Fees, Cost Drivers and 2026 Rules
Are accountant fees tax deductible in Australia? Rules, timing and after-tax cost
When accounting, bookkeeping and tax agent fees are deductible for Australian businesses and individuals, which costs may be capital, how GST interacts, and the real after-tax cost.
Yes, in most cases. Fees for managing your tax affairs, such as having a registered tax agent prepare and lodge your return or deal with the ATO, are deductible under a specific provision of the Income Tax Assessment Act 1997 (section 25-5). Fees for ongoing business accounting and bookkeeping are deductible as ordinary business expenses under the general deduction rule (section 8-1). The deduction is generally claimed in the income year you incur the fee, which may differ from the year the return relates to. Some advice, particularly about setting up or changing a business structure or buying an asset, may be capital in nature and handled differently. Because the fee reduces taxable income, its real cost is lower than the invoice.
This guide is part of the small business accountant fees overview. It is general information; confirm treatment of large or unusual fees with your tax agent.
What is usually deductible
| Cost | Usual treatment | Notes |
|---|---|---|
| Preparing and lodging income tax returns | Deductible (cost of managing tax affairs) | Including a director's or sole trader's individual return |
| BAS preparation and lodgement | Deductible | Business expense |
| Bookkeeping and payroll services | Deductible | Business expense |
| Accounting software subscription | Deductible | Large one-off purchases may be a depreciating asset |
| Tax advice from a registered tax agent | Deductible if it relates to managing tax affairs | Advice must be from a recognised tax adviser for the specific provision |
| Responding to an ATO audit or review | Generally deductible | Including objection costs |
| Advice on starting a new business or structure | May be capital | Small business start-up costs may have specific rules |
| Advice on buying a business or property | Usually capital | May form part of the asset's cost base |
| Penalties and the general interest charge | Penalties not deductible; GIC not deductible for periods from 1 July 2025 | Interest charged before then followed earlier rules |
Timing: which year?
A fee is generally deductible when you incur it, which is usually when you are invoiced and presently liable to pay, not when the work relates to. If your accountant finishes your 2025–26 return in November 2026 and bills you then, the fee is usually deducted in your 2026–27 return. That is why many people see last year's tax agent fee in this year's deductions.
For a business on an accruals basis, an invoice received before 30 June is generally deductible in that year even if paid in July. A cash-basis taxpayer should confirm the rule for their situation.
Where to claim it
- Individuals (including directors): the cost of managing tax affairs is claimed in the individual return at the deduction item for that purpose.
- Sole traders: business accounting and bookkeeping go in the business income and expenses schedule; the tax return preparation fee is a cost of managing tax affairs.
- Companies and trusts: claimed in the entity's return as an expense.
Make sure the same fee is not claimed twice, for example in both the company and the director's return.
GST and the deductible amount
If your business is registered for GST and the accountant charges GST, you can usually claim the GST as an input tax credit on your BAS. The deductible amount is then the fee excluding GST. If you are not registered for GST, the full amount including GST is the deductible cost.
Worked example: real cost of an accounting fee
Two illustrative clients each pay a $3,300 invoice including GST.
| Company (base rate entity, GST-registered) | Sole trader (not GST-registered) | |
|---|---|---|
| Invoice | $3,300 | $3,300 |
| GST credit claimed | $300 | $0 |
| Deductible amount | $3,000 | $3,300 |
| Tax rate applied (illustrative) | 25% | 32% marginal rate plus 2% Medicare levy = 34% |
| Tax saved | $750 | $1,122 |
| After-tax cost | $2,250 | $2,178 |
The sole trader's rate is illustrative; check the current individual tax rates and your own taxable income. Run your own figures in the after-tax cost calculator.
Capital and start-up advice
Advice about establishing a company or trust, buying a business, or a restructure is often capital expenditure. Capital costs are not deductible under the general rule, but some may be:
- Added to the cost base of an asset for capital gains purposes.
- Deducted over five years as business-related costs under section 40-880.
- Deducted immediately where the cost relates to a business that is proposed to be carried on and is for advice or services on its proposed structure or operation (or government fees for setting it up), and you are a small business entity, an entity with aggregated turnover under $50 million, or not otherwise carrying on a business (subsection 40-880(2A)).
The boundary is technical. Ask your agent to split the invoice between deductible compliance work and capital advice. If the 2026–27 Budget proposals on trusts and capital gains lead you to restructure, expect this question to matter; see 2026 rules.
Records to keep
- The tax invoice showing the provider's ABN, date and description of services.
- Proof of payment.
- A note of the split between business and private if the fee covers both, for example a combined business and family return package.
Keep these for at least five years; see record keeping requirements.
Frequently asked questions
Can I deduct fees paid to an unregistered adviser?
The specific deduction for managing tax affairs relates to advice from a recognised tax adviser, which includes registered tax agents. Fees to unregistered people for tax advice may not qualify, and paying them carries other risks; see unregistered agent risks.
Are travel costs to see my accountant deductible?
Travel for the purpose of managing your tax affairs can be deductible. Keep a record of the trip.
Is a monthly accounting package deductible?
Yes, each monthly payment for business accounting is generally deductible in the year incurred. If the package includes private services, apportion.
Does the fee deduction reduce my GST?
No. GST credits and income tax deductions are separate. The credit reduces GST payable on your BAS; the deduction reduces income tax.
Sources and where to check
- Australian Taxation Office — cost of managing tax affairs, business deductions, GST credits
- Federal Register of Legislation — Income Tax Assessment Act 1997, sections 8-1, 25-5 and 40-880
- Tax Practitioners Board — confirm your adviser is registered
- business.gov.au — business expenses and deductions overview
