Tradie Tax Deductions: What You Can Claim in Australia

Most tradie tax deductions are not complicated. Tools, the ute, boots, the phone, the licence renewal: the list barely changes from one trade to the next. What changes, and what quietly costs people money, is the method.

Start with the one that hurts most. The $20,000 instant asset write-off is measured against what an asset cost, not against your share of it. The ATO’s own worked example is a $40,000 ute bought at 40% business use. The business portion is $16,000, comfortably under the limit, and the write-off still does not apply, because the ute itself cost $40,000. That claim drops into the small business pool at 15% in the first year instead of landing in full.

This guide covers what a tradie can claim, and how each claim changes depending on whether you are on wages, a sole trader, or running a Pty Ltd.

The three rules every tradie deduction has to pass

Three things have to be true before anything is claimable. You paid for it yourself and were not reimbursed. The expense relates directly to earning your income. You have a record that proves it, usually a receipt.

Where something is part work and part private, only the work share is claimable. That one rule does more work than any other on this page. The ute that does school pick-ups, the phone that takes personal calls, the laptop the kids use for homework: each of them gets split, and you need a basis for the split you used.

What you can claim is common ground across the trades. How you claim it is where tradies come unstuck, because the same expense runs through three different sets of rules depending on how you are set up.

Employee, sole trader or Pty Ltd: the rules split three ways

The split is not cosmetic. A chippie on wages and a chippie working as a sole trader can buy the identical $900 nail gun and claim it in completely different ways, in different parts of a different form, over different numbers of years.

	Employee on wages	Sole trader	Pty Ltd
Where the claim goes	Work-related deductions in your own return	Business schedule in your own return	The company’s return, and your own on top
Tools	$300 or less immediately, above that depreciated	Instant asset write-off, $20,000	Instant asset write-off, $20,000
Vehicle	Cents per kilometre or logbook, cars only	Cents per kilometre or logbook for a car, actual costs for anything else	Actual costs, always
The ute question	Work use against private use	Business-use percentage	Fringe benefits tax

The $300 tool rule is an employee rule and the instant asset write-off is a business one, so neither works if you are reading the wrong column. A subbie who works for the same builder all year is still a business, not an employee, and claims on the business schedule. If that has you wondering whether you are in the right structure at all, the tax differences between the business structures in Australia matter more than any single deduction, and our accountant for tradies page prices both the ABN return and the company one.

Tools and equipment: the $20,000 write-off and the $300 rule

If you run a business, tools go through the instant asset write-off. Any asset costing under $20,000 can be deducted in full in the year you first use it or install it ready for use, for businesses with an aggregated turnover under $10 million. It applies per asset, so a $19,000 excavator bucket and a $4,500 welder in the same year are both written off outright. New or second-hand makes no difference.

Two conditions catch people. You claim the business-use portion, but the limit is tested against the full cost. And anything at or above $20,000 goes into the small business pool instead, deducted at 15% in the first year and 30% each year after.

If you are on wages, the numbers are much smaller. A tool costing $300 or less is claimed in the year you bought it. Above $300, it is depreciated over its effective life, so a $1,500 brick saw is roughly $247 in the first year rather than $1,500. A set is judged as a set: 16 spanners at $22 each is a $352 set and gets depreciated, even though no single spanner is close to $300.

What counts as a tool is broader than most people claim. The ATO’s own list for trade businesses runs to concrete mixers, drills, electric sanders and saws, grinders, high-pressure water cleaners, ladders, lawn mowers, leaf blowers, nail guns, shelving and storage, tool-boxes, work lights, and the laptop or tablet you quote from. Repairs, spare parts, servicing and insurance on your tools are claimable too.

Two mechanics decide which side of the limit an asset lands on. If you are registered for GST, the cost excludes the GST credit you claim back, and if you are not, it includes the GST you paid. A trade-in does not reduce the cost at all, so a $24,000 ute bought with an $8,000 trade-in is still a $24,000 asset.

The ute: your structure decides the method before the vehicle does

Two questions decide how you claim the ute, and they have to be answered in that order. For a lot of tradies the second one never gets asked, because the first has already settled it.

Your structure comes first. The ATO’s rules on which motor vehicle method applies are explicit: a company or trust must use the actual costs method, regardless of the type of motor vehicle. No cents per kilometre, no exceptions, whatever is parked in the driveway.

