If you have business income (as a sole trader with an ABN, or perhaps a partnership or trust – though this guide is primarily individuals/sole traders), you need to report business financials in your tax return (under the business schedule). We want to help you maximize business deductions while complying with the rules.
Here’s what to bring and consider for your business (sole trader) return:
Income Records for Business
Sales/Income
Gather all evidence of your business earnings. This could be invoices issued to clients, receipts from customers, summaries from gig economy platforms (e.g., Uber provides an end-of-year summary of your gross fares, their service fees, etc.). If you have a Point-of-Sale system or accounting software, print out the Profit & Loss statement for July–June. If you maintained just a spreadsheet or logbook of jobs done and paid, bring that. We need the total gross income. If any amounts were paid in cash, make sure they’re included – cash is taxable too. If you received any government grants or COVID support for your business (e.g., COVID relief grants, etc.), note those as well; many are taxable.
Accounts Receivable
Money you earned by 30 June but not received until after can still be included if you’re using accrual accounting. Most sole traders use cash basis (declare when received), but if you have debtors and you know you should include them, let us know. Generally, for simplicity, we do cash basis unless you have inventory or it’s beneficial to do accrual.
Industry-specific
Tradespeople: Provide summaries of jobs or contracts, or your bank statements highlighting business deposits.
Rideshare/Delivery drivers: The platforms usually provide annual statements: e.g., Uber’s Annual Tax Summary shows your gross rider payments, Uber fees, other adjustments (like safe driving rewards, etc.). This is very useful – bring it. You must declare the gross and you can deduct their service fee. Same for Deliveroo, DoorDash, etc. They also may list how many kms driven while passenger on trip (Uber does) – but be careful, that doesn’t include kms between jobs, so you likely have more to claim if you kept a log. See Vehicle in deductions below.
Airbnb hosts: The platform can show total gross receipts and the fees they took. Bring those. Also, note if you used the property personally for part of the year.
Freelancers: If you did Upwork/Fiverr jobs, you might have a report of earnings and their fees. Provide those or your own records.
Retail or E-commerce: If you run an online store (Shopify, eBay, Amazon) or a physical stall, provide sales records. These platforms often have dashboards with sales figures. Remember to consider cash sales if any (like market stall cash takings). If you use Square/Paypal, etc., those statements help too.
Professionals/Consultants: Invoices or contracts that show what you charged. If you received any royalties or licensing income, note those.
Crypto business: If you were trading crypto as a business (high-frequency, intending to profit from short-term trades), that might be treated as business income rather than capital gains – that’s a complex determination, we’d discuss. If so, you’d inventory your crypto. But most individuals are investors, not business, in crypto unless actively day-trading like a business.
Government Payments
If you are eligible for Small Business COVID grants or other grants (e.g., state government grants for small business), many are taxable unless specifically legislated as nonassessable. Provide info on any such grants or COVID Disaster Payments or JobKeeper (JobKeeper to business is assessable; JobSeeker is personal and already covered). Some state grants were declared non-taxable in specific legislation; we can check which if you tell us the name of grant.
Other Business Income
This could include business bank interest (if you have a separate business account yielding interest), or maybe a sale of business assets (if you sold a piece of equipment, that can trigger a balancing adjustment, possibly a gain or just reduce depreciation claim). Also if you received insurance proceeds for a business asset or for business interruption, that is income.
Let us help your business be on top of tax & compliance this financial year!
Business Deductions
We want to claim all expenses you incurred in running your business.
Typical categories include:
Purchases (COGS)
If your business sells goods, we need Opening Stock, Purchases, Closing Stock to compute Cost of Goods Sold. If you’re a small business and use simplified trading stock rules, you may not need stocktake if change is minimal. But if you have significant inventory, please do a stocktake at 30 June (or provide best estimate). For businesses providing services, usually no COGS (maybe materials consumed in jobs though – those are supplies, claim them as expenses).
Materials & Supplies
All supplies you bought for use in your business or to sell to clients - e.g., a builder’s timber, nails, paint; an artist’s canvases and paints; a hairdresser’s hair products; an online seller’s wholesale goods. They might be part of inventory or direct expenses
Staff & Contractor Costs
If you paid anyone wages, that’s deductible (and you should have handled PAYG withholding and super for them – that’s complex, let’s assume most sole traders here have no employees, but if you do, we’ll include wages and super paid). If you paid subcontractors or freelancers for help, that’s deductible – note amounts and ideally have invoices or at least records of payments. Also, if you had to withhold from contractors (through voluntary agreements), have those details.
