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Tax Deductions for Sole Traders

What can I Claim? Being aware of what you can claim will help you avoid an unwanted tax bill at the end of the year.

By Travis Bacon

August 01, 2021

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Filing Tax Returns can often be a daunting task for sole traders. This is because of a lack of clarity regarding the process and eligibility of filing tax returns. It gets particularly confusing in cases where sole traders are unaware of the tax deductions they can claim. Tax deductions can be defined as expenses that can be subtracted from the taxable income to reduce the tax payable. Fascinating, isn’t it?

Tax Deduction Checklist

With complexities involved regarding what to claim and what to let go of, many sole traders end up getting perplexed. However, it is not as difficult as it appears. Here is a checklist to help you learn what can be claimed if you are filing returns as a sole trader, according to the Australian Tax Office:

  • Advertising

  • Bad Debts

  • Home Office Expenses

  • Bank Charges

  • Business Related Travel

  • Training and Development of Employees

  • Insurance

  • Interest

  • Telephone & Internet Bills

  • Motor Vehicle Costs

  • Repairs & Maintenance of Equipment

  • Tax Agent Fee's

Capital and Depreciable Expenses

The list above refers to regular operational expenses that companies can claim over time. However, in the case of depreciation charged on capital expenses, claims can be made spanning several years. This is primarily because charges like these are often continual and are meant to have a longer life. Therefore, examples of such expenses include:

  • Computers & Other Technology

  • Furniture

  • Motor Vehicles

  • Plant & Equipment

  • Tools

Private Use Expenses

However, it must also be noted that claims can only be made for expenses that are directly associated with the business portion. This implies that in the case where some of the costs are related to personal use and for business use, only those costs can be claimed that can be distinguished to be a part of the business. In other words, personal expenses, or domestic household expenses cannot be claimed for any tax deductions in this regard. Having this checklist in mind when filing for tax returns is particularly fruitful because a lot of sole traders end up saving significant sums of money.  

If you would like some personalised advice on the best tax deductions for you, feel free to reach out to us on  0407 438 849 or


This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek personalised tax advice from us at TaxDigital. Information is current at the date of issue and may change.

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