With that in mind, we use a rule of thumb for identifying which costs can be claimed as business expenses:
If an expense is related to the generation of revenue, it can be claimed.
The nature of your business is also a factor. For example, a media production company may be able to claim Netflix and Sky TV subscriptions as expenses (they are critical for research), but a construction business likely won’t.
With that broad understanding, let’s break down examples of what’s claimable and what isn’t:
- Anything you purchase to sell to clients and/or customers
- Accounting fees
- Bank fees and credit card charges
- Business assets written off
- Commission paid to others to sell your products/services
- Computer / software / internet expenses
- Consultancy fees
- Contractors and subcontractors
- Depreciation on business assets
- Health and safety costs
- Insurance on business assets
- Interest on loans and overdrafts
- Legal fees – if related to the operation of the business to produce income
- Licenses, registrations, and subscriptions
- Office expenses
- Light, heat, and power
- Milk, tea, coffee, biscuits for staff
- Cleaning and toiletries
- Printing and stationery
- Protective clothing
- Rent and lease of assets
- Salaries and wages
- Training and courses
- Travel (national and international)
- Workers compensation insurance
Entertainment subject to FBT
- Food and drink
- Social events
- Office shouts
- Sports or cultural events
Repairs and maintenance
- Repairing an asset to return to its original state
- Maintaining an asset to ensure its continued operation
- Rectifying general wear and tear
- Cleaning, rubbish disposal
If the transaction improves the asset, it cannot be claimed as an expense. It’s instead considered to be part of the asset and depreciated.
Use of (part of) your home as an office
If you can show there is part of your home used as a place of business, you can claim a portion of your house-related expenses. These can include
- Mortgage interest
- Insurance (home and contents)
- Telecommunication bills
The amount you can claim is dependent on the floor area dedicated to business. For more info, check out our article on claiming home expenses.
Motor vehicle expenses
- Fuel, servicing, registration and insurance can all be recorded as business expenses. That said, you must make an adjustment if the vehicle is available for personal use or being used privately
- You can reimburse employees if they personally pay for any motor vehicle expenses.
- If an employee uses their own vehicle for business, you can reimburse them based on the number of business kilometres travelled, or on actual costs incurred.
- You can provide your employees with a vehicle allowance.
Because adjustments and reimbursements can be difficult to calculate, this is one of the times where it pays to have an accountant!
Expenses paid personally
Perhaps you’ve used a personal credit for business expenses like travel or online purchases. All you need to do is make a list and send it to your accountant.
Make sure to keep the invoices. While they might not be necessary for your financial statements, the ATO still requires that they be kept for at least seven years.
Many people believe some of the expenses below are business related. They aren’t!
- Drawings of a sole trader
- Doctor and medical bills
- Entertainment not subject to FBT
- Physiotherapy (even if you’re injured at work)
- School fees and childcare costs
- Vet bills
- Shoes and clothing if they are suitable for general wear
- Gym subscriptions
- Personal travel and accommodation
There are also a few business expenses that can’t be claimed for GST or tax deductions:
- Parking and motor vehicle fines
- Late payment penalties
- Any other fines or penalties
You can claim any business expense that’s linked to the production of your business income. However, you won’t be eligible for GST deductions on any part of an overseas trip.
For any travel that requires six or more nights in a row, you need to keep a travel diary. The following needs to be recorded :
- Travel movements and activities
- where you were
- what you were doing
- when you stop for meals
- the start and end times for activities
As with any business expense, you should retain copies of invoices or tickets.
If a trip is part business, part pleasure, you simply need to claim the relevant percentage or direct costs of the business part of the trip. For example, if your Fiji trip included a week on the beach and a week of client meetings in Suva, you can claim all of the Suva expenses and half of the travel costs (like the air fare).
Don’t hesitate to ask us any questions you have about international travel claims. [email protected] or 1800 955 089
Income from residential property rental should not be declared for GST, and any costs shouldn’t be claimed for GST, either.
- Property management fees
- Repairs and maintenance
- Travel to and from your property for inspections and repairs
- Mortgage repayment insurance
- Loan fees
- Interest on mortgage
Legal and consulting fees
- Legal fees incurred when buying a rental property*
- Legal action to recover unpaid rent
- Costs for evicting a tenant
- Preparation of a tenancy agreement
- Accountancy fees
- Valuation fee to obtain a mortgage*
- Legal fees for selling the rental property*
- Mortgage repayments (except interest)
- Improvements (these will be depreciated)
- Advertising the sale of a rental property*
- Real estate commission*
*While not deductible as expenses, these costs will reduce the property’s selling price for tax purposes, which may lead to a decrease in taxable profit.
If you’d like help figuring out your claimable expenses, our support team would love to give you a hand ([email protected] or 1800 955 089)