What Start-Up Costs Can I Claim Before My Business Begins Trading?

Yes, in many cases. The ATO allows certain professional advice and government fees paid to set up a business — not to buy assets, but to establish the business itself — to be claimed as an immediate deduction, even though the expense happened before the business technically began trading. This applies to small business entities, broadly those with an aggregated turnover under $50 million.

• Professional advice on structure. Advice from a lawyer or accountant on whether to operate as a sole trader, company, trust or partnership, and help setting up the legal arrangements for that structure.

• Business plan development. Professional help preparing a business plan, including advice on the viability of the proposed business.

• Due diligence. If you were investigating buying an existing business, the due diligence costs involved in that assessment.

• Government fees relating to setup. Fees, taxes or charges paid to an Australian government agency to establish the business or its operating structure — ASIC company registration fees are a common example.

• The cost of acquiring assets the business will use — equipment, stock, a vehicle — which is treated under the normal asset and depreciation rules instead.

• Legal or other costs tied to acquiring a specific asset or right, such as negotiating or reviewing a commercial lease — these can fall under different capital cost rules relating to the lease itself, rather than this immediate deduction, and are worth checking specifically rather than assuming they're automatically covered.

• Costs unrelated to establishing the business itself, even if they happened before trading began.

• Later restructuring or business changes — these fall under different, generally less immediate, deduction rules.

Without it, genuine business set-up costs would sit in an awkward gap — not deductible as a normal running expense, because the business hadn't started trading yet, but also not naturally an asset. The ATO created a specific, immediate deduction for exactly this category, recognising that proper professional advice before you start is a legitimate cost of establishing a business, not a personal expense to be indefinitely deferred.

Before opening, a new business owner pays $1,800 for an accountant's advice on choosing and setting up a business structure, and $538 in ASIC registration fees to establish a company. Both are the kind of establishment costs this rule is designed to cover — potentially claimable as an immediate deduction in the year the business begins, rather than needing to be capitalised or ignored. A separate cost, like legal fees for negotiating a commercial lease, would need to be assessed against the specific rules for lease-related costs rather than assumed to fall under this same immediate deduction.

Because these costs are incurred before the business technically exists in a trading sense, it's especially important to keep clear invoices and a record of what each cost was actually for. A vague “consulting fee” on a bank statement doesn't establish what it related to — a detailed invoice from the professional involved does.

• Have I kept invoices for professional advice I paid for before the business started trading?

• Can I clearly separate advice about setting up the business from the cost of assets I purchased?

• Is my business likely to qualify as a small business entity for this purpose?

• Have I flagged these costs to whoever prepares my first tax return, rather than assuming they'll be found automatically?

The ATO sets out which start-up expenses are immediately deductible and the conditions that apply.

ato.gov.au — Certain start-up expenses immediately deductible https://www.ato.gov.au/forms-and-instructions/depreciating-assets-guide-2017/small-business-entities/certain-start-up-expenses-immediately-deductible

• you're not sure whether a specific pre-trading cost qualifies for this treatment;

• you've incurred significant professional fees setting up the business and want them claimed correctly in your first return;

• you investigated buying an existing business and want to understand how the due diligence costs are treated; or

• you're weighing up formal advice now against the cost of getting the structure wrong later.

→ How Much Money Do I Actually Need to Start My Business?

→ Do I Need an Accountant, a Bookkeeper — or Both?

→ Sole Trader vs Company — Which Business Structure Is Right for Me?

SKC Accounting | Knowledge Centre | Knowledge Guide 047

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.