What Can Sole Traders Claim on Tax? A 2026 Checklist
If you work for yourself in Australia, every legitimate business cost you claim is money that comes back off your tax bill. The trouble is knowing what actually counts — and having the records to back it up if the ATO ever asks. This checklist runs through the categories sole traders most commonly claim, the golden rules that decide whether something is deductible, and exactly what the ATO expects you to keep. It's a starting point to jog your memory at tax time, not a licence to claim everything in sight.
The golden rules
Before any category, four simple tests decide whether you can claim an expense. The ATO applies all of them:
- You incurred the cost. You actually spent the money yourself in the income year.
- It's business-related. The expense directly relates to earning your assessable income. If it's private or domestic, it's out.
- You weren't reimbursed. If a client or anyone else paid you back for it, you can't also claim it.
- You kept a record. You have a receipt or tax invoice that proves it.
Where a cost is part business and part private — your mobile is the classic case — you only claim the business-use percentage, and you keep a note of how you worked that split out.
The sole trader deductions checklist
Here are the categories worth checking off each year. Not all will apply to you, but most sole traders will tick several.
| Category | What it covers |
|---|---|
| Tools & equipment | Drills, cameras, laptops, tradie gear. Lower-cost items are often deductible immediately; bigger assets may be written off over time. |
| Software & subscriptions | Accounting apps, design tools, cloud storage, industry subscriptions. |
| Phone & internet | The business-use percentage of your bills, not the whole amount. |
| Car & vehicle | Trips for work (not home-to-work commuting). Two methods — see below. |
| Home office | Running costs for a home workspace — electricity, heating, desk, chair. |
| Travel | Airfares, accommodation and meals on genuine work trips away from home. |
| Insurance | Business, professional indemnity and public liability cover. |
| Bank & merchant fees | Business account fees, EFTPOS and payment-processor charges, loan interest. |
| Education | Courses that maintain or improve skills for your current work. |
| Marketing | Website, ads, business cards, printing, sponsored posts. |
Cars and equipment need a bit more care
Car expenses have two methods. The cents-per-km method lets you claim a set rate for each business kilometre, capped at 5,000 km a year, with no receipts needed (just a reasonable record of your trips). The rate was 88 cents per kilometre most recently, but the ATO reviews it each year, so confirm the current figure at ato.gov.au. The alternative is the logbook method, which claims your actual running costs based on a 12-week logbook. We compare the two in car expenses: cents per km vs logbook.
Equipment can often be written off immediately under the instant asset write-off if it's below the current threshold (recently $20,000 per asset for small businesses), with more expensive assets depreciated over their effective life. That threshold has changed from year to year, so check ato.gov.au before you rely on it.
The home office
If you run your business from home, you can claim the running costs of your workspace. The ATO's fixed-rate method lets you claim a set rate per hour worked from home — 70 cents an hour most recently — which covers electricity, phone and internet in one number, provided you keep a record of your hours. As always, the rate is reviewed annually, so confirm the current figure. The working-from-home deduction guide walks through the fixed-rate and actual-cost methods.
The records the ATO expects
For each expense, capture five things: the date, the supplier (with their ABN on larger purchases), the amount, the GST included if any, and a short note on the business purpose. That last note — "safety boots for the Jones site" — is what turns a hardware receipt into proof of a business cost.
A few practical points:
- A clear photo or digital copy is accepted, as long as it's a true and readable reproduction. You don't need to hang on to the fading paper.
- Keep records for five years from when you lodge the return that relies on them.
- To claim a GST credit, you need a valid tax invoice for purchases over $82.50 (including GST). More on that in GST on business expenses.
This is exactly the drudgery worth automating. Snapceipt lets you snap a receipt and it reads the merchant, total and GST for you, sorts it into a category, and keeps everything BAS-ready — so the record is built the moment you spend, not reconstructed in a panic at tax time. It'll handle your quotes and invoices in the same place, too.
Before you lodge
Run down the checklist, make sure each claim passes the four golden rules, and confirm this year's rates and thresholds at ato.gov.au — they move. Then it's a matter of exporting clean, categorised records rather than digging through a shoebox.
This is general information, not tax advice — check ato.gov.au or a registered tax agent for your situation.