The rule sounds simple. If you spend money to earn your income, you can claim it. In practice, the line between a business expense and a personal one gets blurry fast, and that grey area is where people either miss deductions or claim things they shouldn't.
Here's how to think about it.
The basic test
An expense is deductible if it has a genuine connection to earning your assessable income. A graphic designer's software subscription passes easily. Their morning coffee on the way to a client meeting does not. The question is always whether the expense is business or private in nature, and a lot of costs are a mix of both.
The ones people miss
Home office running costs, a portion of your phone and internet, professional memberships, software subscriptions, bank fees on your business account, and the cost of your accountant. Small amounts add up across a year, and they're easy to forget when you're reconstructing everything in June.
The ones people get wrong
Clothing is the classic. Everyday clothes aren't deductible even if you bought them specifically for work. Only occupation-specific uniforms, protective gear, or branded items count. Meals are another. Unless you're travelling overnight for work, that lunch is private, even if you talked business through it.
Apportioning shared costs
When something is used for both work and personal life, you claim the business portion only. A phone used 60 percent for work means you claim 60 percent of the bill. The ATO expects a reasonable basis for that split, so keep a record of how you worked it out.
The bottom line
When in doubt, keep the receipt and ask. It's easier to decide later whether something is claimable than to invent a record that doesn't exist. If you're unsure where the line sits for your situation, that's exactly the kind of thing worth a quick conversation with your accountant.
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