Common tax deductions for small business

There are three rules for what the ATO accept as a valid business deduction:

1. The expense must have been for your business, 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 it.

For example, if you buy a laptop and you only use it for your business, you can claim a deduction for the full purchase price. However, if you use the laptop 50% of the time for your business and 50% of the time for private use, you can only claim 50% of the amount as a deduction.

You can’t claim the GST component of a purchase as a deduction if you can claim it as a GST credit on your business activity statement. If you are not GST registered you can claim the inclusive GST cost as a tax deduction.

If you’re in an industry that requires physical contact with customers, such as healthcare, retail or hospitality, you can claim deductions for expenses related to COVID-19 safety. This includes hand sanitiser, sneeze or cough guards, other personal protective equipment and cleaning supplies.