Then the vehicle. In the ATO’s guidance for tradies, a vehicle is not a car if it “has a carrying capacity of one tonne or more, such as a ute or panel van” or “can transport 9 passengers or more”. Carrying capacity is the gross vehicle mass on the compliance plate less the kerb weight. Plenty of dual cabs land just under a tonne and plenty of single cabs sit just over, so this is worth checking rather than assuming.

That produces three outcomes.

1. Sole trader or partnership with a carCents per kilometre or the logbook, your choice. You can use different methods for different cars, and change from year to year.
2. Sole trader with a ute or van rated to one tonne or moreActual costs only. Cents per kilometre is not available for a vehicle that is not a car.
3. Company or trust, whatever it drivesActual costs only, with no method to choose between.

Cents per kilometre is 88c per kilometre for 2025-26 and 91c for 2026-27, capped at 5,000 work kilometres per car per year. The rate already covers fuel, registration, insurance, servicing, repairs and depreciation, so nothing gets added on top. You do not need receipts, but you do need a record of how you worked the kilometres out.

Actual costs means the business percentage of everything the vehicle really costs you: fuel, oil, servicing, repairs, registration, insurance, interest on the car loan, and depreciation. For a tradie doing 30,000 kilometres a year that is almost always the larger claim anyway, well past the 5,000 kilometre cap.

One limit only bites where the vehicle is a car. Depreciation on a car is capped at $69,674 for 2025-26, so a $90,000 dual cab under a tonne is depreciated as though it cost $69,674. A one-tonne ute is not a car, so the cap leaves it alone.

If you run through a Pty Ltd, the company ute stops being a business-use question and becomes a fringe benefits tax one. A single cab ute, a panel van or a dual cab rated to a tonne or more can be exempt, but only while private use stays limited to home-to-work travel, incidental trips, and non-work use that is minor, infrequent and irregular. The ATO’s own words are that there is a common myth dual cab utes are automatically exempt from FBT. The tip run is fine. The family taxi on the weekend is not, and once the exemption fails the company has an FBT return and an FBT bill. FBT on the ute is one of the running costs that decides whether sole trader or Pty Ltd is the cheaper structure for a tradie in the first place.

The logbook: 12 weeks that set your percentage for five years

The logbook method is for sole traders and partnerships claiming for a car, and it works out one number: the percentage of your driving that is business. Twelve continuous weeks of records, representative of your year, and you multiply your total vehicle costs by the percentage they produce.

The ATO’s example runs the maths in one line. Tim drove 11,000 kilometres over the year, of which 6,600 were business. That is 60%. His total vehicle expenses including depreciation were $9,000, so his deduction is $5,400.

If you started using the vehicle for business with less than twelve weeks left in the year, the logbook can run into the next year to finish the period. Once it is done, it is valid for five years, provided you keep it and record odometer readings at the start and end of each later year you rely on it. Change the kind of work you do and you may need a fresh one.

Each entry needs the date, the reason for the trip, odometer readings at both ends and the kilometres travelled, and consecutive trips on the same day can be recorded as one. The logbook itself needs the period’s start and end dates, the odometer readings at each end, the total kilometres, the business-use percentage, and the vehicle’s make, model, engine capacity and registration. Alongside it, keep evidence of your fuel and oil costs and of every other vehicle expense.

In a one-tonne ute you are not required to keep a logbook, but you are still claiming a business percentage and something has to support it. The ATO’s position is that a logbook is the easiest way to show how you calculated your work-related use. Twelve weeks now beats reconstructing a year of driving in October. The myDeductions tool in the ATO app will do it for a sole trader with simple affairs.

Driving to work, and driving between jobs

The trip from home to your usual workplace is private. That holds even if you live a long way from the site and even if you have to start outside normal business hours, which is the combination most tradies assume gets them across the line. A scaffolder driving to the same site every day for six weeks claims nothing for it.

What is claimable is the driving your work actually generates:

• Between sites during the day.
• From home to an alternative workplace, such as a quote at a customer’s place, and then on to your usual site.
• Between two separate jobs on the same day.
• Between sites for the same employer.

There is one exception for employees, and all three of its conditions have to hold. The tools have to be essential to the job, genuinely bulky, meaning awkward to transport and only convenient by vehicle, and there has to be no secure storage at the workplace. A concreter carting a mixer to a site with nowhere to lock it up qualifies. A bricklayer with a tool locker on site does not, because taking the tools home is then a choice. This is an employee rule, so a subbie should not lean on it.

