Can I claim AI tools as a tax deduction in Australia?

Can I claim ChatGPT, Claude and other AI tools as a tax deduction?

Generally, yes. As at October 2026, the ATO lists software subscription fees and cloud storage among the operating expenses a business can usually claim in the year it incurs them. That covers ChatGPT, Claude, Copilot and Gemini plans used for work. If you also use a tool privately, claim only the business portion, and keep records showing how you worked it out.

This is general information, not tax advice. Your circumstances change the answer, so check with your registered tax agent before you claim.

How AI costs are usually treated (general information, as at October 2026):

AI cost	Usual treatment	Watch out for
ChatGPT, Claude, Copilot or Gemini subscription	Operating expense, claimed in the year you incur it	Apportion any private use
Pay-as-you-go API usage (Claude API, OpenAI API)	Operating expense	Billed in USD, so keep statements showing the AUD amount
Monthly fee for a managed AI service	Usually an operating expense (a service fee)	Keep each monthly tax invoice
One-off custom AI build that you own	Can be in-house software, a capital expense	Small businesses may be able to write off items under $20,000
GST on any of the above	Not part of the deduction if you can claim it as a GST credit	Give overseas suppliers your ABN only if GST-registered

How does it change for a sole trader, a 2–10 person team and a 10–50 person business?

The rules are the same at every size. What changes is how much private use you need to strip out, and whether you’ll buy custom software that may be treated as a capital asset. Sole traders apportion most. Small teams on business plans usually claim the full amount. Bigger businesses are more likely to buy custom builds and need their tax agent to choose the depreciation treatment.

• Sole trader. Mixed use is common, so apportion. If you’re not registered for GST, you can’t claim GST credits, so the GST-inclusive amount is generally what you claim.
• 2–10 staff. Business workspaces such as ChatGPT Business or Claude Team are usually wholly business use. Put your ABN in each vendor’s billing settings if you’re GST-registered, and have one person keep the list of AI subscriptions and cancel unused seats.
• 10–50 staff. Custom builds and several vendors are more likely. Businesses with aggregated turnover under $10 million that use the simplified depreciation rules can generally use the instant asset write-off; others depreciate in-house software over five years. Ask your bookkeeper to code all AI costs to one account so you can see the total.

What does On Autopilot charge, and how is it invoiced?

On Autopilot is a Melbourne-based AI consultancy run by Boring Ventures Pty Ltd (ABN 67 671 943 758), which is GST-registered. Prices are fixed and in Australian dollars, ex GST: from $497 for a Quick Start automation, $1,500 setup plus $399 a month for AI Bookkeeping Assist, and from $1,500 a month for managed AI. GST is added at invoicing, so GST-registered clients can claim it back.

What that means at tax time:

• No currency conversion. You pay in AUD, with no card foreign transaction fee.
• Claude API costs are included. On most productised agents they run $3–15 a month, absorbed in the monthly fee.
• Setup and monthly fees are separate amounts, so your tax agent can see what is a running cost and what may be in-house software.
• You own the code, prompts and settings, which is why a one-off build can be a capital item (see below).

See all prices on our pricing page. The free AI audit also shows which AI subscriptions are worth keeping.

What are the ATO’s rules for claiming software and AI subscriptions?

The ATO’s three golden rules apply: the expense must be for your business, not private use; if it’s for both, you claim only the business portion; and you need records to prove it. Its guidance on digital product expenses names software subscription fees, cloud storage and file-sharing services as operating expenses, and gives a monthly booking subscription as an example of a fee claimed month by month.

Keep these records:

• Each invoice or tax invoice from the vendor.
• Card or bank statements showing the AUD amount charged.
• A note of how you calculated any business-use percentage.

The ATO’s general retention period for business records is five years, and records must be in English or easy to convert. As an example of the currency gap: Claude Pro lists at US$20 a month, about A$28.85 at the RBA rate on 02/10/2026 (A$1 = US$0.6933) before GST, or about A$33 including GST at checkout, and your card may add a foreign transaction fee, often 2–3%. Prices in AUD for each plan are on our pages for what Claude costs per month and what ChatGPT costs in Australia.

Do I pay GST on overseas AI subscriptions, and should I give my ABN?

Overseas sellers of digital products charge 10% GST to Australian consumers. If your business is registered for GST and the purchase is for business use, give the supplier your ABN and state that you’re GST-registered, and the ATO says you shouldn’t be charged GST. If you’re not registered, you pay the GST. Don’t quote your ABN for personal purchases, because penalties can apply.

If you’re charged GST anyway:

• Ask the supplier for a refund by giving your ABN and stating you’re registered for GST.
• You can only claim a GST credit for incorrectly charged GST if you hold a valid tax invoice showing the supplier’s ABN, or the amount is A$82.50 or less.
• Many overseas suppliers use the ATO’s simplified GST registration, which gives them an ATO reference number instead of an ABN, so they can’t issue a valid tax invoice.

If you give your ABN for a plan you also use privately, the reverse charge rules may apply. That one is worth a question to your tax agent.

Is a done-for-you AI build a deductible expense?

It depends on what you’re paying for. A monthly fee to run and maintain AI agents is a service fee and usually an operating expense. A one-off build of software that you own can be in-house software, which the ATO treats as a capital expense. A small business using the simplified depreciation rules may still be able to write off an item costing less than $20,000 in the year it’s ready to use.

The ATO’s own example is close to home: a sole trader pays $1,500 for customised booking software and, having already chosen a software development pool, claims it over five years (nothing in year one, then 30%, 30%, 30% and 10%). Once you choose a pool, later in-house software has to go into it too. Businesses not using the small business rules generally depreciate in-house software over five years. So show your tax agent the invoice and the scope of work, and let them decide. For where AI fits in the rest of your tax work, see what AI can and can’t do with your BAS.

Sources

• ATO, Business deductions (checked 03/10/2026)
• ATO, Deductions for other operating expenses (checked 03/10/2026)
• ATO, Deductions for digital product expenses (checked 03/10/2026)
• ATO, In-house software (checked 03/10/2026)
• ATO, Instant asset write-off for eligible businesses (checked 03/10/2026)
• ATO, GST and Australian businesses: imported services, digital products and low value imported goods (checked 03/10/2026)
• ATO, GST on imported services and digital products (checked 03/10/2026)
• ATO, Overview of record-keeping rules for business (checked 03/10/2026)
• Reserve Bank of Australia, Exchange rates (rate for 02/10/2026; checked 03/10/2026)