Stop leaving money on the table: 15 overlooked small business tax deductions for 2025–26

Every year, small business owners leave money on the table. Not because they are careless, but because the day-to-day costs of running an organisation are easy to forget once the invoice has been paid and the receipt is buried in an inbox.

The ATO's position is simple: you can claim a deduction for most expenses you incur in running your business, as long as they relate directly to earning your business income. The trick is knowing which costs actually qualify and keeping the records to prove it as you go.

As you prepare your 2025–26 business tax return, review these 15 commonly overlooked tax deductions to ensure your books capture every expense you are entitled to claim.

When is your 2025–26 business tax return due?

If you lodge your own return, including as a sole trader reporting business income in your individual return, the standard due date is 31 October. In 2026, that falls on a Saturday. Under the ATO's weekend rule, lodging on the next business day, Monday 2 November 2026, is treated as on time. Don't plan around it, though: if something goes wrong on the day, you have no buffer.

Three things to know:

• Paying a tax bill: If you lodge by the due date, payment is generally due on 21 November. That’s also a Saturday in 2026, so it moves to Monday, 23 November 2026. Your notice of assessment shows your exact payment date.
• Using a registered tax agent? To qualify for an extended tax lodgement deadline, you must be added to your registered tax agent's client list by 31 October. Please note that the Australian Taxation Office (ATO) strictly enforces this date; it does not roll over to the next business day if it falls on a weekend.
• Companies, trusts, and partnerships: Different lodgment schedules apply to companies, trusts and partnerships. Be sure to check the specific ATO lodgement dates for your entity type or reach out to us directly for guidance.

At CleanSlate, our tax accountant team will prepare and lodge your returns accurately and on time. Contact us before 31 October, and we will add you to our client list, which secures your extended deadline. Late lodgement may trigger an ATO failure to lodge a penalty, so reach out early if you're short on time.

ATO rules for claiming business tax deductions

Before you claim anything, the ATO applies three tests:

• The expense must be for your business and not for private use.
• If it's a mix of business and private use, you can only claim the business portion.
• You must have records to prove it.

Keep those in mind as you read the list below.

The 15 commonly overlooked small business tax deductions

Work through these one by one and tick off the ones that apply to your business.

Here is a closer look at each category to help you optimise your upcoming tax return.

1. Home-based expenses

If you run your business from home, you may be able to claim a share of running expenses, such as electricity. You may also qualify to claim occupancy expenses, such as mortgage interest or rent, if part of your home qualifies as a place of business.

Watch out: Claiming occupancy expenses may affect your main residence capital gains tax exemption when you sell. Talk to our accountant before making a claim.

How to work it out: Eligible occupancy costs are generally apportioned according to the floor area of your workspace and the period it is used. Running costs should reflect work-related use, supported by bills and a diary of working hours.

Example: A 12 square metre studio in a 120 square metre home represents 10% of the floor area. If it qualifies as a place of business and is used exclusively for that purpose throughout the year, 10% is generally the starting point for calculating eligible occupancy expenses. Adjust this if the space is also used privately or only for part of the year.

Records to keep: Floor measurements, mortgage or rent statements, utility bills, and evidence of business and private use.

2. Business travel

Airfares, accommodation, car hire (including fuel, tolls, and parking), and train, tram, bus, taxi, or ride-sourcing fares are all claimable when the trip is for work. Meals count too, but only when you’re away overnight, and your work requires you to stay away from your permanent home.

Watch out: You can only claim the work-related portion. Holidays, family members’ costs, sightseeing, souvenirs, visas, passports, and travel insurance are out. Sole traders and partners who travel for six or more consecutive nights must keep a travel diary.

GST and staff travel: If you are registered for GST and can claim GST credits, claim the GST-exclusive amount as a deduction in your income tax return. If employees travel on your behalf, you must actually pay for it, whether directly, through an allowance, or by reimbursement. Fringe benefits tax may apply, particularly if an employee extends a trip for private reasons and you cover those costs.

