Tax deductions for tradies: tools, utes, phones and what the ATO checks

Tradies have more legitimate deductions than most workers, and more ways to get them wrong. The rules also split depending on whether you are an employee or apprentice on wages, or a sole trader with an ABN. This guide covers both, with the ATO page behind each point listed at the end.

Tools and equipment

For an employee, a tool costing $300 or less is claimed in full in the year you buy it, provided you use it mainly for work, it isn't part of a set costing more than $300, and it isn't one of several identical items that together exceed $300. Anything above that, including a socket set bought one piece at a time, is claimed as decline in value over its effective life. The work share of repairs, insurance and interest on money borrowed for tools is deductible too. Tools your employer supplies or reimburses are not.

For a sole trader with aggregated turnover under $10 million using the simplified depreciation rules, the instant asset write-off gives an immediate deduction for the business share of an asset costing less than $20,000, first used or installed ready for use on or after 1 July 2023. It applies per asset, new or second-hand. An asset at or above the limit goes into the small business pool.

Work vehicles: cents per km, logbook and the ute question

If the vehicle is a car you own or lease, there are two methods:

• Cents per kilometre: 88 cents per work kilometre for 2024–25 and 2025–26, rising to 91 cents for 2026–27, capped at 5,000 kilometres per car. The rate covers fuel, registration, insurance, servicing and depreciation, so nothing is added on top. No fuel receipts are needed, but you must show how you worked out the kilometres.
• Logbook: claim the work percentage of actual costs, including decline in value. The logbook must cover at least 12 continuous weeks with purpose, destination and odometer readings for each work trip, and lasts five years unless your pattern changes. Keep receipts for running costs. The car cost limit caps depreciation.

Utes diverge here. A vehicle with a carrying capacity of one tonne or more, which covers many dual-cab and tray utes as well as vans and trucks, is not a car for tax purposes, so neither method is available. You claim the work portion of actual expenses, and as an employee it goes in the return as a travel expense rather than a car expense. A logbook isn't compulsory for these vehicles, but the ATO says a logbook-style record is the easiest way to prove the work percentage. For a sole trader the same split applies: cars use cents per km or a logbook, other vehicles use actual costs. A company or trust uses actual costs for every vehicle.

One trap: a $40,000 ute used 40% for business fails the instant asset write-off, because the test is the asset's total cost, not the business share. The ATO's own example uses an electrician's ute.

Protective clothing, boots, hi-vis and sun protection

For tradies the protective category does most of the work. The ATO lists steel-capped boots, rubber boots for concreters, safety-coloured vests, fire-resistant and cut-resistant clothing, heavy-duty wet-weather gear, overalls and gloves, plus sun-protection clothing with a UPF rating, and laundering them. Hard hats, safety glasses, earplugs and masks count as protective equipment. Sunscreen and sunhats qualify when your duties keep you outdoors for prolonged periods; sunscreen needs an AUST L number, and private use is apportioned out.

Not claimable: conventional clothing such as jeans, drill shirts, shorts, socks and everyday enclosed shoes. The ATO's example is a builder in jeans and T-shirts worn for comfort; they stay private even if he only wears them on site. Heavy denim cut-resistant trousers, by contrast, are deductible.

Phone and internet

Work calls, texts and data are deductible at your work-related percentage. With an itemised bill, the ATO accepts a representative four-week period applied across the year, based on work calls, call time or data as a share of the total. A handset over $300 is depreciated at the work percentage, and a phone bundled into a plan is depreciated on its full cost rather than claimed monthly. You can't claim calls your employer pays for, calls to check whether casual shifts are available, or phone use already covered by the working-from-home fixed rate.

Licences, tickets, union fees and training

Getting your first licence, ticket, card or certificate to land a job is not deductible; the ATO's example is a bricklayer's initial licence fee. Renewing a licence you need for your current job is. Union fees and trade association subscriptions are deductible and, from 2026–27, sit outside the standard deduction. Training is deductible when it maintains or improves the skills you use in your current work, not when it qualifies you for a different job.

Travel between sites versus home to work

Driving between job sites, from the depot to a client's house, to pick up materials, or between two separate employers is deductible. Driving from home to your regular workplace is not, even if you live far out, start before dawn, do overtime, are on call, or collect something on the way. A narrow exception exists for transporting bulky tools and equipment; the conditions are strict and we test them case by case rather than assume.

The $1,000 standard deduction from 2026–27

From the 2026–27 income year (not the 2025–26 return you lodge now), an Australian resident earning assessable labour income such as wages receives a standard deduction of up to $1,000 automatically, with no spending and no records. It is reduced dollar for dollar by the covered work expenses you choose to claim: tools, car and travel, clothing and laundry, phone and working from home. Union fees, tax agent fees, donations and income-protection premiums sit outside it.

For an employee tradie: covered expenses under $1,000, claim nothing and take the standard amount. Over $1,000, which is common once a ute, boots and tools are counted, claim the actual total with records for all of it, and the standard deduction drops to nil. From 1 July 2026 the old $300 no-receipts and $150 laundry limits are gone. Sole traders do not receive the standard deduction on business income.

Sole traders: GST, BAS, PAYG instalments and TPAR

• GST registration is compulsory once GST turnover reaches $75,000, measured on the current month plus the previous 11 or projected over the next 11.
• BAS then reports GST collected and paid, usually quarterly; see our BAS, GST and IAS service.
• PAYG instalments: an individual with instalment income of $4,000 or more on their last return and notional tax of $500 or more is entered automatically and prepays tax through the year.
• TPAR: a business providing building and construction services that pays contractors must lodge a Taxable payments annual report by 28 August.

Our sole trader tax return page covers how the return itself comes together.

Records the ATO expects

Written evidence means a receipt or invoice from the supplier showing the seller, amount, item and date. A bank or credit card statement on its own is not enough. Photos of receipts are accepted, and records are kept for five years from the date you lodge. For vehicles that means the 12-week logbook and odometer readings; for phones, the four-week usage record; for tools, the receipt plus a note of how you set the work percentage.

Sources

• ATO — Tools and equipment to perform your work
• ATO — Instant asset write-off for eligible businesses
• ATO — Cents per kilometre method
• ATO — Logbook method
• ATO — Expenses for a vehicle that isn't yours or isn't a car
• ATO — Motor vehicle expense calculation methods (business)
• ATO — Clothing, laundry and dry-cleaning expenses
• ATO — Protective items, equipment and products
• ATO — Mobile phone, mobile internet and other devices
• ATO — Building and construction employee expenses G–O (licences, permits and cards)
• ATO — Union fees and subscriptions
• ATO — Self-education expenses
• ATO — Trips you can and can't claim
• ATO — Standard deduction for work-related expenses
• ATO — Registering for GST
• ATO — Starting PAYG instalments
• ATO — Work out if you need to lodge a TPAR
• ATO — Records you need to keep