> ## Documentation Index
> Fetch the complete documentation index at: https://docs.ai2fin.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Tax deductions by profile — expense or asset, and how to set it up
> For sole traders, freelancers, contractors, creators and more: which purchases are expenses, which are assets, the treatment each takes, and the 2Fin setup.
## Who is this guide for?
You know roughly what you can claim. What trips people up is the second question: is this purchase an expense you deduct this year, or an asset whose cost is spread over the years you use it? And the third, which almost nobody asks until the activity statement is due: what kind of supply is it for GST or VAT, because that decides which label it lands on and whether the credit is yours to claim.
This guide walks through the eight profiles 2Fin is built around and the occupations within them, names the purchases that usually fall on each side of the expense-or-asset line, and gives the same four steps for every one of them. The research behind it is Australian first, so where a figure or rule is Australian the text says so; the 2Fin steps are the same in every country.
This is general information, not personal tax advice. What you can claim depends on your circumstances. Confirm with the ATO, your own authority or a registered tax agent, and keep a record to back every claim.
## The four steps, for everyone
Whichever profile you are, the setup is the same, and it is done once.
Create the categories your spending actually falls into, and mark each one deductible or not and with a default business-use percentage. See [Categories](/features/categories). This is the income-tax side: does the expense reduce your taxable income, and by what share.
On the same page, set the **Tax treatment** column: standard purchase for ordinary taxed spending, no-tax purchase for bank fees and government charges, input-taxed income for interest, capital purchase for the *Equipment* and *Vehicles* categories. Use **Suggest treatments** to get a proposal per category and apply the rows you agree with. See [Tax treatment](/features/tax-treatment). This is the indirect-tax side, and it is separate from deductibility on purpose.
The moment a purchase resolves to a capital treatment, Fin offers to add it to the [asset register](/features/asset-register) with the purchase already filled in. Take the offer, set the method, effective life or rate and business-use share, and Fin works out every year from there. Anything you skip waits in the **Not yet registered** panel.
The [depreciation schedule](/features/reports#depreciation-schedule) prints the year's claim per asset, the [Profit & Loss](/features/reports#profit-and-loss) shows net position beside taxable position, and the [Tax export](/features/tax-export) hands your accountant the ledger. Contractors in Australia who pay subcontractors also get the [TPAR](/features/reports#taxable-payments-annual-report-tpar).
## How do you tell an expense from an asset?
The test is how long it lasts. Something consumed in the period you bought it, or that wears out within the year, is an expense: software subscriptions, fuel, stock you resell, consumables, fees. Something you will still be using next year is an asset: a laptop, a vehicle, a camera, a tool chest, a fit-out. For an asset the GST or VAT credit, where you are registered, is claimed in full in the quarter you bought it, while the cost itself is deducted over the effective life, with private use trimming the yearly claim rather than the value you carry.
Three Australian rules shape where the line sits, and each one is a figure to confirm rather than assume:
* **Employees** can deduct an item costing \$300 or less in full in the year they buy it, and claim dearer items over the effective life. There is no GST side for an employee.
* **Small businesses** using the simplified depreciation rules may write an asset off immediately where it costs less than the instant asset write-off limit for that year. Fin prints that limit only for a year in which it has been confirmed, and otherwise asks you to confirm the current limit with the ATO.
* **Trading stock** you buy to resell is never a depreciating asset. It is cost of goods sold; see [Tracking cost of goods sold](/features/lenses#tracking-cost-of-goods-sold).
## The eight profiles
### Sole traders
**The problem:** one bank account carries two lives, and a single statement mixes a bank fee, a few dollars of interest and the occasional piece of equipment, each of which belongs on a different label of the activity statement.
| Usually an expense | Usually an asset | Treatments that matter |
| ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Software subscriptions, phone and internet (business share), home-office running costs, insurance, bank fees, vehicle running costs | Laptop, phone, vehicle, office furniture, tools above the threshold | Bank fees → purchase with no tax. Interest received → input-taxed income, not GST-free. Equipment → capital purchase. Personal lines → marked personal so they leave the return. |
**In 2Fin:** let auto-categorisation split business from personal, then set the treatments on *Bank Fees*, *Interest* and *Equipment* once. Every transaction that lands in those categories is placed correctly from then on, and a capital purchase triggers the asset register offer.
### Freelancers
**The problem:** the laptop and the phone bought in the same year are two kinds of claim, and the GST credit and the income-tax deduction run on different clocks.
| Usually an expense | Usually an asset | Treatments that matter |
| --------------------------------------------------------------------------------------- | -------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| Client software, co-working, professional development, home-office costs, subscriptions | Laptop, phone, monitor, desk and chair | Equipment → capital purchase, whose GST credit is claimed this quarter while the cost is written off over the effective life (or immediately where the write-off rules apply). |
**In 2Fin:** the asset register keeps both halves on the one bank transaction: the treatment sends the GST to the activity statement now, and the register spreads the cost. Set the business-use share on the asset if you also use it privately; the schedule shows the full decline and your deductible share side by side. A [Lens](/features/lenses) per client keeps the costs of each engagement readable without re-categorising.
