The Deductions Contractors Forget About Every Year

Deductions & record-keeping

Most contractors claim the obvious stuff — equipment, maybe a home office. The deductions that get missed are usually the small, recurring ones that don't feel like "business expenses" because they show up on a personal-looking bank statement.

Business insurance and professional cover

Professional indemnity insurance, public liability cover, and workers compensation (if you're required to hold it) are fully deductible business expenses. These often get paid via a general insurance broker with a name that doesn't obviously say "insurance," which is exactly why they're easy to lose track of across a financial year.

Phone and internet — but only the business-use portion

If you use your phone and home internet for work, you can claim the work-related percentage. The ATO expects a reasonable, defensible estimate — not necessarily a minute-by-minute log, but you should be able to explain how you arrived at the percentage if asked. Satellite or NBN internet used to run your home office counts the same way as a traditional phone/internet bill.

Software subscriptions

Accounting software, project management tools, cloud storage, design or development tools — any subscription genuinely used to run the business is deductible in full if it's 100% business use, or apportioned if you also use it personally. These are easy to forget because they're small, recurring, and often billed annually in a lump sum you don't notice.

Vehicle and travel costs — the one that needs real records

This is the category the ATO scrutinises most closely, and for good reason: it's also the easiest to over-claim. A few key points:

• Commuting doesn't count. Driving from home to a regular client site is generally treated like any employee's commute — not deductible, even if you're a contractor.
• Travel between job sites, to clients, or for business errands does count. If you're going from one work location to another, or from home to a client's office for a specific one-off job (not your regular base), that's deductible.
• Car finance, registration, insurance, and fuel are only deductible in proportion to business use — you need either a 12-week logbook establishing your business-use percentage, or you use the cents-per-kilometre method (capped, and requires a reasonable record of business kilometres).
• Flights, accommodation, and car hire for genuine work travel — interstate client visits, conferences, industry events — are deductible. Add-on personal days attached to a work trip generally aren't, and need to be apportioned.

If you're claiming meaningful vehicle costs without a logbook, that's the single most common reason a contractor's deduction claim gets adjusted at audit.

Self-funded superannuation contributions

If you're topping up your own super (nobody's doing the 11.5%+ guarantee contribution for you as a contractor), those contributions can be deductible — but only if you lodge a valid Notice of Intent to Claim a Deduction with your super fund before you lodge your tax return, and receive an acknowledgment back from the fund. Skip that step and the contribution is just an after-tax (non-concessional) contribution with no deduction at all.

The habit that actually matters

None of this requires perfect bookkeeping. It requires a five-minute monthly habit: skim your bank and card statements and flag anything that looks business-related before you forget what it was for. A year-end scramble through twelve months of transactions is how legitimate deductions get missed — not because people don't qualify for them, but because nobody can remember what "EZI*BIZ COVER" was in March.