5 Tax Write-Offs Small Businesses Often Miss (And How To Claim Them)

Running a small business isn't easy. Between managing staff, serving customers, chasing invoices and handling compliance, it's no surprise that some tax deductions get overlooked.

The problem? Missing legitimate deductions could mean your business pays more tax than necessary.

The good news is that many of the deductions small business owners miss are tied to everyday operating expenses they're already paying for.

Before lodging your next tax return, it's worth checking your accounts for these commonly overlooked opportunities.

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1. The Instant Asset Write-Off (Assets Under $20,000)

When your business purchases equipment, technology or machinery, you may not always need to depreciate the cost over several years.

Depending on the rules that apply for the financial year, eligible small businesses may be able to claim an immediate deduction for certain business assets through the Instant Asset Write-Off provisions

• What Counts: Laptops, trade tools, office furniture, point-of-sale hardware, or work-related tech upgrades.
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• The ATO Rule: The asset must be purchased and first used, or installed and ready for use, within the relevant financial year. If the asset is used partly for personal purposes, only the business-use portion can be claimed.

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Tip: Instant Assets Write-Off thresholds can change from year to year, so always check the current rules or seek professional advice before making significant purchases.

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2. Prepaying Next Year's Expenses (The 12-Month Rule)

Here's a deduction many business owners overlook.

In some circumstances, you can prepay certain business expenses before 30 June and claim the deduction in the current financial year rather than waiting until next year. This strategy can help improve cash flow and bring forward legitimate deductions.

• What Counts: Prepaying 12 months of commercial property rent, annual software subscriptions, professional memberships, or business insurance policies
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• The ATO Rule: Generally, the prepaid service period must not exceed 12 months, and the benefit must end before the end of the following financial year. If you're considering prepaying expenses for tax planning purposes, it's worth discussing the timing with your accountant first.

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3. Bank Fees, Merchant Surcharges & Internet

Business owners often focus on larger expenses while overlooking the small recurring charges quietly accumulating in their accounts each month.

Over the course of a year, those costs can become surprisingly significant.

• What Counts: Monthly bank account keeping fees, Stripe and Pay Pal processing fees, EFTPOS terminal rentals, and interest paid on business loans or lines of credit.
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• The ATO Rule: To claim these expenses, they must relate directly to your business activities. Keeping separate business and personal accounts makes it much easier to identify deductible expenses and maintain accurate records.

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4. Working From Home (Fixed Rate vs. Actual Cost)

If you operate your business from home or regularly complete administration, bookkeeping or client work from a home office, you may be entitled to claim a portion of your home-based business expenses.

Depending on your circumstances, there are different methods available to calculate your claim.

• Fixed Rate Method: Allows you to claim a set rate for each hour worked from home and covers a range of running expenses, including:
  
  • Electricity & gas
  • Internet expense
  • Mobile & home phone usage
  • Stationary & computer consumables
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• Actual Cost Method: This method calculates the actual business-use portion of expenses you incur while working from home. While it often requires more recordkeeping, it may produce a larger deduction in some situations.
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• The ATO Rule: You must keep records showing the actual hours worked from home, as well as evidence of the expenses incurred. Acceptable records may include:
  
  • Timesheets
  • Diary entire
  • Rosters
  • Spreadsheets
  • Time-tracking software records

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5. Professional Training & Accounting Fees

Investing in your skills and keeping your business compliant isn't just good business practice, it may also reduce your tax bill. Many business owners are surprised to learn that the cost of preparing their tax affairs is generally deductible.

• What counts: 
  
  • Fees paid to registered tax agents, bookkeepers, and accountants for financial reporting and compliance.
  • Professional training courses, industry conferences, and webinars that directly maintain or improve the skills you need for your current business operations.
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• The ATO Rule: The training must directly relate to your existing business activities and help maintain or improve the skills used in earning your business income. Training undertaken to enter an entirely new profession or business activity is generally not deductible.

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The ATO Golden Rule: Don't Claim Without Proof

To claim any deduction in Australia, your expense must pass the ATO's three core tests:

1. The money must been spent for your business (not personal expenses).
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2. You can only claim the business portion of the expense.
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3. You must have record proof to support your claim.

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Are You Capturing Every Deduction You're Entitled To?

Many small businesses miss out on deductions simply because expenses aren't coded correctly, receipts aren't retained, or opportunities aren't identified early enough. A proactive review of your bookkeeping and tax position can often uncover areas where your business could be operating more efficiently.

At LKB Accountants, we help businesses across Busselton and the Southwest identify legitimate deductions, improve recordkeeping and stay compliant with changing ATO requirements.

Book a consultation with Lachie and find out whether you're making the most of the deductions available to your business.

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Disclaimer: This article contains general information only and should not be relied upon as taxation advice. Tax outcomes depend on your individual circumstances, and tax legislation may change over time. We recommend seeking professional advice before making financial or taxation deicisons.