Every year at BVM, we sit down with business owners who are surprised to learn they've been overpaying tax, sometimes by thousands of dollars. It's not because they're doing anything wrong. It's because the Australian tax system is complex, and unless you have a proactive accountant reviewing your full financial picture, legitimate deductions slip through the cracks.
We work with over 100 small businesses across Sydney, most with turnover between $500K and $10M. Across industries like construction, hospitality, retail and professional services, the same five deductions come up again and again as missed opportunities.
This article breaks down each one, explains how to claim it correctly, and highlights the common mistakes that lead to underclaiming or ATO scrutiny.
Home Office Expenses: Fixed Rate vs Actual Cost Method
If you work from home for any portion of your week, whether that's doing admin on weekends, managing invoices in the evening, or running your business from a dedicated home office, you're likely entitled to claim home office expenses. The ATO provides two methods, and choosing the wrong one could cost you hundreds each year.
The fixed rate method allows you to claim 67 cents per hour worked from home. This covers electricity, phone, internet, stationery, and computer consumables. It's simple and you just need to track your hours. But for many business owners, particularly those who work from home three or more days per week, the actual cost method produces a significantly larger deduction.
The actual cost method requires you to calculate the real proportion of household expenses attributable to your work. This includes a percentage of your electricity, gas, internet, phone, home insurance, and even rent or mortgage interest if you have a dedicated workspace. You'll need records including utility bills, a floor plan showing your office as a percentage of total floor space, and a diary of hours worked.
The effort is worth it. We've seen clients increase their home office deduction from $1,200 under the fixed rate method to over $4,000 using actual costs. If you're working from home regularly, ask your accountant to run both calculations and compare.
Motor Vehicle Expenses: Why the Logbook Method Wins
Business related car travel is one of the most commonly underclaimed deductions we see. Many business owners either forget to claim it entirely, or default to the cents per kilometre method because it seems easier. The problem is that this method caps your claim at 5,000 business kilometres per year, regardless of how much you actually drive.
If you're visiting clients, picking up supplies, travelling between job sites, attending industry events, or driving to your accountant's office, those kilometres add up fast. A tradesperson doing site visits can easily exceed 5,000 km in a few months.
The logbook method requires you to keep a logbook for 12 continuous weeks, recording every trip, both business and personal. This establishes your business use percentage, which you then apply to all car costs: fuel, registration, insurance, servicing, depreciation, and finance interest. That percentage remains valid for five years, provided your circumstances don't change significantly.
We regularly see the logbook method produce deductions two to three times larger than the cents per kilometre alternative. If you haven't kept a logbook before, start one now, even mid year, so you're ready for next financial year. Your accountant can help you set it up correctly to withstand an ATO review.
Instant Asset Write Off: Claiming the Full Cost Upfront
The instant asset write off has been one of the most valuable tax incentives for small businesses in recent years, yet many owners still don't take full advantage of it. The rules have changed multiple times with temporary full expensing, the $20,000 threshold, and various extensions, which creates confusion about what's currently available.
As a general principle, eligible small businesses (aggregated turnover under $10 million) can immediately deduct the full cost of depreciating assets used in the business, rather than spreading the deduction over several years through depreciation schedules. This applies to tools, equipment, computers, furniture, vehicles, and machinery.
The key mistakes we see are: assuming the asset must be depreciated because it's expensive, not realising that second hand assets also qualify, and missing the deadline for the asset to be installed and ready for use by 30 June. Timing matters. If you're planning a significant equipment purchase, bringing it forward to before the end of the financial year can deliver an immediate tax benefit rather than waiting 12 months.
Always confirm the current thresholds and eligibility criteria with your accountant before making purchasing decisions based on tax incentives. The rules change with almost every federal budget, and getting it wrong can mean an unexpected tax bill or an ATO audit.
Superannuation Contributions: The Most Effective Tax Reduction Strategy
Concessional superannuation contributions remain one of the most powerful, and most underused, tax reduction strategies available to business owners. The concept is straightforward: money contributed to your super fund as a concessional (before tax) contribution is taxed at just 15% inside the fund, compared to your marginal tax rate which could be 32.5%, 37%, or even 45%.
For a business owner earning $180,000 in taxable income, contributing the maximum concessional amount (currently $30,000 per year including the super guarantee) can reduce their tax bill by over $5,000 annually. Over a decade, that's $50,000 in tax savings, money that's growing inside your super fund instead of going to the ATO.
The catch is timing. Contributions must be received by your super fund by 30 June to count for that financial year. We recommend making contributions by mid June at the latest to allow for processing time. You must also lodge a notice of intent to claim with your fund and receive an acknowledgement before lodging your tax return.
If you didn't use your full concessional cap in previous years, you may be able to carry forward unused amounts. This is a strategy that can deliver substantial one off tax savings in a high income year. It is particularly useful for business owners whose income fluctuates year to year.
Professional Development and Software Subscriptions
This category is broad, and that's exactly why it gets missed. Business owners often don't realise that the tools, training, and memberships they pay for throughout the year are tax deductible, or they forget to keep receipts for smaller purchases that add up over 12 months.
Deductible items include: accounting and bookkeeping software (Xero, MYOB, QuickBooks), project management tools (Monday, Asana, Trello), industry association memberships, trade publications and journals, online courses and certifications, conference registrations and travel, professional coaching or mentoring fees, and reference books or technical manuals.
The key requirement is a clear connection between the expense and your income earning activity. A construction business owner attending a building industry conference is clearly deductible. A café owner completing a food safety certification is deductible. A consultant paying for a CRM subscription to manage client relationships is deductible.
We recommend setting up a dedicated folder, digital or physical, where you store receipts for these expenses throughout the year. At tax time, your accountant can review the full list and ensure everything eligible is claimed. The individual amounts might seem small ($30/month here, $200 for a course there), but across a full year they often total $3,000 to $5,000 in deductions.
What to Do Next: Getting a Proactive Tax Review
If you've read this article and recognised deductions you might be missing, the next step is straightforward: have a conversation with a qualified accountant who takes a proactive approach to tax planning, not just compliance.
At BVM, we don't just lodge your tax return and move on. We review your full financial position, identify opportunities you might be missing, and help you structure your affairs to minimise tax legally and sustainably. That's the difference between a reactive accountant and a strategic partner.
The five deductions above are just the starting point. Depending on your business structure, industry, and personal circumstances, there may be additional strategies from Division 7A planning to trust distributions to CGT concessions that could save you significantly more.
Don't leave money on the table. If it's been a while since someone looked at your tax position holistically, book a discovery call and let's see what we can find.