### Contractors
**The problem:** job costs need to be organised by the time you are home, and if you pay subcontractors in Australia the ATO may expect a taxable payments annual report.
| Usually an expense | Usually an asset | Treatments that matter |
| --------------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Materials, fuel, insurance, subscriptions, protective clothing, small tools | Drill kits, trailers, vehicles, larger tools and plant | Tools and vehicles → capital purchase. Subcontractor payments → an ordinary purchase, in a category flagged as contractor payments so it reaches the TPAR. |
**In 2Fin:** a capital treatment on the *Tools & equipment* category means every larger purchase is offered to the register. For the TPAR, see [how a payment gets onto the report](/features/reports#how-does-a-payment-get-onto-the-report); whether you must lodge for building and construction depends on the ATO's 50% test, which is a question for the ATO or your accountant.
### Small business
**The problem:** month-end bookkeeping, and the yearly question of whether the new equipment can be written off immediately.
| Usually an expense | Usually an asset | Treatments that matter |
| -------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Rent, wages, utilities, stock, consumables, merchant fees, insurance | Fit-out, point-of-sale hardware, vehicles, machinery, the espresso machine | Wages → the wages code, never a purchase. Stock → a standard purchase (and cost of goods sold, not an asset). Fit-out and machinery → capital purchase. |
**In 2Fin:** when you mark the equipment capital, the register offers the immediate write-off method where your country has one and your business qualifies, and prints the limit only for a confirmed year. Otherwise it runs prime cost or diminishing value on the cost. The Profit & Loss shows every business expense, including the non-deductible ones, so the net position is a profit figure.
### Growing businesses
**The problem:** one set of transactions needs to be sliced by project, client or department, and at year end the first question is "what did you buy or sell, and what is it written down to?"
| Usually an expense | Usually an asset | Treatments that matter |
| --------------------------------------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- |
| Everything a small business has, at more volume, plus contractor and agency costs | Vehicles, fit-out, computers and servers, specialised equipment | As for small business. Imported services → reverse charge, reported on both sides. Imported goods → the import code. |
**In 2Fin:** the asset register answers the year-end question directly: each asset linked to its bank transaction, method and effective life set, and a print-ready depreciation schedule with opening, decline, deductible and closing per asset, or per pool, class or block in the United Kingdom, Canada and India. Lenses give the per-project or per-client view without a second set of categories.
### Students
**The problem:** seeing where the money goes and staying ahead of the month. Most students have no business side at all.
| Usually an expense | Usually an asset | Treatments that matter |
| -------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------- |
| Self-education costs where they qualify, textbooks, stationery | A laptop used for a qualifying course may be claimed over its effective life rather than at once | Usually none: without a business or GST registration, the treatment column can stay on Inferred and the return is an income-tax question only. |
**In 2Fin:** categories and budgets do the work. If a part-time business starts, the same four steps apply from that day.
### Content creators
**The problem:** the camera body, the lighting kit and the editing machine are all capital purchases that are also used for life, and the private share has to be worked out rather than guessed.
| Usually an expense | Usually an asset | Treatments that matter |
| ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Editing software, props, a home studio's running costs, internet, subscriptions, platform fees | Camera bodies and lenses, lighting, microphones, computers, drones | Gear → capital purchase. Platform income → a taxable sale where you are registered; confirm how overseas platform payouts are treated with your adviser. |
**In 2Fin:** set the business-use share once on each asset. The schedule keeps the full decline and your deductible share as separate columns; the full decline carries forward to next year, the deductible share is what you claim, and a note of how you reached the percentage is what makes the claim hold up.
### Accountants and bookkeepers
**The problem:** you are not the one doing the spending; you are the one receiving it. You want one export instead of a folder hunt, figures that trace back to their source, and the asset register your client never kept.
**In 2Fin:** the [Accountant Ledger](/features/tax-export#accountant-ledger) export is one flat row per transaction, with the tax category, deductible flag, business-use percentage and tax amount on each line. The depreciation schedule reconciles by hand, the balancing adjustment on a disposal is flagged for you to assess rather than applied, and every figure on the activity statement is traceable to the treatment that placed it.