Rent for Business Premises
If you rent an office, shop, or workshop solely for the business, the rent is deductible. If you work from a home office exclusively for business, you can claim a portion of home expenses (mortgage interest/rent, rates, etc.) as business use of home. This is a bit different from employees WFH: as a business, if that room is a principal place of business, you can claim occupancy expenses proportionally. E.g., you use one room (10% of house) as an office for your business (and no other office exists), you could claim 10% of rent or mortgage interest, 10% of council rates, etc. But warning: if you own the home, claiming interest and rates will partly deny CGT main residence exemption on that portion on sale. We can discuss pros/cons (often the tax saved now is worth it if business is long-term). If renting, no CGT issue, so claiming portion of rent is fine. Document how you calculate (floor area or time usage). Alternatively, you can use the home office cents method as a safe harbor, but as a business you’re actually allowed occupancy unlike employees. We’ll maximize your advantage here based on your preference and record.
Utilities
Electricity, water, gas for your business premises or home office portion. If home, proportionate to office use (maybe by floor area/time). If separate office, the full bill used for business.
Phone & Internet
Your business phone bills, business internet. If you use your personal phone partly for business, claim the business % (like earlier – but since it’s business, you can be a bit more liberal if truly used a lot for business). Ideally have a dedicated phone or SIM for business, but if not, estimate business use %. Same for internet if home internet is used for business, allocate accordingly.
Vehicle Expenses
If you use a car or vehicle for your business (e.g., you’re a mobile service provider, rideshare, tradesperson with a ute), you have two choices on taxes:
Cents per km: If it’s a passenger car (under 1-tonne or <9 passengers), you can use this method. Note, the 5,000 km limit at 78c (or updated rate) is mainly a tax return shorthand for cars <1t).
Logbook method: Keep a logbook 12 weeks to establish business %. Then claim that % of all car running costs (fuel, maintenance, rego, insurance, depreciation). If you are a small business entity, you can also use simplified depreciation for the vehicle (but there’s a luxury car cost limit ~$64k). Many times, using actual costs yields a bigger deduction if you drive a lot for work (like rideshare can often justify near 100% business use).
🚨 If vehicle is >1 tonne (like a big van or truck) or a motorbike, you can’t use cents/km or logbook method limits – you just deduct actual expenses (no 5,000 km limit, and logbook isn’t legislatively required but recommended to justify business %).
🚙 Rideshare Drivers
The ATO expects logbook or at least a reasonable calculation for Uber drivers. Uber’s report might say “trip km = X” but you also have “dead running” between trips. Ideally you log all business km (maybe the app can do it). If not, you might estimate an extra 20-30% on top of trip km for repositioning. It’s best to have a logbook. Keep Odometer readings at year start/end too if possible. We’ll claim actual fuel, servicing, etc. It usually far exceeds the 5,000 km cap if you drove a lot.
👷🏽♀️ For Tradies
if you have a ute over 1-tonne payload, you can claim 100% of costs if essentially only used for work (and incidental private). If it’s a normal car, keep logbook. If you have sign-writing on car and mostly business use, still do logbook to be safe.
✍🏽 Provide all car expense reciepts
Including fuel (summary of total if you didn’t keep every receipt – maybe credit card statements), service invoices, insurance, registration, tyres, repairs. And if you lease the car or have a loan, provide lease/interest amounts. If the car is used partly privately, we’ll apply the % from logbook.
If you use the vehicle for both business and personal, you cannot claim fines or personal petrol, etc.
⚠️ Only the business portion. Logbook helps here.
Equipment & Asset Purchases
Consumable Items
Any other consumables like office stationery, printer ink, software subscriptions, trade-specific supplies (cleaning materials, spare parts) – all deductible.
Advertising & Marketing
Money spent on ads (Google Ads, Facebook, directory listings), printing business cards, flyers, website costs (hosting, domain registration), etc
Insurance
Business-related insurance premiums – e.g., public liability insurance, professional indemnity insurance, commercial vehicle insurance, business asset insurance. (Not life or critical illness – those aren’t deductible even if you think it protects business.) Also, if you’re a sole trader with income protection insurance and you pay it (not through super), that is deductible (we usually claim that under personal D15, but it’s effectively related to your business income if you’re self-employed).
Travel (Business)
Plane tickets, accommodation, meals (meals only deductible if overnight business travel), taxi/Uber for business trips. For example, you flew to Sydney for a business conference – claim flight, hotel, conference fee, and meals (meals not lavish). If you mixed business and personal on a trip, only claim business portion.
