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21 July

Australian Business Income & Deductions

When you lodge your income tax return, it’s important that you include all the income you receive through running your business, whether payments are made in person or online. If you’re a sole trader you must lodge a tax return even if your income is below the tax‑free threshold for individuals ($18,200 for the 2018-19 income year).

In your first year of business, you should consider putting aside money for your expected tax bill – this includes any amounts paid for GST.

Depending on the amount of income earned, you may be entered into the PAYG instalment system.

You can choose to enter the system voluntarily.  Once you’re in the system, you pay instalments towards your tax obligation.


You can claim deductions for most costs you incur in running your business that are directly related to earning your assessable income. Generally you can claim operating expenses (such as office stationery and wages) in the year you incur them and capital expenses (such as machinery and equipment) over a longer period of time.

If you’re a start-up, there may be deductions you can claim immediately related to the starting of your business.

And for small businesses, you can claim an immediate deduction for the business portion of most assets that cost less than $20,000 each (this applies from 12 May 2015 to 30 June 2019 and reduces to $1,000 on 1 July 2019).

There are three golden rules for claiming business expenses:

  1. You must have spent the money for your business, not on a private expense
  2. If it is a mix of business and private use, you can only claim the portion that is related to your business.
  3. You must have records to prove your expenses.

Need more information?

You can visit the ATO website for more information about tax and super for new businesses at

Find out about the tools and services the ATO has to help you at

You can also get in touch with the ATO by phone (13 28 66), live online chat and an after‑hours call back service. Remember, registered tax professionals can help you to set up your business and help you throughout the year to meet your tax and super obligations.

Other languages 

Do you speak another language and still wish to access online information at your business obligations?

Here are some additional resources :

ATO Tax Talk

ATO tv for foreign languages

Glossary of common tax and superannuation terms


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