The Complete Sole Trader & Freelancer Deduction Guide (Australia)
Every category you can claim as a sole trader — and the small ones that quietly add up to thousands
As a sole trader, you don't have an employer withholding tax and quietly claiming things on your behalf — you are the business. That means every legitimate expense you fail to record is a deduction you lose, and at tax time that's real money out of your pocket.
This guide walks through every category you can claim, the one rule that decides whether something is deductible, and the small recurring costs freelancers forget every single year.
General information only, not personal tax advice. Thresholds and rates change yearly — verify with the ATO (ato.gov.au) or a registered tax agent.
The golden rule: was it spent to earn your income?
Before any category, there's one test. An expense is deductible if it was directly related to earning your assessable income, you paid for it yourself (and weren't reimbursed), and you have a record to prove it. If something is part business and part private, you can only claim the business-use portion.
Three things are never deductible: private or domestic costs, entertainment (mostly), and fines. Keep that test in mind and the rest is a checklist.
The deduction categories that matter most
1. Home office & running costs
If you work from home, you can claim the running costs — electricity, internet, phone and the decline in value of office furniture and equipment — using either the fixed-rate method (a set rate per hour worked from home) or the actual-cost method. The fixed rate is simpler; actual cost can be bigger if you have a dedicated office. Either way, the ATO now wants a record of the actual hours you worked from home, not an estimate.
2. Phone, internet & software
Claim the work-use percentage of your mobile and internet bills — for most full-time freelancers this is substantial. Then add every software subscription you run the business on: design tools, accounting apps, cloud storage, your website hosting, domain, email. Individually small; together, often $1,000–$3,000 a year.
3. Equipment & the instant asset write-off
Laptops, monitors, cameras, tools, office furniture. Lower-cost items can often be written off immediately under the small-business instant asset write-off (verify the current threshold), rather than depreciated over several years. More expensive assets are depreciated — you claim the decline in value each year.
4. Self-education & professional development
Courses, conferences, industry certifications, books and subscriptions that maintain or improve the skills you use to earn income are deductible. (Study to get a new job in a different field generally is not.)
5. Insurance, fees & professional services
Professional indemnity and public liability insurance, business bank and merchant fees (Stripe, PayPal), and the cost of your accountant or registered tax agent are all deductible.
6. Super — the deduction freelancers forget
Sole traders aren't paid super by anyone — so you fund your own. The upside: personal concessional super contributions can be claimed as a tax deduction (up to the annual cap — verify the current figure), letting you build retirement savings and cut your taxable income. Lodge a "notice of intent to claim" with your fund first.
7. Marketing, travel & the rest
Advertising, website costs, work-related travel (not commuting), parking and tolls while working, union or association fees, and protective gear where relevant.
The 50 small claims people forget
It's rarely one big deduction that's missed — it's a long tail of small ones: bank fees, stock photos, app subscriptions, postage, stationery, that online course, the industry magazine, merchant surcharges, cloud backups, a portion of your phone case and charger. Capture them as they happen and they add up to thousands over a year.
Common mistakes
- No records. A claim you can't substantiate can be denied — keep receipts for five years.
- Claiming 100% of mixed-use items. Your phone and internet are part-private; claim only the work share.
- Forgetting GST. Once your turnover passes $75,000 you must register for GST — and you can claim GST credits on expenses.
- Leaving super to the last week of June. The contribution must be received by your fund before 30 June to count.
How TaxBot helps
TaxBot is built for exactly this. Snap any receipt and the AI categorises it, works out the deductible and (if registered) GST portions, and tracks your work-use percentages. At tax time you export a clean, category-by-category report — every small claim captured, nothing left on the table.