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Hi Paul,

If you set up a company the business income will be separate to your personal income. Be mindful though that companies pay a flat 30% tax on profits.

If you run the business through your personal abn the business income will be combined with your personal income and taxed according to your tax rate.
Business expenses will be deducted from your gross income.

Business expenses will be deductible whichever way you structure.
The best structure however depends entirely upon your current tax situation.
You really need to discuss it with your accountant or post up your last tax return.

Steve