When you are running your own business, you will want to keep your costs as low as possible in order to maximise your profits, as in some cases this will be your only source of income. You are able to save money on some of the expenses that are involved in the running of the business as these expenses are tax deductible which means your total tax liability can be reduced by the amount of money that you have spent on these items. There are, however, only certain items that can be claimed for.
Vehicle and travel expenses
If you have to travel regularly as part of running your business then your travel expenses may be tax deductible. This only applies to travel expenses that are incurred during the course of the business day and does not include travel to and from your place of business. There are two types of expenses that can be claimed, car and travel expenses. If your own car is used for business purposes then this is classed as a car expense. Travel expenses relate to any expenses that you incur when travelling as part of your business including fuel, meals and overnight accommodation if necessary.
Tools and equipment
Any tools or equipment that you purchase to help you earn your income are usually tax deductible. For example, if you run a photography business then any camera equipment that you buy should be tax deductible as it would be classified as a technical instrument. In order to claim for the whole cost of the equipment if it costs less than $300 you may need to prove that it is only used for business purposes and that you do not use it for your own personal use. If the equipment costs more than $300 then you can still claim tax deduction for the decrease in value of the equipment. You may also be able to make a claim for any expenses related to the tools such as any insurance that is paid or any repairs that need to be made to the equipment. You may need written evidence of the cost of these repairs.
If you or any employees require specialist protective equipment in the course of their work or have to wear a specific uniform then these may also be tax deductible. Any expenses that are incurred for laundry or dry cleaning costs may also be able to be claimed back. Any clothing that is claimed for should be specific to your work and should not be the types of clothing that you would wear for everyday use. However, you may still be able to claim for uniforms for your staff even if it is not compulsory that they wear them, as long as they are specific to your business. You may need to provide written evidence that the clothing was purchased by you in order to make a claim.
This is not an exclusive list of items that you can claim tax deduction for. As a general rule if you have to spend money to earn income then you may be able to claim back the money that has been spent in the form of a tax deduction. However, it is always a good idea to double check which expenses can be claimed to avoid any disappointments when your tax return is filed.
Disclaimer: The information provided in this blog post was accurate at the time of publishing but may change over time. Please contact your accountant for more information about claiming tax deductible expenses.