Records to keep (5 years): Tax invoices, boarding passes, tickets, travel diaries, and notes showing how you worked out the private portion.

3. Motor vehicle expenses

Driving to meet clients, collect stock, visit job sites, or make bank runs can all add up. Depending on how your enterprise is set up (sole trader, partnership, company, or trust), the ATO offers different calculation methods. Two common ones are:

• Cents per kilometre: 88 cents per work-related kilometre for 2025-26, up to 5,000 kilometres.
• Logbook method: Claim the professional-use percentage of actual running costs, based on a 12-week logbook that stays valid for five years.

Watch out: Travelling from home to your regular workplace is generally private, not deductible.

How the numbers work: At 88 cents per kilometre, the cents per kilometre method tops out at $4,400 per car for 2025-26 (5,000 km). No receipts are needed, but the ATO may ask how you worked out your work-related kilometres, so keep a diary or calendar of trips. If you drive more than 5,000 kilometres, the logbook method will usually give a better result.

Rates are changing: The rate for the 2026-27 income year is reported to be 91 cents per kilometre for travel from 1 July 2026.

Records to keep: A trip diary (cents per kilometre), or a 12-week logbook, odometer readings, and receipts for running costs (logbook method).

4. The instant asset write-off

Small enterprises using the simplified depreciation rules (aggregated turnover under $10 million) can immediately deduct the business portion of eligible assets that cost less than the limit. For assets first used or installed ready for use between 1 July 2023 and 30 June 2026, the limit is $20,000 per asset.

That covers equipment, tools, computers, furniture, and more. Even a guard dog can qualify, if it's suitable for the job and used to protect your premises.

Watch out: The $20,000 limit is for each asset, not all your purchases added together. From 1 July 2026, the $20,000 instant asset write-off rule is permanent, so it also applies to assets you start using in 2026-27.

Other points:

• It applies to new and second-hand assets.
• Your aggregated turnover includes connected entities and affiliates, so check the total, not just your own enterprise.
• A special limit applies to the cost of passenger vehicles.

Records to keep: The tax invoice, the date the asset was first used, and how you worked out the professional-use percentage.

5. The small business pool

Assets that cost more than the instant asset write-off limit aren't a lost cause. Under simplified depreciation, you can add the business portion to the small business pool and claim 15% in the first year and 30% each year after. Once the pool balance falls below the write-off limit at year's end, you can deduct the whole balance.

Watch out: If you use simplified depreciation, you must apply the whole set of rules, not just the instant asset write-off.

Example: You buy a $35,000 machine used entirely in your workspace. It's too expensive for the instant asset write-off, so it goes into the pool. You claim 15%, or $5,250, in the first year, and 30% of the pool balance in each year after.

Good to know: The ATO has suspended the 'lockout' rule until 30 June 2027. Normally, if you opt out of simplified depreciation, you can't re-enter for five years. For now, small enterprises that stopped using the rules can use them again.

Records to keep (5 years): How you worked out your opening pool balance, any change in how much you use an asset, and any assets you dispose of.

6. Software, apps, and digital subscriptions

Accounting software, design tools, cloud storage, website hosting, stock photo libraries, and online marketplaces: the cost of digital products used in your operations is generally deductible. Many owners claim the big platforms and forget the small monthly subscriptions that quietly add up.

Annual plans: If you prepay $1,000 or more for a subscription covering more than 12 months, the deduction may need to be spread across the service period.

Records to keep: Tax invoices or statements showing the date, amount and service, plus a note of the business-use percentage for shared subscriptions.

7. Repairs and maintenance

Fixing a broken printer, servicing equipment, patching a leaking shopfront roof, or replacing a worn part are all generally deductible in the year you pay for them. If the item is also used privately, claim only the commercial share.

Repair or improvement? This is where claims go wrong. A repair restores something to its previous condition. Replacing the whole asset, or upgrading it beyond what it was, is generally treated as a capital expense. It may need to be depreciated, or it may qualify for the instant asset write-off (see deduction 4).