Boots, hi-vis, and the clothes that don’t count

Protective clothing is deductible where it protects you from a real or likely risk of injury or illness at work. Steel-capped boots, hi-vis vests, hard hats, safety glasses, earmuffs, breathing masks and fire-resistant clothing all qualify. So do sunscreen, sunhats and sunglasses where you are required to work outdoors. Repairing, replacing and cleaning any of it is claimable too.

Conventional clothing is not deductible, and the ATO uses tradie examples to make the point. It makes no difference that you only ever wear the gear on site or that the job destroys it twice a year.

Employees get a laundry shortcut. Washing work-only clothing is $1 a load, or 50c where it goes in with the family wash, and no written records are needed under $150. You still have to show how you calculated the figure. If you run a business, PPE you buy for staff or subbies, gloves, masks and sanitiser included, is an ordinary operating expense.

Phone, licences and training

Phone and internet are claimable at the work-related portion of your own bill, worked out from actual use. Content that tells tradies “50% to 70% is reasonable” is inventing a number the ATO does not publish. Work out your own percentage from a representative period and keep the evidence. For employees, incidental work use under $50 needs no records, and above that you need an itemised bill and a defensible percentage.

Licences split cleanly. A forklift ticket, a heavy vehicle permit, or the renewal of a licence you need to keep working is claimable. The licence that got you into the trade in the first place is not, so a first bricklaying licence stays on your own tab. A private driver’s licence is never deductible, however much of the day you spend behind the wheel.

Training is deductible where it maintains or improves the skills you already use in your trade or business. A painter’s advanced finishing course qualifies. A course that moves you into a different line of work does not, because it is not connected to the income you earn now. HECS-HELP repayments are never deductible. Union and professional association fees are.

Insurance, consumables and the bills tradies forget

The claims that get missed are rarely the big ones. Insurance is the usual gap: public liability, professional indemnity, and personal accident and illness cover are all deductible business expenses, as is insuring your tools.

So are the consumables that never make it onto a list because nobody keeps the receipt. The ATO names drop sheets, masking, gaffer and duct tape, oil, replacement belts and computer consumables among the operating expenses a trade business can claim.

Your accountant’s fee is deductible on the business side, and it covers more than the return: preparing and lodging the BAS, bookkeeping to get your records in order, and tax advice about the business all count, which is where whether accountant fees are tax deductible goes into detail. A sole trader return at our fixed $330 is itself a deduction next year. ASIC annual fees are deductible where you run a company, while fines, penalties and late payment fees are not. Home office is worth claiming for the quoting and invoicing hours, apportioned like everything else.

Records, and when to lodge

Keep your records for five years after you lodge. Depreciation records run longer: five years after the final claim on the asset, which for a ute you hold for eight years means thirteen years of paperwork.

A receipt has to show the amount, the date on the document, the date you paid, the supplier’s name and the nature of the goods or services. The ATO puts the consequence plainly: bank or credit card statements usually will not contain that information. A line showing $340 at a hardware chain is not evidence of what you bought. Records also have to be in English, unalterable, and producible if the ATO asks.

When you lodge matters more for tradies than for most people. The ATO’s guidance is late July for employees and after 28 August for sole traders. The reason is new for 2026: payments builders and other payers reported through the taxable payments annual report now pre-fill into your return, and most of that data only lands after 28 August. Lodge in July and you are substantiating everything yourself, with a decent chance of an amendment and a repaid refund later. It is a different calculation from the tax return deadlines most people work to.

Pre-fill is not the whole picture either. Cash jobs and private customers are still yours to declare, and there is no threshold for business income, so a return is due even on $1 of it. If you pay other subbies yourself, you may have a taxable payments annual report of your own due by 28 August.

The claims that actually move the number

Not all of this is worth the same. Ranked by what it does to your assessment, the order for most tradies is the vehicle, then the write-off, then tools and gear, with the phone, licences and consumables at the bottom. Chasing the receipt for a pair of work boots while getting the vehicle method wrong is a bad trade.

Two decisions are worth making before 30 June rather than after: whether an asset lands under $20,000, and whether there is a logbook covering the vehicle. Without one you are relying on a percentage you cannot support.