When running a small business in Perth, the plethora of responsibilities you have makes it easy to overlook legitimate tax deductions that could save you thousands each year.
Many small business owners overpay taxes simply because they’re not claiming everything they’re entitled to. Understanding what you can claim and how to do it correctly makes a real difference to your bottom line.
What Makes an Expense Tax Deductible?
The basic rule is that an expense must be directly related to earning your business income to be deductible.
According to the ATO, a deductible expense must:
- Be incurred in the course of running your business
- Have a clear connection to generating assessable income
- Not be a private or domestic expense
The line between business and personal expenses can sometimes blur, particularly if you work from home or use your vehicle for both business and personal purposes. That’s where proper record-keeping and professional advice become essential.
Top Tax Deductions for Small Businesses in Perth
1. Operating and Running Costs
Your everyday business expenses form the foundation of your tax deductions. These include:
- Office rent or lease payments
- Electricity, gas, water, and internet
- Business phone usage
- Office supplies, stationery, and printing
- Cleaning and maintenance
- Bank fees on business accounts
These costs add up quickly throughout the year. Keeping organised records of these expenses ensures you’re claiming everything you’re entitled to.
2. Home Office Expenses
If you operate your business from home (even part-time), you can claim a portion of your household costs. You may be able to claim:
- A portion of your electricity and gas bills
- Internet and phone usage (business percentage)
- Depreciation on office furniture and equipment
- In some cases, a portion of rent or mortgage interest
The ATO offers different methods for calculating home office deductions. We can help you determine which method maximises your claim while keeping you compliant.
3. Vehicle and Travel Expenses
If you use your vehicle for business purposes, you can claim fuel, maintenance, insurance, registration, and depreciation. However, this is one of the most scrutinised areas by the ATO.
The key is proper documentation. You’ll need to:
- Retain all receipts for vehicle-related expenses
- Remember that travel between home and your regular place of work isn’t deductible
- Depending on your business structure and circumstances, you may be able to use the cents per kilometre method or the logbook method. If using the logbook method, proper records are essential.
Parking fees and tolls for business trips are also claimable, as are accommodation and meals for overnight business travel.
4. Employee Wages & Superannuation
If you employ staff, wages, salaries, bonuses, and compulsory superannuation contributions are fully deductible, provided that super is paid on time. Late super payments aren’t deductible until the year they’re actually paid.
You can also claim:
- Workers compensation insurance
- Payroll tax (if applicable)
- Recruitment and training costs
5. Marketing & Advertising
Every dollar you spend promoting your business is 100% deductible. This includes:
- Website development and hosting
- Social media advertising
- Google Ads and online marketing
- Printed materials like business cards and brochures
- Sponsorships and promotional events
As more Perth businesses shift to digital marketing, these expenses are becoming a larger part of overall deductions. Make sure you’re capturing them all.
6. Professional Fees & Advisory Services
Many business owners hesitate to invest in professional advice, but these fees are fully deductible and often pay for themselves through better tax outcomes.
You can claim:
- Accounting and bookkeeping fees
- Legal advice related to your business
- Business consulting and advisory services
- Financial planning fees
Working with a registered tax agent like Griffiths Advisory gets you expert guidance and also extends your lodgement deadline, ensuring you’re claiming every deduction correctly.
7. Software and Technology
Most businesses today rely on digital tools to manage finances, communicate with customers, and stay organised. These technology costs are fully deductible.
Common claims include:
- Accounting software like Xero or MYOB
- Customer relationship management (CRM) systems
- Project management tools
- Cloud storage subscriptions
- Cybersecurity services
If you purchase software or equipment costing less than the instant asset write-off threshold, you may be able to claim the full cost immediately rather than depreciating it over time.
8. Depreciation & Asset Write-Offs
When you purchase equipment, furniture, or technology for your business, you can claim depreciation over the asset’s effective life. However, the instant asset write-off scheme allows eligible businesses to claim the full cost of certain assets upfront.