For example, fixing a few cracked tiles in a salon is a repair. Re-tiling the whole floor in a higher-grade material is more likely an improvement.

Records to keep: The tax invoice describing the work done, and before-and-after photos if the line between repair and improvement could be questioned.

If a major project or significant expense sits in the gray area between a repair and a capital improvement, get it reviewed by your accountant before you lodge your return.

8. Marketing and advertising

Social media ads, Google ads, flyers, signage, website updates, business cards, and promotional photography are all examples of marketing costs the ATO recognises as day-to-day operating expenses.

Watch out: Entertainment is a different story. Client dinners and similar costs are generally not deductible.

Where owners miss out: One-off costs that don't feel like 'advertising', such as a logo refresh, a photo shoot for your website, a trade show stall, printed brochures, or sponsoring a local team where the benefit to your commercial operations is clear. Check each against the three golden rules.

Records to keep: Tax invoices and ad platform statements. Download monthly statements from each platform, since older ones can be hard to retrieve later.

9. Staff wages and super contributions

Wages and super contributions for your employees are deductible, which is one of the most basic claims, but errors still creep in.

Watch out: If you haven't met your PAYG withholding or reporting obligations, the ATO can deny a deduction for the payment. Keep your payroll and reporting up to date.

Where owners slip up:

• Super paid late: Super is strictly a cash-basis deduction. You can only claim it in the financial year the employee's fund actually receives the cash. If a payment hits their fund after 30 June, it belongs in next year's return. Under Payday Super rules (effective from 1 July 2026), contributions must reach the fund within 7 business days of each payday to avoid strict penalties.
• Family on the payroll: It's common to employ family, but you can only claim their wages if they do real, necessary work for the organisation, and the pay is set at fair market rates.
• Paying yourself a "wage": If you operate as a sole trader or partnership, money you pay yourself is an owner's draw, not a salary, so it cannot be claimed as a deduction.

Records to keep: Payroll reports, payment summaries, super payment confirmations and employment agreements.

10. Staff safety and hygiene supplies

This one catches many owners out. You can claim expenses for protecting staff from safety hazards in their roles, including hand sanitiser, sneeze or cough guards, masks, gloves, other protective equipment, antibacterial wipes, and cleaning supplies used on your premises.

Records to keep: Tax invoices from suppliers. Supermarket receipts are fine if they show the items bought.

11. Training, memberships, and subscriptions

Courses, workshops, and conferences that maintain or improve the skills you or your staff use in your day-to-day operations can be deductible. So can fees for professional or trade associations and relevant industry publications.

Watch out: Training that prepares you for an entirely different line of work won't qualify. The link to your current commercial activities needs to be clear. Keep invoices and a short note explaining the connection.

Example: A hairdresser pays for an advanced colour workshop and renews an industry association membership. Both relate directly to the work the salon already does. A hairdresser paying for a real estate licence course would not qualify.

Records to keep: Enrolment confirmations, tax invoices, and a short note explaining how the training relates to your professional activities.

12. Income protection insurance

Premiums for income protection insurance are generally deductible, and because they are often paid by a direct debit, they are easy to forget.

Watch out: Life insurance, trauma insurance, and policies paid for from your super aren't deductible.

Where to find it: Your insurer's annual statement usually shows how much of the premium was paid and which part is deductible. If the policy is held personally, it still may be deductible where it replaces income you earn from your commercial or professional efforts, so check with your accountant.

Records to keep: The annual premium statement and bank records showing payments.

13. Accountant, tax agent, and bookkeeping fees

You can generally claim a deduction for the cost of managing your enterprise tax affairs. This includes what you pay a registered tax agent or BAS agent for tax returns and activity statements, plus any professional tax advice or opinions. It also incorporates fees for a dedicated bookkeeping support team and comprehensive payroll and super support.

