Tax Deductions for Freelancers

Let’s be honest – figuring out what you can and can’t claim as a freelancer can be a real headache.

The Australian tax system wasn’t exactly designed with simplicity in mind. Instead, it’s built to be fair across countless different work types and industries, which unfortunately means it’s also pretty confusing. The result? Many freelancers either accidentally claim things they shouldn’t, or completely miss out on deductions they’re actually eligible for.

To help freelancers cut through the confusion around tax deductions, the ATO has three golden rules for making claims. If your business expense ticks these three boxes, it’s potentially tax deductible:

1. You must have spent the money yourself, and weren’t reimbursed.
2. The expenses must directly relate to earning your income.
3. You must have a record to prove it (usually a receipt).

On top of these three rules, there are a few other guidelines to bear in mind:

• If you have a client who reimburses you for an expense, it’s no longer claimable.
• The exception is allowances. If you receive a taxable allowance for an expense (eg. travel), and you spend money on travel, you can claim what you spend as an expense.
• If an expense is for business and personal use, you can only claim the business usage of it.

We’ve pulled together this guide to help freelancers across every industry get their deductions sorted. Whether you’re designing logos, writing copy, consulting, or coding, no worries! We’ll get you claiming everything you’re entitled to.

Key:

• ✅ - straightforward and claimable
• ⚠️ - claimable if certain conditions are met
• ❌ - not claimable at all. Sorry folks.

Can claim:

1. Working from home expenses ✅
2. Office set up costs ✅
3. Equipment ✅
4. Phone expenses ✅
5. Software subscriptions ✅
6. Travel expenses ✅
7. Seminars, conferences, and training courses ✅

Might be able to claim

1. Self-education, and study ⚠️
2. Meals ⚠️
3. Motor vehicle expenses ⚠️
4. Clothing and laundry ⚠️

Can’t claim

1. Entertainment and social functions ❌
2. Grooming ❌
3. Glasses ❌
4. Child care ❌
   
   

Working from home expenses ✅

Running your business from a home office or dedicated home studio? You might be able to claim some of those costs back.

If you’re running a business from home (and let’s face it, most of us are these days), you could be eligible to claim a portion of your rent or mortgage interest as a deduction – but only the extra costs that come from running your business, and only if you have an area set aside that has the character of a ‘place of business’.

Here’s how it works: if you’ve got a dedicated home office that genuinely functions as your primary workspace, you can work out what percentage of your home it takes up. That same percentage of your rent or mortgage interest might be claimable as a business expense.

For example, if your home office makes up 10% of your total home space, you could potentially claim 10% of your rent or mortgage interest.

The catch? Your office needs to be used exclusively for business. If it doubles as the guest bedroom or your kids’ playroom, you can’t claim those occupancy expenses anymore.

The rules around home offices can get pretty detailed, so it’s worth checking the ATO website to make sure you’re getting it right.

Office set up costs ✅

Whether you’re kitting out a spare room or building an office setup from scratch, the gear you buy specifically for your freelance business is generally tax deductible.

We’re talking things like:

• A proper desk
• A swanky ergonomic chair
• A laptop stand
• Monitor arms, keyboard trays, or desk organizers
• Filing cabinets or other storage solutions
• A decent desk lamp for evening office hours

The important thing here is that the equipment needs to be used exclusively for your business, in order for you to be able to claim the full cost. If you’re planning to use that fancy office chair for both work and gaming sessions, you can only claim the business usage of the cost.

💡 For bigger ticket items, you might need to claim the depreciation over several years rather than the full cost upfront.

In any case, the bottom line is that investing in a proper workspace isn’t just good for your productivity and wellbeing – it’s also a legitimate business expense that can reduce your tax bill.

Equipment ✅

All those bits and pieces you need to actually do your job? Yep, they’re claimable.

Whether you’re a graphic designer buying the latest graphics tablet, a writer investing in reference books, or a software engineer looking to upgrade their tech, the tools of your trade are legitimate business expenses.

This covers everything from:

• Professional books and resources
• Specialized equipment
• Stationery and office supplies
• External hard drives or cloud storage

Just remember: when using something for both work and personal reasons, you can only claim the business portion. So if that iPad is 70% work, and 30% Netflix, you can only claim 70% of the cost.

Phone and internet expenses ✅

Your mobile phone and internet connection aren’t just about keeping you connected – they’re vital in keeping your business running.

That’s why the work-related portion of your phone and internet costs are totally claimable, including:

• Your actual phone
• Monthly phone plan costs
• Data charges
• Internet and Wi-Fi expenses

The trick is working out what percentage is actually for work. If you calculate 60% of your phone use is business-related, then 60% of those costs can be claimed in your tax return.

Software subscriptions ✅

Need Figma to collaborate with your clients? Or Final Cut Pro to edit your most recent short film? Good news – it’s all tax deductible.

Any software subscriptions you need to do your job can be claimed as a business expense. Just remember (say it with us now) – you can only claim the percentage of the subscription that you use for actual work. Editing a birthday message for a friend unfortunately doesn’t count for the ATO’s purposes.

Travel expenses ✅

Any expenses from overnight work trips are generally tax deductible – think client meetings in other cities, unmissable industry events, or project work that requires you to be away from home.

