Tax deductions and concessions

BUSINESS INFORMATION

Tax deductions lower your total assessable income, thereby reducing the amount of tax you owe. Additionally, you may be eligible for tax concessions if you meet specific criteria.

Most of your business income is considered assessable, meaning it must be declared and is subject to taxation.

Most of your business income is assessable; this means you must declare it and it is subject to tax.

Tax 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.

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

Tip

Rules governing personal services income (PSI) may restrict the deductions you or your business can claim.

Tax concessions

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

You can select the concessions that best suit your business, provided you meet the relevant conditions. It’s essential to verify your eligibility annually, as it may change over time.

For more information on tax concessions for small business, consult the ATO.

Action to take

Visit the ATO’s online learning platform essentials to strengthen your small business to access 21 free short courses in deductions and more
Read the additional information on deductions for home-based business and depreciation on the ATO website.