Top Tax Deductions You Can Claim as a Sole Trader (2025)

If you're running a business as a sole trader, EOFY (End of Financial Year) is a perfect time to make sure you're claiming all the deductions you're entitled to.

The good news? Many everyday business expenses are tax-deductible and can reduce the amount of tax you pay on your business income.

In this article, we’ll cover:

• How do tax deductions work for sole traders?
• A checklist of common tax-deductible items for sole traders
• What can't you claim?
• EOFY tips to stay on top of your tax return
  

How do tax deductions work for sole traders?

As a sole trader, you’re taxed on your business income but you can reduce your taxable income by claiming expenses related to running your business.

To be eligible, expenses must be:

• Directly related to earning your income
• Not private or domestic in nature
• Supported by proof (receipts, bank records, etc.)

The ATO may review your deductions - so it’s important to be accurate and honest.

Top tax deductions you can claim as a sole trader

Here’s a list of common deductions you may be eligible for:

🖥️ Equipment & tools

• Laptops, phones, tablets
• Cameras, tools, or software related to your business
• Depreciation on large assets (under $20,000 may qualify for instant write-off)

🏠 Home office expenses

• Internet bills and mobile plans (proportional use)
• Electricity and gas (if working from home)
• Office furniture (desks, chairs, monitors)

🚗 Vehicle & travel costs

• Fuel and car servicing (for business use only)
• Tolls, parking fees, business-related travel
• Public transport or flights for business purposes

Tip: You must separate personal and business use - you can only claim the business portion.

📦 Business expenses

• Website hosting, domain, design and email services
• Subscriptions (e.g. Canva, Zoom, Xero)
• Advertising and marketing (Google Ads, Meta)

📚 Education & training

• Online courses or workshops directly related to your business
• Professional memberships or industry associations

🧾 Accounting & tax agent fees

• Tax returns, BAS lodgement, bookkeeping services

👨‍⚕️ Insurance and banking

• Business insurance (e.g. public liability, professional indemnity, income protection)
• Bank fees for business accounts
• Loan interest on business-related purchases

What can’t you claim?

You can’t claim:

• Private expenses (e.g. groceries, family holidays)
• Fines or penalties
• Clothing that isn’t branded or protective
• Meals (unless you’re travelling overnight)

EOFY tips to stay on top of your tax return

• Keep digital records for at least 5 years
• Use accounting software to categorise expenses
• Log business use percentages (especially for phone and car)
• Set calendar reminders to lodge your return or BAS
• Talk to a registered tax agent if unsure

Ready to claim like a pro this tax season?

If you’re a sole trader, claiming tax deductions can make a big difference but it’s important to get it right. Keep records, stay organised, and speak to a professional if you need to.

Still need to register as a sole trader?
Get your ABN online in minutes with Register My ABN - no paperwork, no stress, and fully tax-deductible.