Every dollar counts when you’re running a small business, and missing out on tax deductions can quietly chip away at your profits. It’s easy to assume you’re claiming everything you’re entitled to. But the reality is, most small business owners are so focused on keeping things running that staying across every ATO rule just doesn’t happen. Some of the most valuable tax deductions for small businesses are often missed simply because they blend in with everyday expenses. Whether it’s a misclassified expense, poor record-keeping, or simply not knowing what you’re allowed to claim, the end result is the same. You pay more tax than you need to.
As you work through your year-end tax checklist, this is the time to catch what you might have missed. Here are five business tax deductions Australian small business owners often overlook, and how to make sure you’re not one of them.
5 Commonly Missed Tax Deductions And How To Catch Them:
1. Home Office Expenses Often Go Underclaimed
Working from home is common for many small business owners, whether it’s full-time or just a few hours a week. The problem is, most people either don’t realise they can claim home office expenses or they don’t know how to calculate them correctly.
Eligible deductions can include a portion of your rent, electricity, internet, phone bills, and depreciation on office equipment. There are two methods available: the fixed rate method and the actual cost method. Each has its pros and cons, and choosing the right one depends on your specific situation.
How to avoid missing it:
Maintain clear records of your work-related usage. A four-week diary tracking your work hours can help justify your claim. If you’re unsure which method suits your setup, KAN Tax offers expert guidance as part of its broader Tax & Accounting Services, helping you stay compliant and maximise your deductions.
2. Prepaid Expenses Can Give You a Timing Advantage
Small businesses often prepay expenses like rent, insurance, or software subscriptions. These payments, if eligible, can be claimed as deductions in the current financial year, even if the services extend into the next one.
What often happens is that business owners forget to include them when doing their tax return, or they wait until the services are actually used before claiming, missing out on early tax relief.
How to avoid missing it:
Plan ahead and review your cash flow regularly. If you’re in a position to prepay certain expenses before 30 June, you could reduce this year’s taxable income. When it comes to tax preparation, KAN Tax can help you time these payments strategically, ensuring you take advantage of every deduction you’re legally entitled to.
3. Vehicle Use for Business Often Goes Unclaimed
Using your personal vehicle for business purposes, such as travelling to meetings, picking up stock, or attending events, is a legitimate tax deduction. Still, many small business owners skip it entirely or claim far less than they could because they don’t track usage properly.
There are two ways to claim: using a logbook method or the cents-per-kilometre method. Each has different record-keeping requirements, and choosing the right one can make a big difference in your return.
How to avoid missing it:
Start tracking your business travel today. Even a 12-week logbook can help you make valid claims for five years. If you’re unsure how to apply these methods when completing your tax return online in Australia, we can walk you through it and ensure your claim is accurate and audit-ready. Our income tax return services also cover setting up your logbook correctly and making sure everything checks out for ATO requirements.
4. Bad Debts Are Often Forgotten at Tax Time
If your business invoices a customer and includes that income in your accounts, but the payment never comes through, that amount may be written off as bad debt. But only if you’ve taken reasonable steps to recover the money and document the outcome.
Too often, small business owners stop chasing unpaid invoices and forget to recognise the loss on their tax return.
How to avoid missing it:
Regularly review your accounts receivable. If there are overdue payments you’ve written off internally, check if they qualify for a bad debt deduction. KAN Tax offers tax audit assistance, so if the ATO ever questions your claims, you’ll have the documentation and expert backup to defend them.
5. Depreciation on Equipment and Technology Is Commonly Missed
Items like laptops, phones, business tools, office chairs, or even cloud-based software often qualify for depreciation or instant asset write-off. Yet many businesses miss claiming these because the amounts seem small or the purchases weren’t recorded correctly.
The rules change often. Some assets may be eligible for an immediate deduction, while others need to be depreciated over time.
How to avoid missing it:
Keep all receipts, no matter how small. Maintain an asset register and consult with a tax professional to make sure every eligible item is included. As one of the best tax agents in Australia, KAN Tax ensures that no claimable purchase gets overlooked. Whether it’s through immediate deduction or long-term depreciation, we’ll help you get the full value from your investments.
Conclusion:
Small business owners don’t miss deductions on purpose. They’re just focused on keeping things running, and the tax rules are often confusing or easy to overlook. Still, every missed claim means money left behind, and over time, that can make a real difference. The right advice and systems can help you stay in control and avoid paying the ATO more than you need to. KAN Tax is ready to help you do exactly that. Whether you’re closing out the year, lodging your return, or looking ahead, we’ll make sure every deduction is counted. Get in touch today and take the guesswork out of your next tax return.
