Tradie tax deductions for 2026–27: tools, ute, phone and more

Tradies spend a lot on the job: tools, boots, a ute, a phone that never stops ringing. Much of it can be claimed, but what you can claim depends on one question first: are you an employee or do you run your own business? This guide to tradie tax deductions in Australia covers both, including the ute, the cents per kilometre rate and the $20,000 instant asset write-off for 2026–27.

Employee or business? It changes everything

If you're on wages, you claim work-related deductions on your own tax return. If you're a sole trader, or you run a partnership, company or trust, the business claims business expenses, with different rules for equipment and vehicles. The ATO's page Tradies – be certain about what you can claim splits the two the same way, and it's worth reading in full.

For both, the same three tests apply. You spent the money yourself and weren't reimbursed. It was directly related to earning your income. And you have a record to prove it. If something is used for both work and private life, you can only claim the work share.

Deductions for employee tradies

Tools and equipment

You can claim tools you buy and use for work. If a tool cost $300 or less, you can claim the whole cost straight away. If it cost more, you claim it over several years as it declines in value. Watch sets: the ATO's example is a $350 ratchet set, which has to be claimed over time even though each ratchet costs less than $300. Tools your employer supplies or pays you back for can't be claimed. You can also claim the insurance on your work tools, to the extent you use them for work.

Protective gear

Hi-vis, steel-capped boots, safety glasses, helmets and earmuffs can all be claimed. So can sunscreen, sunhats and sunglasses if you have to work outdoors. Ordinary clothes like jeans can't. You can claim laundry for protective and work-specific clothing at $1 a load, or 50c if the load is mixed with personal clothes. If the laundry claim is $150 or less, you don't need receipts, but you must be able to show how you worked it out.

Car and ute

Driving from home to work is normally private. The exception is carrying bulky tools. You can claim those trips only if the tools are essential for your job, bulky enough that you need a vehicle to move them, and there's no secure place to store them at work. If you do claim car costs, use one of the two methods explained in the ute section below.

Licences, phone and the rest

• Licences and tickets: you can't claim the cost of getting your first licence to land a job. You can claim renewing it while the job requires it.
• Phone and internet: the work-related share.
• Self-education: courses directly related to your current work.
• Not claimable: meals and snacks during normal working hours, and prescription glasses.

Deductions for sole traders and trade businesses

A business can claim most expenses of running the business, as long as they're for the business and not private. For a trade business that includes protective gear and safety equipment, consumables like drop sheets and tape, and insurance such as public liability, professional indemnity and personal accident and illness cover.

The instant asset write-off in 2026–27

This is the big one for tools and equipment. The ATO confirms the $20,000 instant asset write-off is permanent from 1 July 2026. If your business has an aggregated turnover under $10 million and uses the simplified depreciation rules, you can immediately deduct the business share of an eligible asset that:

• costs less than $20,000, and
• is first used, or installed ready for use, in that income year.

The limit applies to each asset, so several purchases can each be written off. New and second-hand assets generally both count. The ATO's own list of examples reads like a tradie's shopping list: drills, saws, grinders, nail guns, ladders, concrete mixers, pressure cleaners, work lights, tool boxes, and a car or ute.

An asset that costs $20,000 or more goes into the small business pool instead. It's depreciated at 15% in the first year and 30% each year after.

Can tradies claim their ute?

Yes, the business or work share, but the method depends on whether the ATO counts your ute as a "car". The test is its payload: the gross vehicle mass on the compliance plate, less the basic kerb weight.

• Under one tonne payload (and fewer than 9 passengers): it's a car. Many utes and four-wheel drives fall here.
• One tonne or more: it's an "other vehicle". You can't use the cents per kilometre or logbook methods. You claim the actual costs from receipts, and keep a diary or logbook to separate work from private use.

For a car, sole traders and employees choose between two methods:

• Cents per kilometre: a set rate for up to 5,000 work kilometres a year, with no receipts but a record of how you worked out the kilometres. The ATO's rate is 88 cents for 2025–26 (the returns being lodged now) and 91 cents for 2026–27. The rate covers fuel, rego, insurance, servicing and depreciation, so you can't claim those on top.
• Logbook: keep a logbook for at least 12 continuous weeks that represent your normal year, then claim the business percentage of every car cost. A logbook can be used for 5 years if you record odometer readings each year. Over 5,000 km, this is the method to use.

Two more things. A car limit caps the cost you can depreciate for a passenger car. It was $69,674 for 2025–26, so check the current figure. And if your business is a company or trust, the ATO's motor vehicle guide says it can only claim actual costs, and fringe benefits tax may apply if staff use the vehicle privately. That's one of the trade-offs covered in sole trader vs company.

Keep the records, or lose the claim

A receipt or invoice has to show the amount, the date, the supplier and what you bought. Bank statements usually don't show enough. A photo of the receipt is fine. Keep records for at least 5 years after you lodge, and for depreciating assets, 5 years after your last claim.

For a business, that includes your sales records. Every invoice you've issued, and every payment received, is part of the same record. BizzMate keeps your quotes, invoices and payments together, puts GST on its own line, and lets you download your reports as CSV or a spreadsheet for your accountant. Start a free trial to see it on your own work.

Before you lodge

• Sole traders: the ATO suggests lodging after 28 August, once payments reported on TPARs have been pre-filled.
• Check you aren't claiming the same cost twice, for example rego on top of the cents per kilometre rate.
• Not sure what you owe beyond income tax? Read do sole traders pay super, workers comp, BAS and GST.
• Want to make sure your prices cover all these costs? See pricing a job so you actually make money.

This guide is general information, not legal or financial advice. Deductions depend on your own circumstances, so check the ATO's guidance for the year you're claiming or speak to a registered tax agent.