Which business expenses can you claim against tax?

Binghay Co • June 14, 2023

Incurring expenses is an unavoidable fact of running a business. But which expenses can you claim tax deductions against and which don’t meet the tax-free criteria?


Here’s our lowdown on which expenses you can claim against tax.


Which business expenses can you claim deductions against?


If your business expense is directly related to earning your assessable income then you should be able to claim a tax deduction against this particular cost.


For example, everyday business expenses that you may be eligible include:

  • Your day-to-day operating expenses
  • The purchases of products or services you’ve made for your business
  • Certain capital expenses, such as the cost of depreciating assets like machinery and equipment used in your business.


The amount of a deduction (and when you can claim it) will vary, based on the type of expenses you’re claiming. You can find out more on the Australian Tax Office (ATO) website here.


There are three basic rules for checking the your expense claim is a valid business deduction – and that it won’t be challenged by the ATO.

  1. The expense must have been for your business, available as an allowable deduction and not for private use.
  2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
  3. You must have records to prove that the expense was incurred.


Which business expenses can you NOT claim?


As we’ve explained, you can claim a deduction against most business expenses that are incurred as part of your day-to-day revenue-generation activities. But there are some business expenses you cannot claim against tax.


These non-tax-deductible expenses include:

  • traffic fines you receive
  • private or domestic expenses, such as childcare fees or clothes for your family
  • expenses relating to earning income that is not assessable
  • Non-compliant payments – payments for which you have not met your PAYG withholding or reporting obligations -
  • the GST component of a purchase if you can claim it as a GST credit on your business activity statement.
  • Generally you cannot claim a deduction for the cost of capital assets that are dealt with under the capital gains tax rules, although there are some exceptions.
  • Your deductions may be limited for expenses incurred in relation to personal services income (PSI) if the PSI rules apply to that income.


Talk to us about reducing your business expenses

This isn’t an exhaustive list of tax-deductible expenses. There will be various ways to claim your operational expenses against the relevant reliefs and incentives offered by the ATO.


If you’re looking to cut back your costs and improve your tax efficiency, we can help. Talk to us about your regular operational expenses and tax costs and we’ll work with you to find the important reliefs, incentives and allowances that can be claimed.


Get in touch to start reducing your expenses

If you want to learn more about this topic and how we can help your business, contact us to set up a FREE consultation so we can get started. 


Binghay & Co are Accountants & Business Advisors located in Docklands, Melbourne.

Making your business work for you: making enough to retire

By Binghay Co • April 22, 2025
As a business owner, you may love running your company, but there’s always the underlying thought that, one day, you’ll need to sell and retire. With global markets in flux and an uncertain future, how can you ensure your business is worth enough when the time comes to sell? Let's look at the core ways your business can be structured to deliver on your own personal, family, philanthropic and leisure goals, now and into retirement. Creating a business that will fund your retirement plans Your business should be your retirement nest egg, but how do you ensure it holds its value for a comfortable retirement? Here are five strategies to boost your business’s value, ensuring you get the return on investment (ROI) needed when it’s time to sell. Build a business that can run without you To maintain its value at sale, your business must operate independently of you. Systematise your operations and create scalable processes, so the day-to-day functions are not solely reliant on you. A strong management team that can run the business without you is essential. Autonomy increases the business’s appeal to potential buyers, who want to ensure the company will thrive even after the founder leaves. Focus on recurring revenue streams Recurring revenues provide stability and increase your business’s value. Consider subscription services or other predictable income sources. Recurring revenue models significantly raise business valuation multiples, often by 2-3 times compared to transaction-based models. With a stable income structure, you can sell your business for a premium price, giving you the capital needed for retirement. Invest in intellectual property and licensing Intangible assets like intellectual property (IP) and brand equity can significantly enhance your business’s value. Consider developing products, processes, or technologies that can be patented and licensed. This creates passive income and appeals to buyers looking for businesses with valuable, long-term assets. Keep detailed records and keep finances healthy A business with a solid financial track record is more attractive to buyers. To boost your business’s appeal, maintain strong financial health, a good credit score, and positive cash flow. Rigorous financial tracking and clean books with 3-5 years of profitability will justify higher valuations and greater ROI, making your business a more desirable asset. Create a strategic exit plan well in advance of retirement The key to a successful exit is planning well in advance. Work with your advisors to enhance the business’s value, identify ideal buyers, and structure your exit in a tax-efficient manner. Ideally, start your exit strategy 3-5 years before retirement to ensure you have time to focus on succession planning, boosting business value, and securing enough capital for your retirement needs. Helping you secure your income and lifestyle You’ve worked hard to build your business, and you deserve a fulfilling, comfortable retirement. But to make that a reality, it’s crucial to plan ahead. Start working on your exit strategy now. Come and have a chat about your retirement plans and exit strategy. We can also introduce you to independent financial advisers who can offer personalised wealth management advice.

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