What Can I Claim as a Tax Deduction for My Side Hustle in Australia?

One of the biggest mistakes Australian side hustlers make is paying tax on their gross revenue when they could be paying tax on a much smaller profit figure. The ATO allows you to deduct legitimate business expenses from your side hustle income — which means every dollar you spend running your business reduces your taxable income by that same dollar.

This guide covers every major deduction category available to Australian side hustlers in 2025–26, with practical examples and the ATO rules you need to follow.

The ATO's Three Rules for a Valid Deduction

The expense must be directly related to earning your side hustle income (not personal)
You must have actually spent the money yourself and not been reimbursed
You must have a record to prove it — a receipt, invoice, bank statement, or logbook

1. Phone & Internet

Your phone and internet plan are partially deductible if you use them for your side hustle — and almost every side hustler does. You can claim the business-use percentage of your total annual bill.

For example, if your phone bill is $1,200 per year and you estimate 40% of your use is for your side hustle (client calls, emails, apps, navigation), you can claim $480 as a deduction.

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How to calculate your percentage: The ATO accepts a 4-week representative diary period to establish your usage split. Track how many calls, emails, and minutes you use for business vs personal for one month, then apply that percentage to your full year's bill.

2. Home Office Expenses

If you work on your side hustle from home — doing admin, managing orders, writing, designing, or anything else — you can claim home office expenses. The ATO offers two methods:

Fixed Rate Method (67 cents per hour)

Claim 67 cents for every hour you work from home on your side hustle. This covers electricity, gas, internet, stationery, and computer consumables. You must keep a record of your hours — a diary, timesheet, or calendar works fine.

Example: 10 hours per week × 48 weeks × $0.67 = $321.60 deduction

Actual Cost Method

Calculate the actual costs — a portion of rent/mortgage interest, electricity, internet, cleaning — based on the floor area of your dedicated workspace as a percentage of your total home area. More complex but potentially higher if you have a dedicated home office.

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Important: The space does not need to be a separate room, but you must be genuinely working — not just sitting at your kitchen table with the TV on. The ATO may ask for evidence of your working hours if audited.

3. Equipment & Technology

Any equipment you buy for your side hustle is deductible. Under the small business instant asset write-off rules, items costing less than $20,000 can often be deducted in full in the year of purchase rather than depreciated over time.

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Laptop / Computer

Business-use proportion if also used personally. 100% if exclusively for work.

e.g. $1,500 laptop, 70% business = $1,050

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Camera / Equipment

Photographers, videographers, and content creators can claim gear used for paid work.

e.g. $800 camera lens = $800

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Printer / Scanner

Business-use proportion. Keep a note of what you print for business.

e.g. $300 printer, 60% business = $180

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Headset / Accessories

Fully deductible if used for client calls, online meetings, or recording.

e.g. $150 headset = $150

4. Software Subscriptions

Any software you pay for to run your side hustle is deductible — even if you pay monthly. This includes:

Accounting software (Xero, MYOB, QuickBooks)
Design tools (Adobe Creative Cloud, Canva Pro, Figma)
Project management (Asana, Notion, Monday.com)
Communication tools (Slack, Zoom paid plans)
Website hosting and domain registration
Email marketing tools (Mailchimp, ConvertKit)
Stock photo or asset subscriptions

Add up your monthly subscriptions — most side hustlers are surprised how quickly these total $1,000–$3,000 per year.

5. Vehicle Expenses

If you use your car for your side hustle — driving to clients, picking up supplies, making deliveries — you can claim vehicle expenses. You have two options:

Method	How It Works	Best For
Cents per km	88¢ per business km, up to 5,000km/year. No receipts needed, just records of trips.	Low-mileage side hustlers
Logbook method	Keep a 12-week logbook. Claim that % of all actual car costs (fuel, insurance, rego, servicing, depreciation).	High-mileage or high-cost vehicle

6. Professional Services

Any professional you pay to help run your business is deductible:

Accountant or tax agent fees — 100% deductible, including the cost of preparing your tax return
Bookkeeper fees — 100% deductible
Legal advice — for contracts, IP protection, or business structure
Business coaching or consulting — if directly related to your side hustle

7. Marketing & Advertising

Social media advertising (Facebook Ads, Instagram, TikTok)
Google Ads or other paid search
Business cards and printed materials
Website design and development costs
Photography or video production for marketing
SEO services

8. Training & Education

Courses, books, conferences, and training that directly improve skills you use in your side hustle are deductible. The key test: the training must relate to your current side hustle, not a completely new field.

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Examples that qualify: A freelance copywriter taking an advanced writing course. A photographer attending a lighting workshop. A web developer buying programming books. A consultant attending an industry conference.

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Examples that don't qualify: A graphic designer taking a nursing course. A delivery driver studying accounting. Training for a completely different career path you haven't yet started.

9. Bank Fees & Financial Costs

Business bank account fees
Payment processing fees (Stripe, Square, PayPal transaction fees)
Platform commission or service fees (Upwork, Fiverr, Airtasker)
Interest on business loans (not personal loans)

What You Cannot Claim

Expense	Why It's Not Deductible
Personal groceries or clothing	Not directly related to earning income
Traffic fines or penalties	Never deductible under any circumstances
Private portion of mixed expenses	Only the business proportion can be claimed
Capital losses on personal assets	Different tax treatment applies
Expenses without receipts	Cannot be proven to the ATO if audited

Record Keeping: The Golden Rule

You must keep records of every deduction you claim for five years from the date you lodge your tax return. The ATO can audit you any time within that window.

The easiest approach: create a folder (physical or digital) and drop every receipt in as you receive it. Apps like Dext, Hubdoc, or even just a Google Drive folder make this painless.

See How Deductions Reduce Your Tax Bill

Enter your side hustle revenue and deductions into our free calculator to see your actual taxable profit and how much tax you'll owe.

Calculate My Tax →

How Much Can Deductions Save You?

Here's a practical example for a freelance graphic designer earning $30,000 from their side hustle, with a day job salary of $80,000:

Item	Amount
Side hustle revenue	$30,000
Less: Adobe Creative Cloud	−$900
Less: Laptop (70% business use)	−$1,050
Less: Home office (67¢ × 500hrs)	−$335
Less: Phone (40% business)	−$480
Less: Accountant fee	−$550
Taxable side hustle profit	$26,685
Tax saved (at ~37% marginal rate)	~$1,231 saved

That's over $1,200 saved simply by properly tracking and claiming legitimate expenses — without doing anything aggressive or questionable.

This article is for general informational purposes only and does not constitute tax or financial advice. Deduction rules can change — always verify with the ATO website or consult a registered tax agent for advice specific to your situation.