Running a business as a sole trader comes with plenty of flexibility — but also a fair share of responsibility, especially at tax time. One of the biggest advantages of operating as a sole trader is the ability to claim tax deductions for business-related expenses. These claims can significantly reduce your taxable income and help you retain more of your hard-earned profits.

This guide breaks down exactly what you can and can’t claim as a sole trader in Australia, using clear language and up-to-date ATO guidelines. Whether you’re just starting out or looking to tighten your financial systems, Latitude Accountants is here to support you every step of the way.

What Is a Sole Trader?

A sole trader is an individual who runs a business under their own name or a registered business name. It’s the simplest and most common business structure in Australia. You are legally responsible for all aspects of the business, including income, expenses, debts, and tax obligations.

As a sole trader, your business income is treated as your personal income. That means you report your income and claim deductions on your individual tax return.

What Can I Claim as a Sole Trader?

You can claim any business expense that is directly related to earning your income, provided you have a record of the expense and it wasn’t for private use.

Common Tax Deductions for Sole Traders:

• Business vehicle expenses
• Home office costs
• Tools and equipment
• Marketing and advertising
• Bank fees and merchant fees
• Internet and phone bills (business portion)
• Insurance (public liability, professional indemnity)
• Training and professional development
• Business travel
• Accounting and legal fees
• Super contributions (voluntary)

Let’s break these down.

Vehicle and Travel Expenses

If you use your car for business purposes (such as delivering products, visiting clients, or attending meetings), you can claim:

• Fuel 
• Registration 
• Insurance 
• Repairs and servicing 
• Depreciation 

Q: Do I need to keep a logbook?
A: Yes. The ATO requires a 12-week logbook to calculate the business-use percentage of your vehicle. Alternatively, you can use the cents-per-kilometre method, but only up to 5,000 km.

Home Office Expenses

If you run your business from home, you may be able to claim:

• A percentage of rent or mortgage interest (if you have a dedicated business space) 
• Electricity and gas 
• Internet and phone 
• Cleaning costs 
• Office furniture and equipment depreciation 

Q: Can I claim rent if I work from home?
A: Only if you have a clearly defined work area that is used exclusively for business. The ATO has strict rules, and claiming part of your rent could impact your capital gains tax when selling the home — so speak to your accountant first.

Tools, Equipment, and Assets

Any tools, laptops, software, or equipment you buy for your business are claimable.

• Items under $20,000 (as part of the instant asset write-off, depending on current government thresholds) may be claimed in full. 
• Items over that threshold must be depreciated over their effective life. 

Q: Can I claim a new phone or laptop?
A: Yes, if it’s used for business. You must apportion the expense between business and personal use.

Advertising and Marketing

You can claim expenses related to promoting your business, such as:

• Facebook and Instagram ads
• Google Ads
• Website hosting and design
• Business cards and brochures
• Influencer marketing and brand collaborations

Q: What about SEO services or photography for my products?
A: Absolutely. These are directly related to your income-producing activities.

Phone and Internet

You can claim a percentage of your mobile phone and internet bills if you use them for work. Keep a four-week usage diary to work out the business portion.

Insurance

Most business-related insurance policies are fully deductible, including:

• Public liability insurance
• Professional indemnity insurance
• Cyber insurance
• Business interruption insurance

Training and Education

You can claim courses, workshops, and training that are directly related to running or improving your current business operations.

• Business coaching
• Skills development courses
• Industry conferences
• Online learning subscriptions (e.g. LinkedIn Learning)

Q: Can I claim a course that helps me start a new business?
A: No. You can only claim education that relates to your current business activities — not a future one.

Bank Fees and Subscriptions

You can claim:

• Bank account fees (if the account is used solely for business)
• Payment gateway fees (e.g. Stripe, PayPal)
• Accounting software (e.g. Xero, MYOB)
• Business-related subscriptions (e.g. Canva, Mailchimp)

What Can’t I Claim as a Sole Trader?

While many expenses are deductible, some are specifically disallowed by the ATO:

• Personal expenses or clothing (unless it’s protective gear)

• Fines or penalties

• Entertainment (e.g. lunch with friends, even if business is discussed)

• Private use portion of shared expenses

• Costs associated with earning non-assessable income (like hobbies)

What Records Do I Need?

You need to keep clear and accurate records for all your income and expenses, including:

• Receipts and tax invoices

• Bank statements

• Logbooks (for vehicle use)

• Timesheets (for home office claims)

• Notes explaining business purpose

Records must be kept for five years and can be stored digitally.

How Latitude Accountants Can Help

At Latitude Accountants, we help sole traders across Australia simplify their bookkeeping, claim every eligible deduction, and stay fully compliant with ATO requirements. We go beyond basic tax returns — offering proactive advice, real-time support, and smart strategies to help your business grow.

We understand the pressures of running a business alone — and we’re here to make sure tax doesn’t hold you back.

Final Thoughts

Understanding what you can claim as a sole trader can significantly improve your financial outcomes at tax time. The key is keeping accurate records, knowing the rules, and getting the right advice.

Whether you’re unsure about home office deductions, need help calculating your vehicle expenses, or want to build a smart tax strategy, professional support can make all the difference.

Speak to Latitude Accountants Today

You don’t have to navigate sole trader tax alone. At Latitude Accountants, we work with freelancers, consultants, tradies, creatives, and business owners across all industries — providing clear, tailored advice that makes tax time easier and more profitable.

Contact us today for a free consultation and discover how we can help you claim smarter, stay compliant, and focus on growing your business.

📞 Contact Latitude Accountants
📧 info@latitudeaccountants.com.au
🌐 www.latitudeaccountants.com.au

Disclaimer

This blog is for general information only and does not constitute legal or tax advice. For personalised guidance, please speak with a registered tax agent or accountant.