Running a business as a sole trader allows you to control your work, profits and major decisions. But when it comes to paying taxes, you need to understand how you can make legitimate claims while staying compliant to the ATO (Australian Taxation Office). Sole trader tax claims allow you to reduce your taxable income, which you can use to reinvest in your business.
To help you claim such deductions, this guide explains the rules around deductions and what you can claim. It will also discuss how business tax advisory can help you to keep a detailed record for filing tax returns.
As a sole trader, you run the simplest business in terms of structure. By following this business model, you personally own, operate and are responsible for all aspects of the entity. This also includes debts and other financial obligations.
Thereafter, the sole trader tax return is filed as a part of your individual return. Your tax rates follow personal income tax thresholds. For example, if your business makes a turnover of $75,000 annually, then this amount will be taxed at individual tax returns as per the ATO rules.
For this reason, many business owners hire sole trader tax accountants to manage their financial reporting and to fill in all records accurately. These people help you to accurately claim all deductions and fulfil your tax obligations on time.
As a sole trader, your taxes are not deducted automatically unless you have made special agreements where someone else deducts them. This occurrence encourages you to put the money aside and pay your taxes later. Here are some of the common ways to efficiently manage business accounting:
Besides following these steps, your business tax planning should also include forecasting your obligations and setting aside some amount to fulfil tax returns smoothly.
There are multiple deductions you can claim depending on the annual turnover. As per the ATO sole trader tax deductions rules, your business expenses can be deductible if you do any of the following:
In this scenario, a tax accountant Perth can help you to lodge applications for your claims.
The immediate expenses you can claim for business include any assets that are under $300. These include office chairs, stationery, or power tools. However, to reimburse large assets such as computers and vehicles, you will need to qualify for the instant asset write-off under sole trader bookkeeping.
Also, these thresholds are subject to change each year, so it’s better for you to hire an expert who knows sole trader bookkeeping.
Many sole traders work from home and the ATO allows to to calculate such deductions related to utilities used for business. Moreover, if any part of your home is used only for business, then you can claim mortgage interest and council rates with the help of the bookkeeping services Perth.
In order to get reimbursement for such expenses, you can show your vehicle’s logbook records, including the distance travelled for business purposes. Through these claims, you can get a rebate for fuel, servicing, and insurance costs for your vehicles.
Today, businesses are thriving on online visibility with the help of website hosting, paid advertising, and campaigns. The amount you have spent on all of these activities is deductible from your income tax returns. Along with that, digital solutions such as accounting solutions also play a crucial part in sole trader allowable deductions Australia.
If you have taken a business loan, you may be eligible to claim deductions for the interest paid on the borrowed amount. This applies when funds are borrowed to purchase equipment, vehicles, or other assets used in your business.
As part of effective business tax planning, knowing how to manage loan interest deductions can help reduce taxable income and improve cash flow. For a smooth and compliant deduction process, you can seek sole trader tax help from both lawyers and accountants.
Apart from multiple deductible expenses, here are some of the expenses that you can’t get reimbursed for. Some of them include:
To better analyse what you can claim, and what not, consult with a small business accountant Perth today. They can help you lodge your BAS and ITR better during tax season.
Also read: How to Maximise Tax Deductions on Your Business Loan
Sticking to the ATO’s rules, using accurate records and applying for legitimate claims will allow you to get the accurate reimbursement for the transactions you make solely for business. To help you with this process, you can approach to accounting services Perth. These professionals have in-depth knowledge about sole traders’ ITR returns and help you to accurately submit your BAS results or any other required documentation to the ATO during tax season.
Sole traders in Australia can claim any expenses that are directly related to earning income, such as office costs, vehicle expenses and professional tools expenses. For example, if you purchase a computer for your business, then you can claim its reimbursement under asset write-off rules.
You can get the interest paid on business loans when the amount is solely for business activities. For instance, if you borrow an amount to purchase machinery, the interest on the borrowed amount can be reversed to you.
Yes, a logbook method is a highly effective approach to claim deductions related to your vehicles. With such records, you can claim the accurate amount you spent to on your car for business purposes.
If you are registered for GST, then you become eligible to claim credits for business expenses. This step helps you to reduce the overall operational cost of your business.
As a sole trader, you can use such asset write-offs to deduct the cost of assets that were solely purchased for business use. For example, if you have purchased a printer for your office, then you can reimburse it during ITR filing.
Copyrights © Palladium Financial Group 2025
