On the Tools: The Tradie's Guide to Tax Deductions

Tradies spend more of their own money on work than almost anyone. The tools, the safety gear, the ute, the tickets. And yet every year someone on the tools sits down with us having claimed their boots and nothing else, walking past a thousand dollars in the process.

This is the full rundown of what you can claim, what you cannot, and the myths that quietly cost you at tax time. It is written for tradies who are employees, on wages with tax taken out of every pay. If you are a subbie on your own ABN a lot of it still applies, but you also have extra options like the instant asset write-off, and that is a bigger conversation. You can hear the whole thing on episode 50 of The Aevum Accounting Podcast.

The three golden rules

Every deduction has to pass three tests. You must have spent the money yourself and not been paid back for it. It has to relate directly to earning your income. And you need a record to prove it, which usually means a receipt. Where something is used for both work and private life, you can only claim the work portion.

Your car and travel

The most common question is whether the drive to work counts. Usually it does not. Home to your regular site and back is private travel, no matter how far you live from the job or whether you are heading in on a weekend.

The trips that do count are driving between two separate jobs on the same day, travelling from one site to another for the same employer, and driving from home straight to an alternative site such as a training course.

The bulky tools exception. If you have to carry bulky, awkward equipment, the trip from home to work can become claimable. The catch is that the gear has to be essential, genuinely bulky, and there must be no secure place to store it on site. If your boss provides a locked shed, that trip goes back to being private.

There are two ways to work out the claim. Cents per kilometre pays a set rate for every work kilometre, currently 88 cents, capped at 5,000 kilometres. The logbook method uses a twelve week logbook to establish your work-use percentage, which you then apply to your actual running costs.

One warning worth checking. If your vehicle is built to carry a tonne or more, or nine or more passengers, neither of those methods is available and you claim actual work-related running costs instead. A lot of tradie utes fall into that bucket.

Tools and equipment

This is the heartland of tradie deductions. You can claim the tools and gear you buy for work, plus repairs and insurance on them.

The $300 threshold. A tool costing $300 or less can be claimed in full in the year you buy it. Anything above $300 is not lost, you simply claim it gradually as it wears out, which is called decline in value.

Two traps sit alongside that. If you buy a set of tools that together costs more than $300, you cannot split it up to claim each piece immediately, because the tax office looks at the set as a whole. And you cannot claim tools your employer bought or paid for.

Clothing and laundry

This is where a lot of tradies get it wrong. Everyday clothing is not claimable even if you only ever wear it to work and your boss insists on it. That means your drill shorts, your jeans and your plain work shirts.

Protective clothing is a completely different story. Steel-capped boots, hi-vis, safety glasses, hard hats, fire-resistant gear and gloves are all deductible, whether you are buying, repairing or washing them. You can claim up to $150 of laundry a year without keeping written evidence.

Sun protection counts too. If you work outdoors for long stretches, your sunscreen, sunglasses and broad-brim hat are claimable, because on a site the sun is a genuine work hazard.

Licences, tickets and training

Renewing a licence, permit, card or certificate you need to keep doing your job is deductible. Your high-risk work licence, your forklift ticket, your electrical or plumbing licence are all claimable at renewal.

The catch is at the start. Getting your very first ticket to break into the industry, such as a white card before you have landed the job, generally is not claimable, because that is the cost of getting the work rather than doing it. The same logic runs through self-education. A course that relates to your current trade is claimable. A course to switch into a different career is not.

Apprentices, this includes you. The tools you buy and the training that forms part of your apprenticeship can be claimed, so start keeping receipts from day one.

The ones people forget

Union fees and professional association memberships are deductible. So is the work-related portion of your phone and internet, if you are taking calls from the boss, getting site addresses and checking rosters on your own phone. Work out the percentage and keep a record of how you arrived at it.

If your employer pays you an overtime meal allowance under an award and you buy a meal while working the overtime, that meal is claimable. If you do your quoting, invoicing and admin from home you can claim running costs, and the simplest way is the fixed rate of 70 cents for every hour worked at home. Income protection premiums paid outside super are generally deductible too.

What does not fly

Your driver's licence is not claimable, even though you need it to get to jobs. Neither are fines, so parking and speeding tickets on the way to site are out. Music subscriptions to get through the day, no. Gym and fitness, even where the work is physical, no. Childcare, no matter how early the start, no.

What it actually adds up to

Take Jack, a carpenter. Last year Jack claimed his boots and nothing else. Over that same year he had bought a nail gun, a drop saw and a set of chisels, renewed his white card and his high-risk work licence, paid union fees, used his own phone for work every day, and paid for income protection out of his own pocket.

Added up, Jack had spent well over $3,000 on legitimate work expenses he never claimed. At his tax rate, claiming them properly would have put more than $1,000 back in his pocket. Same job, same receipts, one good conversation.

Keep the records and the rest is easy

None of this is a clever loophole. It is knowing what counts and being able to prove it. The easiest habit to build is the myDeductions tool in the ATO app. Photograph the receipt the moment you buy the gear and it is sitting there waiting for you at tax time.

If you are on the tools, you are almost certainly entitled to more than you are claiming. If you would like a hand making sure you have claimed every dollar, book a consultation with our team. Our Perth tax accountants work with tradies and small businesses right across Australia.

The information in this article is general in nature and does not take your personal circumstances into account. Tax laws are complex and change often. For advice tailored to your situation, speak to a qualified professional at Aevum Accounting.

Prefer to listen? We covered this in On the Tools: A Tradie's Guide to Deductions and Myth-Busting, episode 50 of the Aevum Accounting Podcast.