Tax deductions for freelancers

If you're a freelancer, you probably have some idea of what you can claim at tax time.

But there are some tax deductions that you might not know about so we've put together this handy list for you.

1. Buy new stuff now

If you need a new laptop, phone, tools or other equipment, now might be a good time to buy them, thanks to an extension the Australian government announced in its 2017 budget allowing small businesses and sole traders to claim tax deductions on equipment or assets.

The rules are that you need an active ABN, annual turnover of less than $10 million and each piece of equipment or asset that you want to claim a deduction on must cost less than $20,000 (either new or second hand).

Note: The extension ends with this financial year on 30 June 2018.

2. Prepay your expenses

if you prepay business expenses, like travel, training, rent, phone or internet up to a year in advance, you can claim a tax deduction on them.

3. Your website

There's a good chance you can claim some of the costs associated with your website - both one-off and ongoing costs, in the year that you incur them. Examples include website hosting, domain names or website development.

4. Bad debts

If someone doesn’t pay for your services, you might be able to claim a tax deduction on their unpaid bill. Your accountant can explain how to document it properly so you can claim it in your tax return.

5. Personal super contributions

If you’re paying your own super there’s a good chance you can claim a tax deduction on it up to $35,000 in annual payments. The ATO explains this more here and don’t forget to read the part about notifying your fund before you claim the deduction.

6. Insurance

You can claim a tax deduction for insurance premiums on policies that protect against loss of income, like income protection or salary continuance insurance. You can’t claim the costs of life, trauma or critical care insurance though.

7. Your accountant

Yes, in a beautiful circle of tax harmony, you can claim a deduction on your accountant’s fees in your tax return.

Other tax deductions for freelancers
Just in case you need a reminder, here's a quick list of the more common things you can claim:

  • Home office expenses, such as a percentage (not all) of your rent or mortgage, mobile phone bill and utility bills including internet. Try using the ATO’s home office expenses calculator
  • Other home office expenses, such as stationery
  • Vehicle expenses such as fuel and maintenance costs, as long as you own the car and the travel is part of your working day (excluding driving to and from work), such as driving to visit clients or special trips to the post office or bank
  • Gifts to clients
  • Donations of $2 or more
  • Study, courses or seminars

The ATO has more info on all of these too. And don't forget to save receipts for all of these things.

Please be aware that this info is general in nature - it's not personal tax advice. If you would like personal advice, please don't hesitate to contact our tax expert, Michael Budnow.