As a business owner, you’re no stranger to regular expenses – fuel for your car, client meetings over coffee, office supplies like printer toner… the list goes on.

But which of these are actually tax-deductible?

The ATO has recently reminded us that not all expenses make the cut. In fact, they’ve shared some rather creative claims that didn’t pass the test:

  • A mechanic tried to claim an air fryer, microwave, two vacuum cleaners, a TV, gaming console and accessories – all knocked back as they were for personal use.
  • A truck driver claimed swimwear, explaining it was for a dip at a rest stop on a hot day. Denied.
  • A fashion industry manager attempted to claim over $10,000 in designer clothes and accessories to look the part at work events. That one didn’t fly either – the ATO doesn’t consider conventional clothing a deductible expense.

The takeaway? If it’s personal, it’s not deductible.

So, What Can You Claim?

In most cases, everyday business expenses are tax-deductible – provided they’re directly related to earning your assessable income.

This might include:

  • Day-to-day operating costs
  • Services and goods purchased for business use
  • Some capital expenses (like depreciating assets)

To determine whether an expense is deductible, the ATO uses three golden rules:

  1. The expense must be for your business, not personal use.
  2. If it’s mixed-use, you can only claim the business portion.
  3. You need proper records to support your claim.

Common Non-Deductible Expenses

Some expenses are clearly out of bounds with the ATO, including:

  • Entertainment (unless it’s a fringe benefit)
  • Traffic fines, even while on business trips
  • Personal expenses (childcare, family clothing, etc.)
  • Costs related to income that isn’t assessable
  • Payments that haven’t met PAYG withholding or reporting obligations
  • The GST portion of purchases where a credit is already claimed on your BAS

Not Sure What You Can Claim?

Understanding what qualifies as a deductible business expense can be tricky – and getting it wrong can cost you.

If you’re unsure, have questions, or just want peace of mind, get in touch with our team at Think Accountants. We’ll help you review your expenses, ensure you’re compliant, and make the most of every deduction available to your business.