Tax deductions and accounting for cafes.
You can generally claim your coffee machine and kitchen equipment, fit-out, stock and staffing costs against your cafe income, provided each one relates to earning it and you keep the records to back it up. This guide covers what cafe owners typically claim, how GST works when a menu mixes GST-free and taxable items, and how we keep the books running week to week. We're Brisbane based and work with cafe owners right across Australia.
Updated July 2026 · Reviewed by the LINK Advisors team
What cafes can claim.
Ordered by typical value. Every claim still has to pass the ATO's tests: you paid for it, it relates to earning your income, and you can show a record.
Coffee machine, grinder and kitchen equipment
Your espresso machine, grinder, fridges and cooking equipment are generally deductible, either claimed outright or depreciated depending on the cost and the instant asset write-off rules current at the time - check the current threshold with us.
Fit-out and leasehold improvements
Counters, seating, shelving and any fit-out work done to the tenancy are generally deductible over their effective life, whether you funded the fit-out yourself or your landlord contributed toward it.
Food and beverage stock
Coffee beans, milk, food ingredients and packaging bought to sell across the counter are generally deductible as a cost of the goods you sell, with wastage and spoilage tracked as part of your normal stock management.
POS and EFTPOS fees
Subscription and transaction fees for your point-of-sale system, whether that's Square, Lightspeed or similar, are generally deductible as ongoing running costs.
Staff wages and on-costs
Wages, superannuation and leave entitlements for baristas and floor staff are generally deductible, and getting the award classification right from the start avoids a much bigger correction down the track.
Cleaning and food safety compliance
Cleaning products, pest control and the cost of maintaining your food safety supervisor certification and compliance program are generally deductible.
Uniforms and branded apparel
Branded aprons, shirts and other uniform items carrying your cafe's logo are generally deductible. Plain clothes staff happen to wear on shift aren't.
Barista and food safety training
Courses that build your team's coffee or food handling skills, and any training required to hold your food business licence, are generally deductible.
Marketing and loyalty apps
Social media advertising, signage and subscriptions to loyalty or ordering apps used to bring customers back are generally deductible.
GST on every plate, credits on some.
Most of what crosses your counter, a made coffee, a toasted sandwich, anything eaten in or served hot, is a taxable supply, so you charge GST on it once you're registered. Some packaged, unheated items you sell, a bottle of milk or a muesli bar someone grabs on the way out, can be GST-free basic food, which is exactly the kind of line that trips up a POS set up in a hurry.
On the buying side, a lot of your raw ingredients, milk, fresh produce, uncooked meat, are GST-free from your supplier, so there's no GST credit to claim on them even though they cost you real money. Your GST credits mostly come from elsewhere: the coffee machine, fit-out, packaging, EFTPOS fees and rent all generally carry GST you can claim back.
None of this is a problem once your POS categories are mapped correctly to the right tax codes in Xero. The risk is a generic setup that treats every sale the same way, which either overstates the GST you owe or understates it, and either way you find out at BAS time rather than when it's easy to fix.
The right structure for the work.
A single cafe with you and a small team behind the counter runs perfectly well as a sole trader, and plenty of owners stay that way for years. Once you're carrying a bigger team, a lease with real fit-out value tied up in it, or you're looking at a second site, a company structure starts to earn its keep for the cleaner separation between the business and your personal assets. There's no need to over-engineer this on day one - it's worth revisiting as your staff count and fit-out investment grow.
Run the work, we run the numbers.
Your POS, whether that's Square, Lightspeed or another system, should feed straight into Xero so sales, fees and GST land in the right place without you re-keying anything. Rostering and award-compliant payroll through a tool like Deputy or Employment Hero keeps your biggest cost under control, and we set both connections up properly so your weekly numbers are actually trustworthy, not just a bank balance you're hoping is right.
Frequently asked questions.
Can I claim my coffee machine and grinder?
Generally yes. Equipment used to run your cafe, from the espresso machine to fridges and ovens, is deductible, either claimed outright or depreciated depending on the cost. Keep the invoice and, for anything financed, the loan or lease paperwork too.
Do I charge GST on takeaway coffee?
Yes, generally. A made coffee is a taxable supply whether it's for here or to go. GST-free treatment is reserved for certain unheated, packaged basic food items, not drinks or food prepared to order.
How do I account for wastage and spoiled stock?
Spoilage and wastage are a normal part of running a cafe and are generally factored into your cost of goods sold rather than claimed as a separate deduction. What matters more is tracking it consistently so you can see whether your wastage rate is creeping up and eating into margin.
Should a single cafe be a company or a sole trader?
Plenty of single-site cafes run comfortably as a sole trader, particularly early on. It's worth reviewing once you're employing a bigger team, have real money tied up in fit-out, or you're eyeing a second location, since a company structure often suits that stage better.
What records do I need for casual and junior staff?
Keep rosters, timesheets and pay records that show hours worked line up with what's been paid under the correct award classification. Getting this set up properly in Xero payroll from the start is far easier than reconstructing a year of shifts after the fact.
Talk to an accountant who knows cafe businesses.
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