businesses Claim in Australia?

Below are common business expense categories Australian small businesses may be able to claim.

Rent and utilities

Rent, electricity, water, gas, internet and phone costs may be claimable if they relate to your business premises or business operations.

For example, a retail store may claim shop rent and utilities. A consultant working from home may need to split internet and phone costs between business and private use.

Staff wages, super and training

Wages, superannuation, staff training and payroll-related costs may be business expenses when they relate to employees working in your business.

If you employ staff, keep payroll records, superannuation records and PAYG withholding records. These records matter for tax, payroll and compliance.

Business insurance premiums

Business insurance premiums may be deductible where they relate to your business activities.

This may include public liability, professional indemnity, business pack, cyber insurance, commercial motor, workers compensation and management liability. The tax treatment depends on the type of cover and your circumstances, so confirm with a registered tax agent.

Marketing and advertising

Marketing costs may be claimable if they are used to promote your business.

This can include online ads, website costs, SEO, social media, graphic design, printed flyers, business cards, signage and branding work.

Accounting, bookkeeping and legal fees

Fees paid to accountants, bookkeepers, lawyers, tax agents and business advisers may be deductible if they relate to your business.

This can include tax preparation, bookkeeping, contract review, lease advice, business setup advice or support with tax obligations.

Software and subscriptions

Accounting software, CRM tools, cloud storage, booking platforms, project management tools and other subscriptions may be claimable if used for business.

If the software is used partly for personal purposes, claim only the business portion.

Vehicle costs

Fuel, parking, tolls, registration, insurance, repairs and maintenance may be claimable where the vehicle is used for business.

You need records. Depending on your structure and vehicle use, this may include a logbook, odometer readings or other evidence of business kilometres.

Home office expenses

If you work from home or run a home-based business, you may be able to claim part of your electricity, internet, phone and other home office costs.

Private use must be excluded. The ATO has specific methods for home office and home-based business expenses, so check the current rules before claiming.

Stock, supplies and materials

Inventory, raw materials, packaging, consumables and supplies may be business expenses if they are used to make, sell or deliver your products or services.

Product-based businesses should keep clear records of stock purchases, stock on hand and sales.

Tools, equipment and assets

Tools, laptops, machinery, furniture and equipment may be business expenses, but not everything can be claimed immediately.

Some assets may need to be depreciated over time. In some cases, the instant asset write-off may apply for eligible assets under the relevant threshold. The rules and thresholds can change, so check current ATO guidance before relying on it.

Business travel

Business travel may include flights, accommodation, transport and meals for overnight business trips.

The travel must relate to business activity. Keep receipts, booking confirmations and notes showing the business purpose of the trip.

Bank fees and finance costs

Bank fees, merchant fees, payment processing fees and interest on business loans may be deductible if they relate to business activity.

Keep business and personal accounts separate. It makes finance costs easier to track and reduces confusion at tax time.

What Business Expenses Are Not Deductible?

Not every cost is deductible. You generally cannot claim:

• private or domestic expenses;
• the private portion of mixed-use costs;
• fines and penalties;
• expenses without records;
• entertainment in many cases;
• the GST component if you already claimed it as a GST credit on your BAS;
• capital costs that must be depreciated, unless a specific rule allows an immediate deduction.

For example, if you buy a laptop and use it 50% for business and 50% personally, you generally only claim the business-use portion.

How Do Mixed-Use Business Expenses Work?

Mixed-use expenses are costs used partly for business and partly for personal purposes. Common examples include your phone, internet, car, laptop, home office and some software subscriptions. The rule is simple: claim only the business portion.

Phone and internet

If you use your phone or internet for both business and personal use, you need to work out a fair business-use percentage. Keep itemised bills, usage records or another reasonable method to support the split.

Car expenses

If you use a car for business and personal driving, keep records of business use. Sole traders may use ATO-approved methods such as cents per kilometre or logbook, depending on the circumstances. Companies and other structures may have different rules.

Home office costs

If you work from home, you may be able to claim part of your home office running costs. This can include electricity, internet and phone costs, depending on how you work and which ATO method applies.

Laptop, devices and software

If your laptop, tablet, phone or software subscription is used partly for business and partly for personal use, claim only the business-use portion.

Are Business Insurance Premiums Tax Deductible?

Business insurance premiums may be deductible where they relate to earning business income or protecting business operations.

This can include different types of cover depending on the business.

Public and products liability insurance

Public and products liability insurance may be held by businesses that interact with customers, suppliers or members of the public.

It is commonly considered for third-party injury and property damage risks.

Professional indemnity insurance

Professional indemnity insurance may be relevant if you provide advice, consulting, designs, services or recommendations.

