What deductions can sole traders claim?
Learn what business deductions sole traders may be able to claim and what the ATO says about claiming expenses.
Summary
The ATO says businesses can generally claim a tax deduction for most expenses incurred in carrying on a business, where the expense is directly related to earning assessable income. Sole traders claim business deductions in their individual tax return.
What this means
A deduction is not available just because money was spent. The expense must be connected to earning business income, and private or domestic expenses generally need to be separated from business use.
For mixed-use expenses, only the business portion may be deductible. This is common for car expenses, home-based business expenses, phone, internet, and equipment.
Typical actions
- Keep receipts, invoices, and records.
- Separate business and private expenses.
- Work out the business-use percentage for mixed-use expenses.
- Claim deductions in the correct part of the individual tax return.
- Keep evidence to support each claim.
Official ATO sources
Last checked: 20 June 2026
Business deductions
Explains the general rules for claiming business deductions.
Records required for your business’s tax return — deductions
Explains records that may be needed to support deduction claims.
Business structures — key tax obligations
Explains that sole traders can claim business deductions in their tax return, subject to the rules.
Related questions
- Can sole traders claim car expenses?
- Can sole traders claim home office expenses?
- What records do sole traders need to keep?
- How is sole trader income taxed?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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