Are Accountant Fees Tax Deductible in Australia?

Accountant fees are tax deductible in Australia, and they are not a work-related expense. They sit in a category of their own, the cost of managing your tax affairs, which the ATO defines with its own list of what counts and its own list of what does not.

One thing came off that list recently and it is worth checking before anything else. General interest charge and shortfall interest charge incurred on or after 1 July 2025 are no longer deductible. Before that date they were. If you have been on an ATO payment plan, or carried a shortfall after an amended assessment, interest you used to claim is now denied.

What the fee should be in the first place is a different question, and what a business tax return costs answers that one. This is about what happens to the fee once you have paid it.

What counts as a cost of managing your tax affairs

The category is wider than a tax agent’s invoice. Here is the ATO’s own list, which runs to eleven items and includes several nobody thinks to claim.

• Preparing and lodging your tax return and activity statements, including lodging through a registered tax agent.
• Getting tax advice from a recognised tax adviser.
• Dealing with the ATO about your tax affairs.
• Buying tax reference material, and tax return preparation courses.
• Buying software that lets you prepare and lodge your return. If you also use it for other things, you claim only the relevant portion.
• Travel to get tax advice from a recognised tax adviser. The ordinary car expense rules decide how you work that out.
• Litigation costs in managing your tax affairs, including court fees, Administrative Review Tribunal fees, and solicitor, barrister and other legal costs. The ART replaced the Administrative Appeals Tribunal from 14 October 2024.
• A valuation you needed for a deductible donation of property, or for entering a conservation covenant.
• Penalties imposed on you for underestimating a varied GST instalment. One of the very few penalties the ATO lets you claim.
• Complying with your legal obligations for someone else’s tax affairs. The ATO’s example is withholding tax from a payment to a supplier who did not quote an ABN.
• The portion of a financial advice fee that helps you manage your tax affairs, with salary sacrifice advice given as the example.

What the ATO means by a recognised tax adviser

The ATO defines this one backwards. Rather than listing who qualifies, it tells you the claim fails where the advice came from someone who is neither a tax agent registered with the Tax Practitioners Board nor a qualified tax relevant provider registered with ASIC.

Legal costs are not an exception to that test. They become deductible through the separate litigation limb, which covers a court or tribunal matter about your tax affairs, and not through the advice limb.

What you cannot claim

The ATO publishes this list too, and it is shorter than the first one and more expensive to get wrong.

• Penalties for failing to meet your obligations, including failure to lodge on time.
• General interest charge and shortfall interest charge incurred on or after 1 July 2025.
• Tax advice from a person who is not a recognised tax adviser.
• Financial advice that is not about managing your tax affairs. The ATO’s example is factual information about a financial product that does not involve applying or interpreting tax law to your circumstances, or household budgeting.
• Judgment debt interest you had to pay as a result of a court case involving your tax affairs.
• Interest on a loan you took out to pay a personal tax debt, and the personal tax debt itself.

The interest change is the newest item on that list, and it applies by the date the interest was incurred rather than the year you are lodging for.

If you are paying tax off over time, that changes the arithmetic on the payment plan itself, not just on your return. Interest on an ATO debt used to come back to you at your marginal rate, so a plan running at general interest charge cost you materially less than the headline rate. Since 1 July 2025 it costs the headline rate. The same is true of a shortfall after an amended assessment, which is worth factoring in before deciding whether to pay a bill in full or spread it.

When you incur the fee, and why it lands a year later

You claim the fee in the year you incurred it, and incurred does not mean paid. The ATO’s test for the 2025-26 return is that you received a bill or invoice for an expense you are liable for and had to pay, “even if you paid it after 30 June 2026”. If you were charged without an invoice and paid it, that counts too.

The difference matters at the end of June. An invoice dated 20 June that you settle in August still belongs to the earlier year.

For most people the practical effect runs the other way and comes as a surprise. Your accountant prepares your 2025-26 return in October 2026 and invoices you then. That fee is a 2026-27 deduction. It reduces the tax on next year’s income, not the return it was charged for.

Where the claim goes on your return

For an individual, question D10, Cost of managing tax affairs. The ATO splits it across two labels and makes you do the sorting: litigation costs go at label L, and everything else goes at label M. Most people only ever touch label M.

That label is also the reason there is a national benchmark for this. Because the fee is reported as a deduction, the ATO publishes what people actually claim.

The average was higher, at $389, which is what you would expect from a figure with litigation and complex affairs sitting in its tail. The year before, 6,067,228 people claimed a median of $199. If you want to know what sits behind those numbers across different jobs, what an accountant costs in Australia breaks the market down by service.

One more rule applies if your invoice covered more than you. Where a single invoice covers your return and an associated person’s, a spouse for example, you have to split the fee, be able to show how you worked out each part, and keep the records behind it.

If you run a business, it is a different list

A business claims accounting fees as an operating expense in the business schedule, not at D10. The categories overlap, but they are not the same list, and the differences are where mistakes happen.

Bookkeeping is the one that catches people out. Having a bookkeeper prepare your business records is on the ATO’s business list and appears on neither individual list, so a salaried employee paying someone to sort out their receipts is not making a D10 claim out of it.

Two more business-side points are worth knowing. Annual fees charged by statutory bodies such as ASIC are deductible, but penalties and fines imposed for breaching an Australian law are not, and ASIC late fees are usually penalties. And where an expense is mixed business and private, only the business portion is claimable.

If you are a sole trader, both lists apply to one return

A sole trader does not lodge a separate business return. The ATO’s position is that you lodge the individual return with the business and professional items schedule attached, so one document carries the business side and the personal side together.

That means both lists above are live for you at once. Work your accountant did on the business, reconciling income and sorting deductions for the schedule, belongs on the business side. Work on the rest of your return sits at D10 with everyone else’s. Where a single fee covered both, the split follows what the work was actually for, which is a conversation worth having with your accountant when the invoice is written rather than in June.

What the deduction is actually worth

A deduction reduces your taxable income. It does not refund the fee. What it is worth to you is your marginal rate, and nothing more.

So the deduction is worth more the more you earn, which is the opposite of how it usually gets described. For most people it takes roughly a third off the sticker price of the fee, and the fee still has to earn the other two thirds.

Our own fees are published for that reason: personal returns are $150 and sole trader returns $330, both including GST and both prepared by a registered Tax Agent. Whether paying anyone at all is the right call for your situation is a separate question, and whether a tax agent is worth it against myTax works through it.

Three things to do with the invoice

• Keep it, along with anything showing what the work covered.
• Note the financial year you were billed in, not the year you paid.
• Split it if it covered anyone else’s return, and record how you worked the split out.

A claim backed by those three survives a question from the ATO. One reconstructed from a bank statement in October usually does not.