I came up with this:
(S.1) $a - a = 0$
(S.2) $a - b = S(a - S(b))$
This seems to work. At least for $a$$\ge$$b$.
Is this the correct or most efficient formulation?
Also, does there happen to be one for division? Of course I would imagine that that division would only work for $a/b$, where $a$ is a multiple of $b$.
What I've come up for this one is:
(D.1) $0 / a = 0$
(D.2) $a / b = 1 + (a - b)/b$
Your definition would work, and as Peano only defines the natural numbers, you would only need subtraction when $a \geq b$. Normally the Peano axioms do not define subtraction, but subtraction is just defined as the inverse of addition, i.e. $a - b = a + (-b)$, where $-b$ is the number defined by $b + (-b) = 0$. For this to work you need the whole $\mathbb{Z}$ to work with though.