It is commonly considered by consultants, allied health professionals, designers, engineers, accountants, marketers and other professional service providers.

Business pack insurance

Business pack insurance may be relevant if you have premises, contents, stock, tools, equipment or business interruption exposure.

Cyber insurance

Cyber insurance may be relevant if you store customer data, use online bookings, accept payments, rely on cloud systems or operate digitally.

Commercial motor insurance

Commercial motor insurance may be relevant if vehicles are used for business.

Workers compensation

Workers compensation is generally required if you employ staff. Rules vary by state and territory.

Management liability insurance

Management liability insurance may be relevant for companies, directors and businesses with employees or governance exposure.

Confirm the deductibility of your specific insurance premiums with a registered tax agent.

What Records Should You Keep for Business Expenses?

Good records make business expenses easier to claim. Keep:

• receipts and invoices;
• bank and credit card statements;
• contracts and agreements;
• payroll and superannuation records;
• vehicle logbooks, if claiming car expenses;
• BAS and tax return records;
• insurance policies and certificates of currency;
• notes showing how you split mixed-use expenses.

The ATO generally requires business records to be kept for at least five years. Accounting software such as Xero, MYOB or QuickBooks can help you keep records organised. The earlier you set it up, the easier tax time becomes.

How Do Business Expenses Work for Sole Traders, Companies and Trusts?

Business expenses can be reported differently depending on your business structure.

Sole trader business expenses

A sole trader usually reports business income and deductions in their individual tax return. This is common for freelancers, contractors, consultants and small service businesses.

Partnership business expenses

A partnership reports income and deductions through the partnership. Each partner then reports their share.

Company or Pty Ltd business expenses

A company claims business expenses in its company tax return. If you searched for “limited company expenses,” the Australian equivalent is usually a company or Pty Ltd.

Trust business expenses

A trust’s tax treatment depends on the trust deed and the business setup. Speak with a registered tax agent about your structure.

What Are Common Business Expense Mistakes?

Most business expense mistakes are avoidable. Common issues include:

• claiming personal costs as business expenses;
• not splitting mixed-use phone, internet, car or home office costs;
• not keeping receipts;
• claiming the GST component already claimed on BAS;
• assuming all meals and entertainment are deductible;
• claiming equipment immediately when it should be depreciated;
• relying on generic advice instead of checking ATO guidance or speaking with a tax agent.

The safest approach is simple: keep records, separate business and personal costs, and ask a registered tax agent before claiming uncertain expenses.

About upcover

upcover helps Australian small businesses arrange business insurance online. Business insurance premiums may be a deductible business expense where they relate to your business activities.

Depending on your business activities and eligibility, upcover may be able to help arrange public and products liability insurance, professional indemnity insurance, business pack insurance, Cyber insurance, commercial motor insurance, management liability insurance and other business insurance products.

upcover is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

Frequently Asked Questions

What are business expenses?

Business expenses are costs incurred in running your business, such as rent, wages, insurance, marketing, stock, equipment, software and vehicle costs. Many may be deductible if they relate to earning business income.

What business expenses can I claim in Australia?

You can generally claim a deduction for most expenses directly related to earning business income, as long as the expense is for business, not private, and you have records. Common examples include rent, staff costs, insurance, marketing, software, vehicle expenses, home office costs, stock and equipment.

What expenses are not deductible?

Private expenses, fines, entertainment in many cases, expenses without records, the GST component already claimed on BAS, and capital costs that must be depreciated are generally not deductible. Mixed-use expenses must be split.

Can I claim business insurance as a tax deduction?

Business insurance premiums may be deductible where they relate to earning business income. Common examples include public liability, professional indemnity, business pack, cyber insurance, commercial motor and workers compensation. Confirm your circumstances with a registered tax agent.

Can I claim phone, internet or home office expenses?

You may be able to claim the business portion. Private use must be excluded. The ATO has specific methods for calculating home office and vehicle deductions. Keep records showing how you split the expense.

What records do I need to keep?

The ATO generally requires business records to be kept for at least five years. Keep receipts, invoices, bank statements, contracts, payroll records, logbooks, BAS records, tax return records and insurance documents.

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_{The information in this article is general in nature and provided for informational purposes only. It does not constitute personal tax, financial, legal, or insurance advice. Tax rules, deduction thresholds, and ATO guidance can change. Always confirm current requirements with the ATO, a registered tax agent, or a qualified accountant before claiming deductions. All insurance products arranged through upcover are subject to the terms, conditions, limits and exclusions contained in the relevant policy wording and Product Disclosure Statement. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}