Running a small business in Australia means wearing multiple hats—owner, manager, marketer, and bookkeeper. With all that responsibility, it’s no surprise that many small business owners may sometimes overlook or forget to claim valid tax deductions during EOFY.
The good news is, brokers are in a strong position to offer more than just lending advice. By helping clients understand essential business tax deductions, brokers can guide them toward smarter financial decisions.
This article covers common (and often missed) tax deductions available to small business owners in Australia, offering practical tips brokers can use to potentially help their clients save money and stay compliant.
Tax Deductions Quickly Defined
Business tax deductions reduce the portion of income that’s subject to tax. In business terms, you can subtract certain costs from your assessable income, which may lower the tax owed to the ATO.
This is particularly valuable for small business owners looking to keep more of their profits and reinvest in growth. The ATO provides three golden rules for valid business tax deductions:
- The expense must have been incurred for your business.
- It must relate directly to earning assessable income.
- You must have a record to substantiate the claim (e.g., receipt, invoice, or logbook).
Understanding these rules can help prevent rejected claims during audits, reduces non-compliance risk, and encourages better recordkeeping and financial discipline.
Timing is also key: a business can typically claim an expense in the financial year it was incurred, even if payment is made later.
For example, if a business receives an invoice for services in June but pays in July, the deduction can still apply to the earlier financial year, as long as it was incurred.
Business Tax Deduction Checklist For SMEs
Not all business expenses are immediately deductible; many deductions can fall through the cracks during busy EOFY prep.
Here’s a checklist of essential categories to help your clients get more back at tax time. Brokers may want to go over this list during EOFY strategy meetings with their clients.
1. Tax-Relevant Costs And Expenses
Expenses incurred while managing a business’s tax obligations are themselves deductible. These include:
- Registered tax agent fees
- Tax advice from professionals
- Books, guides, and software related to tax preparation
- Attending tax-focused workshops or webinars
Despite being administrative costs, these expenses also qualify as business tax deductions when directly connected to tax preparation and compliance.
Brokers can encourage clients to keep receipts for any tax-related services or educational resources.
2. Mixed-Use Expenses
Only the business-use portion can be claimed as business tax deductions when an asset or service is used partly for business and personal reasons.
This applies to many modern working arrangements, especially for freelancers, consultants, and home-based business owners.
Examples include:
- Mobile phones used for both work and personal calls
- Cars used for deliveries and family trips
- Home internet used during business hours
The ATO expects reasonable evidence to back up these claims. To track business versus personal use, consider reminding clients to maintain a usage logbook or a detailed spreadsheet.
This will help them justify business deductions and avoid audits.
3. Prepaid Expenses
Certain prepaid expenses can be claimed immediately, offering SMEs a way to lower their taxable income this year.
This can be useful for businesses with extra cash flow that want to maximise deductions before EOFY.
Eligible prepayments include:
- Rent for the next year
- Insurance paid in advance
- Subscriptions under $1,000, such as memberships or software licenses
However, not all prepayments may qualify. Larger amounts or services that stretch over more than 12 months may need to be apportioned over future income years.
Brokers may want to encourage clients to consult with their accountant when checking which prepayments can be deducted in full.
4. Instant Asset Write-Offs
Under current rules, businesses with a turnover under $10 million can claim an immediate deduction for assets costing less than $20,000. This applies to each asset and is valid for the 2024–2025 financial year.
Assets must be:
- Used or installed and ready to use by EOFY
- Purchased primarily for business use
Examples:
- Laptops and tablets for staff
- Tools and trade equipment for contractors
- Vehicles used for deliveries or on-site work (excluding luxury cars)
This Instant Asset Write-Off generally provide an excellent cash flow advantage.
Instead of depreciating assets over the years, clients can get the full tax benefit upfront. Brokers can add value by reminding clients of these opportunities during mid-year check-ins.
5. Self-Education Expenses
Self-education costs are deductible when they maintain or improve skills directly related to business income. As business environments change, many SMEs may invest in upskilling to stay competitive.
Eligible expenses:
- Industry certifications and licences
- Business improvement workshops (marketing, finance, etc.)
- Online or in-person seminars relevant to current services
However, courses that help launch a new business or career, such as a lawyer studying to become a chef, are generally not deductible.
Brokers can help clients avoid any confusion by encouraging them to keep course outlines and receipts to prove relevance.
6. Utilities And Rent
These essential overheads are often underclaimed, especially by businesses operating from home.
Rent, electricity, water, and gas are fully deductible for businesses in rented premises. For home-based setups, clients must calculate the portion of utilities used for business.
Examples:
- A 10m² home office in a 100m² home could potentially allow for 10% of electricity costs to be claimed
- Internet bills could be apportioned based on actual business use vs. personal use
Consider encouraging clients to document how they calculate usage and save all utility bills. Even small deductions here can add up over the year.
7. Employee’s Super Contributions
Super contributions for employees are deductible, provided they are paid on time. Missed deadlines can not only affect business tax deductions but also trigger penalties.
Key points:
- Employers must pay at least the minimum Super Guarantee
- Payments must be received by the fund before the quarterly cutoff
- Late payments are not deductible and may incur interest and penalties
Some contractors treated as employees under the Superannuation Guarantee laws may also require super payments.
Brokers can try to highlight this during client discussions, especially with sole traders and growing businesses adding staff.
Conclusion
Many small business owners miss out on deductions simply because they aren’t aware of them or don’t have solid records. Over time, those missed deductions can significantly eat into their profits.
For brokers, knowing these deductions is more than a courtesy. It’s the ideal way to deepen relationships while offering clients tangible value.
A proactive approach to EOFY planning can help clients stay ahead and give brokers another way to support business growth.
Now is the ideal time to help your clients prepare for EOFY by reviewing their expenses, improving their recordkeeping habits, and taking full advantage of what they’re entitled to claim.
Helping clients stay tax-smart isn’t just good advice—it’s good business.
