Running a childcare business from home can be a rewarding career, but it also comes with unique expenses. The good news is that many of these costs are tax-deductible. If you operate a family day care or home-based childcare service, the Australian Taxation Office (ATO) allows you to claim deductions for expenses directly related to earning your childcare income.
Below, we outline the main categories of deductions you can claim.
1. Occupancy Expenses
If a part of your home is set aside exclusively for childcare, you may be able to claim:
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A portion of mortgage interest or rent
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Council and water rates
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Home insurance premiums
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Depreciation on home improvements
⚠️ Be mindful: claiming occupancy expenses can have capital gains tax (CGT) implications when you sell your home.
2. Running Expenses
These are everyday household costs that can be apportioned based on the area and hours used for childcare:
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Electricity and gas (heating, cooling, lighting, cooking)
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Cleaning and laundry for the childcare area
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Internet and telephone (business-use portion)
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Depreciation on furniture and appliances (e.g., cots, fridges, playpens)
3. Childcare-Specific Costs
Expenses directly related to the care and education of children include:
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Toys, books, puzzles, and craft materials
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Outdoor play equipment
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Safety equipment such as gates, locks, mats, and first aid kits
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Food and drinks for children (if provided as part of the service)
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Learning resources aligned with childcare programs
4. Business Expenses
Just like any other small business, childcare operators can claim:
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Insurance (public liability, business cover, professional indemnity)
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Licensing and registration fees (Family Day Care schemes, council permits)
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Professional training (First Aid, early childhood development courses)
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Stationery, printing, and office supplies
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Marketing and advertising (websites, flyers, online ads)
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Accounting and tax agent fees
5. Motor Vehicle Expenses
If you use your car for childcare purposes, such as:
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Picking up supplies
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Transporting children (where allowed and agreed)
You can claim either:
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Cents per kilometre method, or
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Logbook method for a percentage of total car expenses
6. Superannuation Contributions
If you are a sole trader, you can claim a deduction for personal super contributions, helping you save for retirement while reducing your taxable income.
Key Points to Remember
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Only claim the business portion of mixed-use expenses.
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Keep detailed records, receipts, and time-use calculations.
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Be aware of potential CGT consequences if claiming occupancy expenses.
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If registered for GST, don’t forget to claim input tax credits.
Final Thoughts
Running a childcare business from home requires careful financial management, but with the right approach, you can make the most of the deductions available to you. Every operator’s situation is different, so it’s wise to seek tailored advice.
At The Taxation, we specialise in helping family day care and childcare operators maximise their deductions while staying compliant with ATO requirements.
📞 Contact us today to discuss your childcare business and ensure you are claiming everything you’re entitled to.
