On the Tools: A Tradie's Guide to Deductions and Myth-Busting

Mia: Welcome to the podcast, our newsletter made easy. Please note, this podcast features AI-generated voices for your hosts, Mia Taylor Leo: and Leo Baker, bringing you expert insights from the team at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax, whether it's for your individual finances or the complexities of running your business. Mia: We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. Leo: So, if you're looking to understand your obligations, maximize your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week! Mia: Let's kick off with this week's review. It comes from Luke, who left us five stars. He wrote: the whole team is exceptional. They've done more for me and my business than any other accountant, and they actively found ways to get me tax breaks based on my industry. They even chased up the tax office when there were hold-ups. Very impressed. Leo: Thanks so much for that, Luke. It really means a lot to the whole team. And "tax breaks based on your industry" is the perfect place to start, because that is exactly what today is all about. So, let's head out to the work site. Mia: That's right. Today's episode is for the tradies and the construction crews. The chippies, the sparkies, the plumbers, the brickies, the concreters, and everyone who spends their day on the tools. Leo: And here's why this one matters. Tradies spend more of their own money on work than almost anyone. Your tools, your safety gear, your ute, your tickets. But every year, we see tradies walk in and claim a fraction of what they are actually entitled to. Mia: Before we dive in, one quick clarification. This episode is really for tradies who are employees, isn't it? On wages, with tax taken out of every pay. Leo: That's the one. If that's you, this is gold. Now, if you're a subbie on your own ABN, a lot of this still applies, but you've also got extra options, like the instant asset write-off, and that's a whole episode of its own. So today, we're talking to the employees. Mia: So today we're going through it properly. What you can claim, what you can't, and the myths that quietly cost you money every single year. Leo, where do we start? Leo: We start with the three golden rules. Because every single deduction we talk about today has to pass these three tests. Get these, and the rest is easy. Leo: Rule one. You must have spent the money yourself, and you weren't paid back for it. If your boss bought it, or reimbursed you, you can't claim it. Rule two. It has to directly relate to earning your income. And rule three. You need a record to prove it, and usually that means a receipt. Mia: So if the answer to "did I pay for it, is it for work, and can I prove it" is yes, yes, and yes, then we're in business. Leo: Exactly. And one more thing before we dig in. If you use something for both work and private life, you can only claim the work part. Your phone is the classic example, and we'll come back to that one. Mia: Okay, let's start with the big one, the question everyone asks. The car. Leo, can I claim the drive to work? Leo: Ah, the number one question. And for most people, the answer is no. The trip from home to your regular work site and back is private travel. It doesn't matter if you live two hours away, or you're heading in for weekend work. Home to work is generally not claimable. Mia: So when can a tradie actually claim their car? Leo: A few key situations. If you drive directly between two separate jobs on the same day. If you travel from one work site to another for the same employer. Or if you drive from home straight to an alternative site, like a training course. That travel counts. Leo: And there's a special one for tradies. If you have to carry bulky tools or equipment, you might be able to claim the trip from home to work. But, and this is a big but, only if the gear is essential, it's genuinely bulky and awkward to carry, and there is no secure place to store it at the site. If your boss gives you a locked shed on site, that trip goes back to being private. Mia: That's a really important catch. So how do you actually work out the car claim? Leo: There are two methods. The first is cents per kilometre. You claim a set rate for every work kilometre, and this year that rate is eighty-eight cents. But it's capped at five thousand work kilometres. The second is the logbook method, where you keep a twelve-week logbook to work out your work-use percentage, then claim that share of your actual running costs. Leo: One quick warning, though. If you drive a ute or a vehicle built to carry a tonne or more, or nine or more passengers, you can't use those two methods. You have to claim the actual work-related running costs instead. A lot of tradie utes fall into this bucket, so it's worth checking yours. Mia: Good to know, because half the utes on the road are one-tonners. Alright, next up, the one thing every tradie has. Tools. Leo: Tools and equipment. This is the heartland of tradie deductions. You can claim the cost of the tools and gear you buy for work, and you can also claim repairs and insurance on them. Leo: Now here's the rule that trips people up. If a tool costs three hundred dollars or less, you can claim the full cost straight away, in the same year you bought it. If it costs more than three hundred dollars, you don't lose the deduction, but you claim it gradually over a few years as the tool wears out. That's called decline in value, or depreciation. Mia: So my twenty-dollar hand tools, I claim now. My two-thousand-dollar laser level, I claim over a few years. Leo: Exactly right. And watch out for sets. If you buy a set of tools together that adds up to more than three hundred dollars, you can't split it up to claim each piece instantly. The tax office looks at the set as a whole. Leo: One more. You can't claim tools your employer gave you or paid for. And if you use a tool for both work and private jobs, like