## Occupations: what is usually an asset for you?
These are the occupations in the research with a gear note, which is the part that decides expense or asset. The first column is the purchase most often worth registering. Figures and thresholds are Australian.
| Occupation | Usually registered as an asset | Usually an expense | Note |
| ---------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Tradies | Drill kits, trailers, a ute, larger power tools | Consumables, small hand tools, protective gear, fuel | Employees claim tools over \$300 over the effective life; on an ABN with GST registration the GST credit is claimed now. |
| Apprentices and trainees | Dearer tools above \$300 | Tools at \$300 or less, in full that year | Employees, so no GST side. Keep the receipt for the dearer tools. |
| Mechanics | Tool chest, scan tool, hoist | Consumables, small tools | Using the gear on your own car trims the yearly claim, not the carried value. |
| Cleaners | Commercial vacuum, floor scrubber | Cleaning products, small equipment | Using the same machine at home reduces the business share. |
| Rideshare and delivery drivers | The car itself, a dash cam, a phone mount | Fuel, tolls, cleaning, phone plan (business share) | Rideshare drivers must be GST-registered in Australia. The car's cost is claimed over its effective life under the logbook method, with the car limit applying; confirm the current limit with the ATO. |
| Truck drivers | A prime mover or trailer (owner-drivers); a fridge or CB radio over \$300 (employees) | Fuel, tolls, maintenance, meals where they qualify | Owner-drivers claim the GST credit now; employees have no GST side. |
| Bus and coach drivers | Prescription sunglasses or a handheld device over \$300 | Items at \$300 or less | Usually employees. Wearing the sunglasses on days off trims the share. |
| Content creators | Camera bodies, lenses, lighting, the editing machine | Editing software, props, internet | The private share trims the yearly claim, not the value on the register. |
| Streamers and gamers | A streaming PC, a GPU, capture hardware | Subscriptions, internet, peripherals under the threshold | Personal gaming hours reduce the work-related share of each year's deduction. |
| Online sellers | Shelving, a label printer, a laptop | Packaging, postage, platform fees, advertising | Stock you buy to resell is trading stock, never an asset. |
| Designers and digital freelancers | A colour-accurate display, a drawing tablet, a Mac | Software subscriptions, fonts, stock assets | Private use of the same machine reduces the share you claim each year. |
| Performing artists and musicians | Instruments, a PA system | Strings, reeds, sheet music, stage wear where it qualifies | Many instruments have an effective life running to decades. |
| Fitness instructors | Gym equipment, a portable sound system, a laptop | Music licensing, insurance, registration | Training with the same gear yourself reduces the business share. |
| Hairdressers and beauty therapists | Clippers, a salon dryer (chair renters) | Products, consumables | Chair renters on an ABN claim the GST credit now; employees claim tools over \$300 over the effective life. |
| IT professionals | Laptop, monitors, home-office hardware | Software, cloud services, certifications | Contractors claim the GST credit now; employees claim hardware over \$300 over the effective life. |
| Engineers | Survey instruments, a workstation, a plotter | Software licences, professional memberships | As for IT professionals: the GST side depends on whether you consult on an ABN. |
| Security guards | A torch, a body camera, a two-way radio over \$300 | Items at \$300 or less, uniform laundering | Mostly employees, so no GST side. |
| Flight attendants and cabin crew | A suitcase or luggage set over \$300 | Luggage at \$300 or less, in full that year | Employees. Taking the same bag on holiday reduces the share. |
For the other occupations in the research (nurses, teachers, hospitality, real estate, office workers, doctors, lawyers, accountants, retail, aged care, pharmacists, childcare) the purchases are mostly expenses, and the asset question rarely comes up beyond a laptop or phone, which follows the freelancer pattern above.
## FAQs
### I am an employee, not a business. Does the treatment column matter to me?
Rarely. Without GST or VAT registration you have no activity statement, so the indirect-tax side does nothing for you and the column can stay on Inferred. Deductibility and the asset register still apply: an item over the employee threshold is claimed over its effective life, and the register works that out.
### My camera is used for the channel and for holidays. How much can I claim?
The business share of the decline. Set the business-use percentage on the asset and the schedule shows the full decline, the private share and the deductible amount side by side. The full decline is what carries forward; the deductible share is what you claim.
### Can I write off the new equipment immediately this year?
In Australia, only if it qualifies under the instant asset write-off rules for the year you first use it, and Fin shows that option with a prompt to confirm the current limit rather than printing a number for a year that has not been confirmed. Otherwise the asset is depreciated over its effective life. Other countries have their own concessions; see the per-country section of the [asset register](/features/asset-register#how-does-depreciation-work-in-your-country).
### Stock I buy to resell went into the Equipment category. Is it an asset now?
No, and the category is the problem. Trading stock is never a depreciating asset; move those transactions to a stock or cost-of-goods category with a standard purchase treatment, and decline the register offer with **Not an asset** if it appeared.
### Where do the dollar figures in this guide come from?
From the Australian occupation research that 2Fin's deduction guides are built on, reviewed in August 2026, with statutory limits that move yearly left for you to confirm with the ATO. Nothing here is a figure for another country.
***
Next: [Asset register](/features/asset-register) for the per-country rules, and [Tax treatment](/features/tax-treatment) for the codes named above.