💼 Freelancer / Sole Trader Tax Deductions Australia
Self-Employed Contractors & Freelancers — your complete 2026 ATO guide.
Last updated: May 2026
If you work as a freelancer / sole trader in Australia, you're entitled to claim a deduction for many of the costs you incur doing your job. The ATO has specific rules about what counts and what doesn't — and getting it right can mean a meaningfully bigger refund. This guide covers every tax deduction available to Australian freelancer / sole traders for the 2025–26 financial year, based on published ATO guidance for the Gig Economy sector. We break down what's fully deductible, what's partially deductible (and how to apportion it), and what to avoid claiming.
The 3 ATO golden rules
To claim a work-related deduction, you must meet all three:
- You paid for it personally and weren't reimbursed.
- The expense directly relates to earning your income.
- You have a record (usually a receipt).
✅ Fully deductible 14 items
ABN registration costs
Costs to set up and maintain your ABN are deductible.
Tax agent and bookkeeping fees (last year)
Tax agent fees paid last year are deductible on this year's return.
Accounting and invoicing software
Software used to manage your business is deductible.
Professional indemnity insurance
Professional indemnity insurance is deductible.
Public liability insurance
Public liability insurance for your business is deductible.
Income protection insurance
Income protection premiums paid outside super are deductible.
Bank fees on business account
Bank fees on a dedicated business account are deductible.
Self-education (current business)
Self-funded training that maintains your current business skills is deductible.
Industry association fees
Professional association fees relevant to your business are deductible.
Marketing, website and ads
Marketing for your business is deductible.
Subcontractor fees you pay
Payments to subcontractors for your business work are deductible.
Office supplies and stationery
Work-related stationery is deductible.
Ergonomic chair, desk and monitor
Ergonomic equipment used for business is deductible.
Conference and seminar fees
Conferences relevant to your business are deductible.
⚠️ Partially deductible 5 items
These costs are split between work and private use. You can only claim the work-use percentage — keep a 4-week diary or 12-week logbook.
Mobile phone (work-related use)
Work-related calls, messages and data are deductible at the work-use percentage based on a 4-week log.
Home internet (work-related use)
The work-related proportion of your home internet is deductible based on usage records.
Laptop or computer (work use)
The work-related percentage of a personal laptop used for work is deductible; items over $300 are depreciated.
Home office running costs
Electricity, gas, and depreciation of office furniture used for work are deductible (70c/hr fixed rate or actual cost method).
Car expenses (work travel)
Work-related travel is deductible; private travel is not. Use logbook or cents-per-km method.
❌ Not deductible 1 items
Common audit traps. Claiming these can trigger ATO review and penalties.
General clothing (non-uniform)
Conventional clothing worn to work is not deductible, even if your employer requires it.
Need help lodging your return?
ALI Tax's qualified agents handle returns Australia-wide. Average refund: $2,847.
Get started with ALI Tax →Frequently asked questions
What's the simplest way to track freelancer / sole trader deductions during the year?
Keep a separate folder or app (like Receipt Bank or your phone's notes) and capture every work-related receipt as you spend. The 'shoebox approach' costs most freelancer / sole traders thousands in lost refunds each year.
Can I claim something my employer reimbursed?
No. If you've been reimbursed (or it was salary-packaged), you can't claim a deduction for it as well.
Do I need receipts for everything?
You need a receipt or written record for any deduction. For laundry up to $150 and small expenses up to $300 in total, you can use the ATO simplified methods without keeping every receipt.
What's the difference between deductible and partial?
Fully deductible means you can claim 100% of the cost. Partial means it's split between work and private use — you can only claim the work-use percentage based on a diary or logbook.
How long do I need to keep my receipts?
Five years from the date you lodge your tax return. The ATO can ask for records anytime in that window.