This can apply to:
- Computers and laptops
- Office furniture
- Tools and equipment
- Vehicles (subject to specific rules)
The instant asset write-off threshold and eligibility criteria change regularly. We stay up to date with these rules so you don’t have to.
9. Business Insurance
Protecting your business is essential, and insurance premiums are fully deductible. This includes:
- Public liability insurance
- Professional indemnity insurance
- Business interruption insurance
- Income protection (for business-related coverage)
10. Interest on Business Loans
If you’ve borrowed money for business purposes, the interest portion of your repayments is deductible. This includes:
- Business loan interest
- Business credit card interest
- Equipment finance charges
Remember, only the interest is deductible, not the principal repayment. Your accountant can help you separate these amounts correctly.
11. Education & Professional Development
Courses, training, and professional development directly related to your current business are deductible. This includes:
- Industry-specific training
- Business management courses
- Professional memberships and subscriptions
- Conferences and seminars
12. Bad Debts
If you’ve provided goods or services but haven’t been paid, you may be able to write off the debt as a tax deduction. However, you must have previously included the income in your assessable income and made genuine attempts to recover the debt.
At Griffiths Advisory, we help Perth small business owners reduce their tax bills legally while staying fully compliant. We take the time to understand your business, identify every legitimate deduction, and structure your affairs in the most tax-efficient way. Contact us to make tax time easy to manage.
Frequently Asked Questions About Small Business Tax Deductions
What mistakes cause small business owners to miss deductions?
Many small business owners miss deductions because expenses are not recorded properly throughout the year. Receipts get lost, subscriptions are paid from personal accounts, cash purchases are forgotten, and mixed-use expenses are not split correctly between business and personal use.
Another common issue is waiting until tax time to think about deductions. By then, it is much harder to reconstruct what happened across the year. A simple record-keeping system can make a significant difference.
What happens if I claim a deduction without proper records?
If the ATO asks for evidence and you cannot substantiate the claim, the deduction may be disallowed. This could increase your taxable income and may result in additional tax, interest or penalties.
Good records do not need to be complicated, but they do need to show what the expense was, when it was paid, who it was paid to, and how it relates to your business.
How long should small business records be kept?
Most business records need to be kept for five years. This includes receipts, invoices, bank statements, payroll records, loan documents, vehicle records and any calculations used to support your claims.
Digital record-keeping can make this easier. Using accounting software, receipt capture tools, and separate business bank accounts can reduce the chance of missing deductions or mixing personal and business spending.
Should I separate my personal and business expenses?
Yes. Keeping personal and business expenses separate makes tax time much easier and reduces the risk of incorrect claims. A dedicated business bank account can help you track income and expenses more clearly.
This is especially important for sole traders and small businesses where personal and business spending can easily overlap.
When should I speak to a tax accountant about deductions?
It is worth speaking to a registered tax accountant before tax time, especially if your business has grown, you have purchased new assets, started working from home, hired employees, taken out finance or changed how the business operates.
Getting advice early can help you structure records properly, understand what can be claimed, and avoid mistakes that are harder to fix later.
Can better record-keeping reduce my tax bill?
Better record-keeping does not create deductions, but it helps ensure legitimate deductions are not missed. Many businesses overpay tax because they cannot prove expenses that would otherwise have been claimable.
A clear system also helps you make better decisions during the year, because you can see where money is going and plan for upcoming tax obligations.
How can Griffiths Advisory help with small business tax deductions?
Griffiths Advisory helps Perth small business owners review their expenses, identify legitimate deductions, improve record-keeping, and prepare accurate tax returns. With the right advice, you can stay compliant while making sure your business is not paying more tax than necessary.
Related posts:
- How a Tax Accountant Can Help Minimise Your Small Business Tax Bill
- How Can A Small Business Accountant Help Your Business?
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Phil has been the Managing Director of Griffiths Advisory for 29 years, combining his expertise in taxation, business advisory, superannuation, negative gearing, and wealth creation. He also loves an active lifestyle, indulging in surfing, cycling, snowboarding, and spending quality time with his wife and two children.
