A sole trader is an individual who operates and runs a business single-handedly without the support of partners or shareholders. Sole proprietorship comes with both its advantages and disadvantages. As a sole proprietor, there are several claims you can make to help you lower your tax burden.

In this read, we will discuss some of the claims that you can make to lighten your debt to the taxman.

sole trader

What can a Sole Trader Claim?

To have your deductions considered, you must satisfy some basic rules. First, the expense must arise solely from the business and not for your personal use. If the expense is a blend of both personal and business use, then you can only claim part of the expense that is related to the business. Finally, you must have records in order to prove your business expenses.

Operating Expenses that are Claimable in the year Incurred

  • Bank charges
  • Insurance
  • Interest
  • Telephone bills
  • Tax preparation charges
  • Bad debts
  • Advertising
  • Business travel
  • Expenses related to business vehicles
  • Professional memberships

Claims made Over Several Years (Depreciation)

These claims are typically based on your business’ capital expenses that tend to have longer life spans. They are claimed over several operational years and include:

  • Plants and equipment
  • Motor vehicles
  • Computers
  • Furniture
  • Electrical tools

Note that there are currently generous asset instant write off provisions in place for plant and equipment that was previously only depreciable. These have also been massively upscaled with the new Government Business package. Ask us how these affect you.

What Can’t a Sole Trader Claim?

 As a sole trader, you will not be able to claim expenses such as:

  • Traffic fines
  • Penalties
  • Private expenses like clothing or decorations
  • Entertainment expenses
  • Costs relating to your hobbies

Point to note, though, is that capital expenses before were generally claimable over a long period, unlike operating expenses, which you can claim within the year they were incurred.

tax agent for sole trader

Find a Trusted Tax Agent 

As you might be aware, tax regulations are subject to constant change, which is why you need professional help in preparing and lodging your Tax Return. At Perth Mobile Tax, we handle your  Income Tax, BAS, GST etc, to ensure that you stay on the right side of the Tax rules and Law! Talk to us today