If you’re a sole trader, three everyday costs can add up to thousands in legitimate tax deductions: running your home office, using your car for business, and your work calls on mobile.
The good news? The ATO has clear rules on each and if you follow them, you can reduce your taxable income without raising red flags.
In this guide, we’ll cover:
Looking for every deduction you can claim? See our full deduction list.
Fixed-rate (70¢ per hour)
From 1 July 2024-25, the ATO rolled internet and phone into a single 70 rate. Track your work hours for the full year (a diary or time-tracking app works) and multiply by 0.70. You can’t claim internet or phone again elsewhere if you use this rate.
Actual-cost method
Measure the floor area of your workspace and calculate its share of household costs - electricity, gas, internet, even depreciation on office furniture. You’ll need bills and your floor-plan calculation, but it can yield a larger claim if you use the space heavily.
💡 Tip: You need to keep your records for 5 years including a record of the number of actual hours you work from home during the entire income year - for example, a timesheet, roster, diary or other similar document (an estimate of your hours won't be acceptable)
Cents-per-kilometre (88¢, up to 5,000 km)
Ideal for irregular travel. Keep a diary, GPS app, or job sheets to prove the distance. Multiply business kilometres by 0.88.
Logbook method
Better for regular on-road work. Record every trip for 12 consecutive weeks (one logbook lasts five years) and work out your business-use percentage. Then claim that percentage of all running costs: fuel, servicing, registration, insurance, finance interest, and depreciation.
No deduction is available for purely personal vehicles.
If you use one phone for everything, highlight a month’s bill and count the business calls to set a reasonable split (e.g., 70% work / 30% personal), then apply that split to the year.
With a dedicated business phone, you can usually claim 100% of the plan and handset depreciation.
Home internet is already covered under the 88¢ fixed-rate method. If you’re using the actual-cost method, work out the business percentage from data logs or hours online.
💡 Need to keep expenses tidy? Compare options in our bank-account guide.
Claim these three deductions correctly and you can legitimately reduce your tax bill. Keep accurate records for at least five years, choose the method that delivers the best result, and review your percentages annually.
New to business? Make sure you have an ABN first - apply online in five minutes.