Education & Training (Business-Related)
Courses, certifications, workshops that help your business. As a business expense, even learning a new skill can be deductible (the self-education new vs current job rule doesn’t apply the same way if you’re upgrading skills for your existing business or a related line). Just ensure it’s relevant to earning business income.
Legal & Professional Services
Fees for legal advice or accounting relating to the business. If you paid a lawyer to draft a client contract, deductible. If you got a tax advisor for business structure advice, deductible (unless it’s a capital expense like setting up a new company – but for sole trader likely not). Also, bank fees on your business bank account, interest on business loans/overdraft (aside from vehicle or equipment loans we addressed), and merchant fees (e.g., EFTPOS machine fees, PayPal fees) are all deductible.
Subscriptions & Licenses
Any subscriptions to industry journals, trade publications, software licenses (e.g., Adobe Suite, Microsoft 365 for business), or apps you use for work (accounting software subscription, etc.). Also professional license fees or permits needed to operate (e.g., a tradesperson’s contractor license renewal, a taxi license fee, etc.). If you had to obtain a police check or specialty certification for the business, deductible.
Home Office for Business
If your home is your main place of business (e.g., you do all your work from a home office or workshop), see the earlier note: you can claim a reasonable portion of occupancy (interest/rent) and running expenses of the home. Alternatively, use the ATO rate (70c/hour) – but for a serious full-time home business, the actual expense method might yield more because you can include interest or rent which the 70c doesn’t cover. We’ll decide based on what you’re comfortable with and evidence. If claiming occupancy, measure your office space vs house area (and note you used it solely for business, not a guest room in off-hours ideally). Keep in mind partial CGT impact – we will advise.
🕵🏽♀️ Private Portion of Expenses
Just like in work expenses, if something is partly private, only claim the business use portion.
⚠️ This is important: ATO watches closely to ensure that sole traders don’t dump personal costs.
Examples: If your mobile phone is 50% personal, 50% business, claim 50%. If your car is 30% personal per logbook, we only claim 70%. If your home internet is used 20% for business (emails, uploading content) and 80% by family for Netflix, claim 20%. We need you to give an honest estimate or evidence of these percentages. It’s often similar to earlier WFH apportionment, but now as business expense. The ATO tends to scrutinize things like 100% of phone or car claimed when clearly there’s some personal use (they have industry benchmarks too). So keep it reasonable and documented.
Non-Deductible or Capital
Some costs might be capital (to be depreciated or amortized) and not outright deductible (we covered asset purchases – they go to depreciation unless eligible for immediate write-off). If you spent money on goodwill, business purchase, or franchise fee, those may need special treatment (goodwill not deductible, franchise fees often amortized). If you incorporated your business (set up a company) and had legal fees, those are capital (but small business can deduct up to $100 startup costs instant due to some provisions – anyway, might not apply here). Repayments of loans aren’t deductible (just interest). Drawings (what you pay yourself as sole trader) aren’t deductible – you’re taxed on profit, not on what you withdraw.
GST Considerations
If you’re registered for GST, all expense amounts we talk about should be net of GST (because you claim GST credits separately). If you’re not registered, you deduct the GST-inclusive cost. So when giving us figures, ideally tell us GST-exclusive amounts if registered. Or give us total and note which have GST, we’ll back it out. For simplicity, many just give the P&L prepared on cash basis net of GST if they do BAS – that’s perfect. If you are not sure, we’ll figure it out.
Industry-Specific Deductions
🔨 Tradies
Tools (which we have in assets if expensive or materials if consumable), protective gear, vehicle/trailer costs, trade insurance, any site expenses, union fees or industry association dues. Also license renewals (builder’s license, etc.), and maybe subcontractor payments if you hired some.
🎨 Freelance Creatives (designers, writers)
Computer hardware/software, home office, reference materials, camera equipment for photographers, musical instruments for musicians (with depreciation), travel to gigs, cost of costumes or props, union/guild fees, etc.
🤝🏽 Consultants
Possibly a lot of travel to clients (car, or flights), self-education to keep up credentials, networking event costs, home office, etc
🛞 Rideshare
Biggest costs are car depreciation, fuel, car washes (deduct all those Uber car cleaning, water, mints for riders), tolls (when driving for Uber, tolls often are charged to passenger but if you paid any, deduct), phone mount, charger, extra insurance if you got rideshare insurance. And the Uber/OLA/DiDi service fees – these can be 20-30% of fares, and are deductible (the Uber statement shows them). Also GST: if you’re a rideshare driver, you must register for GST regardless of turnover. So you’ll be claiming GST credits and paying GST on fares. Our discussion here is income tax though. Just ensure you have separated the GST if you are registered (we’ll check your BAS).