that weekend cash job on your mate's deck, you only claim the work-related share. Mia: Let's talk clothes, because this is where a lot of tradies get it wrong. Leo, can I claim my work clothes? Leo: It depends entirely on the type of clothing, and this is a really important distinction. Everyday clothing, even if you only ever wear it to work and your boss makes you wear it, is not claimable. That means your drill shorts, your jeans, your plain work shirts. The tax office calls that conventional clothing. Leo: But protective clothing is a completely different story. Anything you wear to protect yourself from a real risk of injury on the job, you can claim. Steel-capped boots, hi-vis, safety glasses, hard hats, fire-resistant gear, gloves. Whether you buy it, repair it, or launder it, the work-related portion is deductible. And here's a handy one on washing that gear: you can claim up to a hundred and fifty dollars of laundry a year without keeping written evidence. Mia: So the rule of thumb is, if it protects you, it's probably in. If it's just normal clobber, it's probably out. Leo: That's a great way to remember it. And don't forget sun protection. If you're working outdoors for long stretches, and most tradies are, your sunscreen, your sunnies, and your broad-brim hat are all claimable. On a site, the sun is a genuine work hazard. Mia: Now here's one I think a lot of tradies miss. All those tickets and licences we have to keep current. Leo: This is a big one. You can claim the cost of renewing a licence, a permit, a card, or a certificate that you need to keep doing your job. Think renewing your high-risk work licence, your forklift ticket, or your electrical or plumbing licence. Those renewals are deductible. Mia: What about the white card, or getting a brand new licence? Leo: Here's the catch. Getting your very first licence or ticket to break into the industry, like your first white card before you've landed the job, generally isn't claimable, because that's the cost of getting the work, not doing it. But once you're in the trade, renewing and upgrading your tickets to keep earning your income, that is the deductible part. Leo: The same logic applies to self-education. A short course, a ticket, or training that directly relates to your current trade and helps you earn more in that job, you can claim. A course to switch into a completely different career, you can't. Mia: And that includes the apprentices listening, doesn't it? Leo: It absolutely does. If you're an apprentice, the tools you buy and the training that's part of your apprenticeship can be claimed too, as long as it relates to the job you're being paid for. So start keeping those receipts from day one. Mia: What about union and association fees? A lot of tradies pay those. Leo: Yes, union fees and professional association memberships are deductible. And so is the work-related part of your phone and internet. If you're taking calls from the boss, getting site addresses, and checking your roster on your own phone, work out that work percentage and claim it. Just keep a record of how you got to the number. Mia: A few more that surprise people. What about overtime meals? Leo: If your employer pays you an overtime meal allowance under your award, and you buy a meal while working the overtime, you can claim that meal. Note the conditions there. It has to be a genuine overtime meal allowance under an award or agreement. Leo: And two more quick ones. If you do your quoting, invoicing, and admin from home, you can claim working-from-home running costs. The easy way is the fixed rate, which is seventy cents for every hour you work from home. And if you pay for income protection insurance outside of your super, those premiums are generally deductible too. Mia: Okay, let's flip it around. What are the things tradies try to claim that just don't fly? Leo: A few big ones. You can't claim your driver's licence, even though you need it to drive to jobs. You can't claim fines, so those parking tickets and speeding fines on the way to site are out. Music subscriptions to get through the day, no. Fitness and gym, even if the job is physical, no. And childcare, no matter how early your start, is not deductible. Mia: Let's make this real with an example. Leo, paint me a picture. Leo: Meet Jack. Jack is a carpenter. Last year, Jack claimed his boots, and nothing else. But over that year, Jack had bought a nail gun, a drop saw, and a set of chisels. He renewed his white card and his high-risk work licence. He paid union fees, used his own phone for work every day, and paid for income protection out of his own pocket. Leo: Add it all up, and Jack had spent well over three thousand dollars on legitimate work expenses he never claimed. At his tax rate, claiming them properly put more than a thousand dollars back in his pocket. Same job, same receipts, one good conversation with his accountant. Mia: More than a thousand dollars, just for keeping his receipts and asking the right questions. For a lot of people, that's a week's wage. Leo: And that's the real secret. It's not some clever loophole. It's just knowing what counts, and keeping the records to back it up. The easiest way is the myDeductions tool in the ATO app. Snap a photo of the receipt the moment you buy the gear, and it's all there waiting for you at tax time. Mia: No shoebox full of faded receipts. Just snap and go. Leo, bring us home. Leo: Here's the bottom line. If you're on the tools, you are almost certainly entitled to more than you're claiming. Don't guess, and don't leave it on the table. If you'd like a hand making sure you've claimed every dollar, head over to Aevum Accounting, at aevumaccounting.com.au, and have a chat with the team. Mia: That's it for today's episode. If you found this useful, share it with a tradie mate who is definitely only claiming his boots. Until next time, stay savvy, and keep those receipts. Leo: And get every dollar you're owed. See you next time.