To prepare for tax time 2021, we have created a list of deductions that you are able to claim if you are a sole trader.

Home-based Business Expenses

You are able to claim the running expenses if you work from home. Running expenses are the increased costs from using your home’s facilities for your business (e.g. heating, cooling, lighting, cleaning, phone, internet, depreciation of your furniture, and any repairs to your business equipment).

Motor Vehicle Expenses

You can claim expenses for your car if they are part of the everyday running of your business. If the vehicle is used for both private and business purposes, you must exclude any private use (e.g. driving your children to school).

You can claim a maximum of 5,000km if you have not kept a logbook. With a logbook, you can claim the business-use percentage of each car expense, based on logbook records. You will need to record when the logbook period begins and ends, the car’s odometer reading at the start and end of the logbook period, kilometres travelled, and the reason for the journey. If you use the logbook method, you can generally claim a deduction for the capital costs, such as the purchase price of a motor vehicle, over a period of time (depreciation).

Travel Expenses

You can claim a deduction for expenses that you incur when you travel for your business. This can include airline, bus, train, tram, taxi, ride-sourcing fans, car-hire fees including costs incurred, and accommodation and meals if you are away overnight.

You need to keep records that prove all of your business travel expenses for five years, including tax invoices, boarding passes, tickets, travel diary, and details of how you worked out the private portion of expenses.

Pausing or Closing your Business

If you are pausing trading activities in your business, with the intent of restarting, you don’t need to cancel your ABN and GST registration. You will only need to cancel your ABN and GST registration if you permanently close your business.

If you are permanently closing your business, it is important that your tax affairs are finalised before you cancel your ABN. You must lodge your final business activity statement (BAS) before closing your business. This allows the ATO to finalise your account and issue any refunds that might be owed to you. You must also cancel your ABN registration within 28 days of stopping your business activities.

If you are permanently closing your business, you must apply to cancel your GST registration within 21 days of stopping your business activities. Cancelling your GST registration may affect some other registrations, such as, fuel tax credits, luxury car tax, wine equalisation tax.

Single Touch Payroll

If an employee’s employment has ended, make sure you report their cessation date in your Single Touch Payroll report. If you have already paid them their final pay, you can still tell us this information by submitting an update event.

This information has been sourced from the ATO.



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