• New Wave Accountants

An Australian Start-up's Guide to Claiming Tax Deductions

Updated: May 24, 2021

To any Australian business that is looking to cut costs and boost profits in the most legitimate way possible, business tax deductions often prove to be a saving grace.

Although they aren’t the newest financial tools in existence, business tax deductions have become a key fixture in effective accounting and bookkeeping practices. If you’re a small business that’s just starting out and on the verge of getting the hang of your financial basics, it’s also worth noting that this particular function will prove to be essential in the long run!

What you need to know about tax deductions

As intimidating as the concept of claiming business tax deductions may seem, it’s worth noting that it can also prove to be fairly easy to deal with if you take the right details and information in mind. Thanks to the fact that the Australian Taxation Office (ATO) has taken the necessary steps to ease up the claiming process, getting deductions and increased returns has never been easier!

To help ensure that you approach the business tax deduction claim process in the best way possible, here is everything you need to know about the process from start to finish:

What can you claim?

Australian taxation guidelines state that tax deductions can be claimed on various expenses that are incurred during business operations, as long as they are directly related to earning accessible income. Admittedly, it can be quite difficult to pinpoint exactly what constitutes deductible and what doesn’t because of all the various details in the way.

While there are different ways to determine the eligibility of an expense for tax deductions, here are three golden rules that will apply when determining what is acceptable:

  1. The expense must be for a business-related purpose and not for private use.

  2. You must have the records to prove that your expense is for the sake of your company and its operations alone.

  3. If your expense is a mix between business and private use, you can only claim the exact portion used for your business.

What can’t you claim?

Over the years, many people have confused what counts as a deductible expense because many have claimed their costs under the scope of tax deductions, only to be denied in the end. To give you a better idea of what you should avoid listing to ensure that you only get positive results during your claiming process, here are some of the most common non-deductible expenses to watch out for:

  • Private or domestic expenses (those which relate to your family)

  • Entertainment expenses

  • Traffic fines

  • Expenses that are incurred from non-assessable income

When can you claim your deduction?

Technically, business tax deductions are claimed according to a specific timeframe that depends on their main classification according to the ATO’s standards. If you want to claim an expense deduction in the hopes of getting a large return on your investments and work, here is the recommended claim schedule for major types of expenses:

  • Capital Expenses: A period typically longer than a year, up to three years maximum depending on completion and delivery of machinery or equipment (such as presses, cars, and control arms).

  • Operating Expenses: A period within the year that you incur them.

How can you claim your tax reduction?

Like your claimable, your ability to claim your tax reduction depends on your classification according to the ATO guidelines. In this case, the factor is the type of business you’re registered as. Let’s look at the set standards for claiming periods depending on your business type:

  • Sole Traders: You may claim the deductions in your individual tax return in the 'Business and professional items' schedule when using myTax or a registered tax agent.

  • Trust: You may claim your business tax deductions in your trust tax return.

  • Partnership: You may claim your business tax deductions in your partnership tax return.

  • Company: You may claim your business tax deductions in your company tax return.


Compared to other parts of your financial operations, tax deductions serve as one of the most vital parts that you shouldn’t overlook because of how the difference they make in your profits and cost management efforts. Through this guide’s help, you can put your best foot forward when managing your forms and lodging your returns just in time for tax season!

If you're looking for a small business accountant in the Gold coast that can help you with your business activity statement preparation and lodging-related needs, our team of experts are here for you. Get in touch with us today to learn more about how we can keep you on top of your financial requirements in the most effective way possible!

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