You claim these fees in the year you pay them, not the year the work relates to. For example: You paid your accountant $660 in September 2025 to prepare your 2024-25 return. That is claimable in your 2025-26 return, because you claim it in the financial year you actually pay it.

Records to keep: Tax invoices from your accountant or bookkeeper, plus bank records showing payment.

14. Business finance costs and bank fees

Interest on business loans, account-keeping fees, merchant fees, and other finance costs are claimable.

Watch out: The ATO's general interest charge and shortfall interest charge incurred on or after 1 July 2025 are no longer deductible. Many owners still try to claim them out of habit.

What owners miss:

• Interest on equipment finance and credit cards used for trading.
• Merchant, payment gateway, and bank account fees.
• Loan establishment fees. Borrowing expenses over $100 are generally spread over five years (or the loan term if shorter), not claimed all at once.

The purpose test: What matters is what the money was used for, not what the loan is secured against. Interest on a loan used partly for private purposes needs to be apportioned.

Records to keep: Loan statements showing interest charged, the loan agreement, and bank fee summaries.

15. Bad debts

If a customer has not paid an invoice and you have already reported that amount as income in your tax return, you may be able to claim a bad debt deduction. You must determine that the debt is unlikely to be recovered and write it off in your records before the end of the income year you want to claim it in. Keep evidence of your attempts to collect payment.

The catch: If you report income only when you receive payment, an unpaid invoice generally has not been counted as taxable income. You therefore usually cannot claim a deduction for it. If you are unsure how you report income, check with your accountant.

GST: If you reported GST on the sale, you may also be able to claim back the GST on your BAS once the debt is written off as bad. Managing these adjustments is simple when you complete your BAS lodgment with our expert team.

Records to keep: The original invoice, evidence of your attempts to collect (emails, reminders, letters), and the write-off entry in your accounts.

Other deductible expenses worth checking

Three more that regularly slip through the cracks:

• Prepaid expenses: If you prepay $1,000 or more for goods or services that you won't receive in full within 12 months, you may need to spread the deduction across the service period.
• Start-up costs: Some may be deductible immediately, others over time.
• Donations: Gifts of $2 or more to a deductible gift recipient are deductible, but only if you receive nothing in return. Keep the receipt.

What records do you need to support tax deductions?

A deduction is only as strong as the paperwork behind it. Under ATO guidelines, you must generally retain business records, including tax invoices, bank statements, vehicle logbooks, travel diaries, and notes on mixed business and private usage, for at least five years from the date you prepared or obtained the record, or from when the transaction was completed, whichever is later.

However, the ATO requires you to hold onto certain records for longer than the standard five-year window:

• Amended assessments and periods of review: You must keep records long enough to cover both the five-year retention period and any active period of review (amendment period) for that assessment. If an assessment is amended, the review period for that amended portion restarts.
• Information used in future returns: If you use data from a record across multiple years, such as spreading borrowing expenses over time or carrying forward tax losses to deduct against future profits, you must retain those original records until the period of review for the final tax return in which you claim that deduction has ended.
• Depreciating and CGT assets: For equipment, vehicles, and Capital Gains Tax (CGT) assets, records must be kept for the entire duration you own the asset, plus an additional five years after you sell or otherwise dispose of it.

An organised digital archive helps protect you in an ATO review and keeps every legitimate claim well supported.

Conclusion: Keep more of what you earn this tax time

Tax time doesn't have to be stressful, and it shouldn't cost you more than it needs to. The 15 deductions in this blog post are costs that most small-scale owners forget about, but each one could put money back in your pocket.

Here's what to do next. Grab your bank statements, go through the list, and note every cost that applies to your commercial venture. Keep your receipts, and only claim what's genuinely for work purposes.

Short on time, or not sure what counts? With the deadline closing, CleanSlate can take care of it for you. We prepare and lodge tax returns, check that you have claimed every deduction you are entitled to, and can look after your bookkeeping too. Ready to get started? Book a call with us today to secure your spot before deadlines catch up.