Tax deductions and concessions

Most of your business income is assessable; this means you must declare it and it is subject to tax. As a small business you might be eligible to claim deductions and/or tax concessions.

Deductions

Tax deductions reduce your income; they are taken off your total assessable income and you pay your tax on the left over income. You are not reimbursed for your tax deductions.

You can claim tax deductions for expenses incurred in running your business, providing they are not private or domestic expenses, such as childcare fees. Entertainment, fines and some other expenses are also excluded.

Common business expenses that may be claimed include:

  • advertising and phone costs
  • business travel
  • fringe benefit tax
  • motor vehicle costs
  • depreciation of assets such as plant and equipment
  • salary, wages and superannuation contributions
  • repair and maintenance costs
  • costs associated with running your business from home.

TIP: Rules that apply to personal services income (PSI) may limit the deductions you or your business can claim.

The ATO has more information regarding income and deductions for business.

Concessions

Generally, to qualify for small business tax concessions your business must have an annual turnover of less than $2 million.

You can choose the concessions that suit your business providing you satisfy any associated conditions. You will need to check each year to determine whether you still qualify for these concessions.

The ATO has more information regarding tax concessions for small business.

More information

► Watch the ATO videos on business deductions, tax concessions, depreciation, motor vehicle and home office expenses.
► The ATO website has further information regarding deductions for home-based business.
Tax reporting requirements
Tax and your business structure