Tax Deductions for Freelancers (Australia 2025-26)

General information only. Speak with a registered tax agent for advice.

As a freelancer operating under an ABN, you have more deductible expenses available to you than a standard employee — but you also carry more responsibility for substantiating each claim. The ATO treats freelancers as sole traders and expects the same rigour it applies to any small business. Getting your deductions right from day one avoids problems at lodgement time and means you keep more of what you earn.

What you can claim

Expense	Typical range	Key rule
Home office — fixed rate	67c per work hour	Keep a 4-week diary of hours; no dedicated room required; does not include occupancy costs (rent, mortgage interest)
Home office — actual cost	Floor-area % of rent/interest, electricity, depreciation	Requires a room used exclusively and regularly for work; higher deduction but stricter requirements
Computer and peripherals	Work-use % of cost	Items over $300 must be depreciated (typically 3–4 years); items $300 or under written off immediately
Software subscriptions	Work portion	Adobe Creative Cloud, Figma, Notion, Slack, project management tools — all deductible at work-use %
Internet and phone	Work portion	Establish work percentage using a 4-week representative period; typical freelancer work-use is 50–80%
Professional development	Full cost	Online courses, workshops, and training that maintain or improve your current freelancing skills
Website hosting and domain names	Full cost	Directly related to your business presence and client acquisition
Professional indemnity insurance	Full cost	Where you hold the policy in your own name as a contractor
Accounting and bookkeeping fees	Full cost	Tax agent fees, BAS preparation, and bookkeeping services
Marketing and advertising	Full cost	Paid ads, stock imagery subscriptions, and promotional costs for client acquisition
Professional memberships	Full cost	Industry associations directly relevant to your freelance work
Bank fees (business account)	Full cost	Fees on accounts used exclusively for business transactions

What you cannot claim

• General clothing. Everyday clothes — even if you only wear them for video calls with clients — are not deductible. The ATO’s position is that conventional clothing has a dual use and cannot be claimed.
• Home rent or mortgage interest (fixed-rate method). If you use the 67c/hour fixed rate, it already covers the occupancy portion of running a home office. You cannot add a separate rent or interest claim on top.
• Personal subscriptions. Streaming services, personal cloud storage, or apps you use for leisure are not deductible — even if you occasionally do work-related things with them.
• Initial education or career-change study. A qualification that gets you into freelancing for the first time is capital expenditure and is not deductible. Only ongoing training to maintain existing skills qualifies.
• GST collected (if registered). If you are GST-registered, the GST component of your income and expenses must be excluded from income and deduction figures — the net amount is what flows through to your income tax return.

Worked example

Lena is a freelance graphic designer operating as a sole trader. Her gross freelance income for 2025-26 is $92,000. She works from a dedicated home office that is 12% of her total floor area.

Deduction	Amount
Home office — actual cost (12% of rent $28,000 + electricity $1,800)	$3,576
MacBook Pro depreciation (85% work, $3,200 cost ÷ 3 years)	$907
Adobe Creative Cloud + Figma subscriptions (100% work)	$1,188
Internet (75% work, $1,440/yr)	$1,080
Phone (60% work, $960/yr)	$576
Professional development (UX course)	$650
Website hosting and domain	$220
Professional indemnity insurance	$1,100
Accounting fees	$680
Total deductions	$9,977

At a marginal tax rate of 39% (including Medicare levy), Lena’s deductions reduce her tax by approximately $3,891.

ATO audit triggers

• Switching between home office methods year to year. You can change methods each year, but the ATO may query large swings in home office claim amounts that are not explained by a genuine change in circumstances.
• Claiming 100% of phone or internet without apportionment. Very few freelancers genuinely use their phone or internet 100% for work. A full claim without a diary or usage breakdown is a common review trigger.
• Asset write-offs without depreciation where required. Items over $300 must be depreciated, not written off in full in year one. Immediately deducting a $2,500 laptop is incorrect and will be picked up.
• Large deduction claims with low or variable income. If your freelance income is modest but your deductions are high, the ATO may ask for substantiation. Keep records even when income is low.

Records you need

• Home office diary for at least 4 continuous representative weeks showing hours worked at home each day (fixed-rate method), or evidence of exclusive room use for the actual-cost method.
• Floor plan or measurements if using the actual-cost method, showing the proportion of your home dedicated to work.
• Receipts and invoices for all deductions — software subscriptions, insurance, courses, professional fees.
• Depreciation schedule listing all depreciable assets with purchase date, cost, and work-use percentage.
• Bank and credit card statements to corroborate business expenses and income.
• ABN and GST records if registered for GST: BAS lodgements, GST collected, and GST credits claimed.

Key takeaways

• The actual-cost home office method is almost always more valuable than the 67c/hour rate for freelancers with a dedicated work room — calculate both before choosing.
• GST registration is compulsory once your annual freelance turnover exceeds $75,000 (GST-exclusive). Register before you cross the threshold, not after.
• Equipment over $300 must be depreciated over its effective life — you cannot write it off in one year unless a specific instant asset write-off threshold applies.
• Sole traders pay income tax on net profit (income minus deductions) at individual marginal rates — there is no company tax rate benefit, so maximising legitimate deductions has a direct impact on your tax bill.

Sources

• ATO sole trader tax obligations
• ATO working from home deductions
• ATO self-education expenses
• ATO occupation and industry guides hub
• ATO claiming deductions 2025
• Legislative anchor: ITAA 1997 s 8-1 and Div 900

Next step

• Estimate your refund with the Tax Return Calculator
• Model your taxable income with the Income Tax Calculator

Occupation guides

• Tax for Freelancers — invoicing, deductions, GST, home office
• Tax for Copywriters — ABN income, software, research tools
• Tax for Virtual Assistants — home office, software, client admin
• Tax for Graphic Designers — software, devices, client travel
• Tax for Web Developers — software, hardware, hosting, PSI