You can deduct expenses from the income that you are taxed on. If you want to claim expenses, you’ll need to keep records of your expenses and income and understand what types of costs you can claim as an expense.
Common expenses
These are examples of expenses that are common across a range of businesses.
| Expense | More information |
|---|---|
|
Using your home for your business |
|
Depreciation |
|
Claiming vehicle expenses |
Common expenses for content creators
The following are examples of expenses that are more common for content creators.
Fees and subscriptions
- Professional fees, for example accounting or tax agent fees related to the content creation activity, and fees for creative services, for example fees for editing, design, or promotional work.
- Subscriptions for online content or apps that content creators use for their activity.
- Music licensing fees.
Set-up costs
Some set-up costs such as computers, desks and chairs can be claimed as an expense. You may need to claim deprecation for these instead of claiming the full cost of the items.
Content materials
- The cost of buying games and expansion packs for professional gamers or content creators who feature the games in their content.
- In-game micro-transactions for professional gamers or content creators, if these transactions are necessary to be competitive in deriving income from gaming or streaming.
- The costs of materials, for example materials used in instructional videos.
Some expenses will not be deductible because they are private or domestic in nature, for example most clothing expenses. Private and domestic expenses are essentially living costs and costs associated with the home or family.
Deductibility
Before you claim an expense as a deduction, consider how you incurred the expense.
- Expenses must be incurred in earning income or carrying on a business for the purposes of earning income.
- You can only claim an expense if you are the person who has incurred the expense.
- Your income-earning activity must have started to be able to claim expenses - in other words your activity can generate your income.
- You can claim expenses even in years where your expenses are more than your income. However, there must still be an intention to make a profit.
Expenses you cannot claim
- Your personal or domestic expenses cannot be claimed as a deduction against your income. You may be able to claim part of an expense when it is used both in your income-earning activity and for personal use. For instance, if you have a home office you may be able to claim the part of your home expenses that relate to your content creation work.
- You cannot deduct capital expenses such as cars. If they are used for your content creation income, you should depreciate the item.
- Deductions for expenses cannot be claimed if your business or income-earning activity has stopped, even if you continue to derive income from your old content.
Start of income-earning activity
An income-earning activity usually starts when the activity can generate income for you. In some situations, there may be certain activities that need to happen before any income can be derived. For example, a person may need to establish a certain number of viewers or subscriptions before they can make money from their content. In this situation the income-earning activity has not yet begun.
Keeping records
You need to keep good records that support any expenses that you claim. We may request these as proof of the expense.
Records of income and expenses
Li wants to be a professional online gamer and streamer like his friend Joshua. Li is an excellent gamer but does not derive amounts regularly from gaming and streaming activities. Before Li can start deriving regular amounts from competing or streaming, he'll need to do a few things, for example:
- climbing the in-game ladder
- competing in open tournaments
- building their viewership.
However, Li is committed to giving it a go.
Li purchases the equipment he thinks he'll need to be competitive and wants to know whether he can deduct the costs from his income. In this case, Li cannot deduct the expenses from his income. Although it is not necessary for an activity to make a profit for expenses to be deducted from income, the income-earning activity must have started. Li might have an intention to make a profit one day like Joshua, but his income earning activity has not started.
Li is not yet making income because he is not deriving regular amounts from competing or streaming and is not in a position to do so. He has several steps to do before this will be possible.
Ashley, a fashion commentator, is attending a fashion show. Ashley buys a new designer jacket to wear to the show, because being well dressed is essential to the success of their content.
The cost of the jacket is not deductible. Generally, the cost of clothing is private or domestic so is not deductible, even if a high standard of dress is required.
Ashley does not work from home, instead they rent space in an office to work from. Ashley therefore cannot claim their household bills as an expense. They can however claim expenses for the office they are renting.