You can claim these expenses as long as you can prove:

• You were away overnight
• You actually spent the money while away
• The trip was directly related to earning income
• How you calculated your claim

Pretty straightforward stuff, but worth keeping those receipts!

Seminars, conferences, and training courses ✅

Conference tickets, online courses, workshops, industry seminars – if it’s going to make you better at what you currently do, it’s likely tax deductible.

You can even claim travel costs, accommodation, and meals if you’re away from home for more than a day attending these events. Score!

Just one catch: the whole trip needs to be genuinely work-related. You can’t tack a weekend in Bali onto a one-day workshop and claim the lot (trust us, we’ve thought about it). In mixed trips like that, only the direct costs – like course fees – will be tax deductible.

Self-education and study ⚠️

You can claim self-education expenses, but only if they directly relate to your current freelance work. To qualify, the course or study needs to either:

• maintain or improve the specific skills you need for your current projects, or
• be likely to boost your income from your existing freelance services

The key word here is “current.” You can’t claim a deduction for a course that’s going to help you pivot into a completely new field. And unfortunately, general personal development courses don’t make the cut with the ATO - they need to be directly relevant to the work you’re already doing.

Meals ⚠️

We all need to eat, especially while we work. But the ATO rules are pretty specific about when you can claim costs.

• ❌ You can’t claim your regular lunch, coffee, or snacks during normal work hours. The ATO considers these personal expenses.
• ✅ You can claim meals if you’re working late and receive an overtime meal allowance from a client that’s included in your taxable income.
• ✅ You can also claim meals when you’re traveling overnight for work.

Basically, if it’s just your regular fuel to get through the day, it’s on you. But if it’s genuinely an extra cost because of specific work circumstances, it might be claimable.

Motor vehicle expenses ⚠️

Your car can be a business expense, but the ATO is pretty strict about when.

Here’s what you can and can’t claim:

❌ Can’t claim:

• Your regular commute to a fixed workspace (even if you work weird hours)
• Tolls for driving to your regular workplace
• Parking at or near your regular workplace
• Any taxi or Uber fares for your normal commute

✅ Can claim:

• Driving between different client locations during the day
• Travel between multiple work sites for the same client
• Tolls and parking fees for work-related trips
• Travel between different job sites, provided they’re not your regular fixed workplace

Basically, if it’s your regular journey to and from work, it’s personal. If it’s additional travel because of work requirements, it’s likely claimable.

📖 For more information, check out our guide to claiming motor vehicle expenses.

Clothing and laundry ⚠️

That “work outfit” probably isn’t as deductible as you’d hope.

The ATO is pretty strict here. You can only claim clothing that’s:

• A uniform with a business logo
• Occupation-specific (like safety gear for tradies)
• Unconventional costumes (think performers or entertainers)

Even if you only wear certain clothes for client meetings, if they could reasonably be worn outside of work, you’re out of luck.

If your work clothes are deductible, you can also claim laundry costs:

• Dry cleaning and repairs
• $1 for every load of just work clothes
• $0.50 for mixed loads with personal items

If your laundry expenses are under $150 (excluding dry cleaning), you don’t need receipts, but you do need to show how you calculated your claim.

Networking and client entertainment ❌

This one stings, but networking costs are personal expenses.

Even though networking is crucial for freelancers, the ATO considers entertainment and social costs personal expenses – even when they’re work-related or feel mandatory.

You can’t claim:

• Taking clients out for coffee or meals
• Networking event tickets
• Industry social functions
• Any entertainment costs, even if they directly lead to new business

We know, we know – it feels unfair when these events are essential for growing your freelance business. But them’s the breaks.

Personal grooming ❌

Looking professional is important, but it’s not tax deductible.

Even if your clients expect you to look polished, grooming costs are considered personal expenses. This includes haircuts, skincare, makeup – anything related to your personal appearance.

(Even if you’re a freelance makeup artist, you can absolutely claim the products you use for your clients – but not the stuff you use yourself.)

The ATO’s view? Looking good is a personal choice, not a business requirement.

Glasses and contacts ❌

Can’t work without your specs? The ATO still won’t help with the cost.

Glasses and contact lenses are personal expenses, even if you’re practically blind without them and can’t do your job. It doesn’t matter how essential they are for your work – they’re not claimable.

Child care ❌

This one’s especially tough, but childcare is never claimable.

Even if you literally can’t work without paying for childcare, it’s considered a personal expense. No exceptions, unfortunately.

We get it – this feels particularly harsh for freelancers who need flexibility around family commitments. But the rules are clear on this one.

Claim tax deductions with Hnry

We may be biased, but we reckon the best way for freelancers to maximise tax deductions (cost-effectively and legally!) is to use Hnry.

Hnry is an award-winning app that’s helping freelancers of every industry spend less time on financial admin, and more time doing what they love (unless what they love is financial admin).

For just 1% +GST of your self-employed income, capped at $1,500 +GST a year, Hnry will calculate and pay all your taxes, levies and whatnot for you, including:

• Income tax
• GST
• Medicare Levy
• Student loan repayments
• Superannuation contributions (optional)

We also complete and lodge your tax return for you, including claiming any tax relief you might be entitled to. It’s all part of the service!

More importantly, we free up thousands of hours for you to focus more on what you do best – your job. Hnry is on a mission to make being a freelancer simple, affordable, and accessible for anyone.

Get your tax ducks (and deductions) in a row by joining Hnry today!

Share on: