Tax time can be one of the busiest periods of the year for Australian tradies.After spending long days on construction sites, in homes, workshops and commercial projects, the last thing a builder, electrician, plumber or other tradesperson may want to do is sort through receipts, fuel records, tool purchases and business expenses.
But keeping accurate records can make a significant difference when preparing your Australian tax return.For the 2025–26 financial year, tradies should pay particular attention to work-related tools, vehicles, protective clothing, phone expenses, training, travel and other costs connected with earning their income.
The Australian Taxation Office (ATO) has specific rules around what employees and business operators can claim. A cost is not automatically deductible simply because it was purchased for a job. Generally, the expense needs to be connected with earning your income, you must have paid it yourself, and you need appropriate records to support the claim.
This guide explains the main tax deduction areas Australian tradies should review around the end of the financial year.
Important: This article is general information, not personal tax advice. Tax treatment can differ depending on whether you are an employee, sole trader, contractor, partnership or company.
What Does 30 June Mean for Australian Tradies?
In Australia, the financial year generally runs from 1 July to 30 June.That means 30 June 2026 marked the end of the 2025–26 income year.
If you are preparing your 2025–26 tax return, now is the time to organise the records for expenses you incurred during that financial year.The important point is that buying something does not automatically create a tax deduction.
You need to consider:
- Was the expense connected with your work or business?
- Did you pay for it yourself?
- Were you reimbursed?
- Was it partly private?
- Do you have suitable records?
- Does the expense need to be claimed over several years instead of immediately?
The ATO specifically states that work-related expenses need to be properly supported and that private expenses generally cannot be claimed.
1. Tools and Equipment
Tools are one of the most obvious expenses for many tradies.Builders, electricians, plumbers, carpenters, mechanics and other tradespeople may spend significant amounts on equipment throughout the year.
Potentially relevant expenses can include:
- Hand tools
- Power tools
- Tool storage
- Equipment repairs
- Equipment insurance
- Work-related accessories
- Replacement tools
However, the tax treatment depends partly on the cost and circumstances.For employees, the ATO's tradie guidance says a work-related tool or equipment purchase costing $300 or less may generally be immediately deductible if it does not form part of a set costing more than $300. More expensive items are generally claimed through decline-in-value rules rather than simply deducting the entire purchase immediately.
That means a tradie should not assume that every expensive tool bought before 30 June can simply be deducted in full.Keep the invoice and details of the purchase.
2. Work Vehicle and Motor Vehicle Expenses
For many tradies, the vehicle is one of the biggest work-related costs.A builder may carry materials and equipment. A plumber may travel between customer properties. An electrician may move from one job site to another throughout the day.
Possible vehicle-related costs can include fuel, servicing, registration, insurance, repairs and other running expenses, depending on the deduction method and circumstances.
However, the rules are different depending on whether you are an employee or operating a business.
Employees may use an applicable method such as the cents-per-kilometre method or logbook method, subject to eligibility and ATO rules.For the 2025–26 income year, make sure you use the rate applicable to that income year rather than automatically using a newer rate.
The ATO's 2026 determination states that the cents-per-kilometre rate increased to 91 cents per kilometre from 1 July 2026, meaning that rate applies to the 2026–27 income year, not the 2025–26 year.This is an important distinction when preparing your records.
What About Driving From Home to Work?
A common mistake is assuming every kilometre driven for work is deductible.Ordinary travel between home and a regular workplace is generally private for employees.
Work-related travel can be treated differently when you are travelling between workplaces or travelling to perform employment duties, subject to the applicable rules.For this reason, tradies should keep a clear record of why a trip was made rather than simply recording total kilometres.
3. Protective Clothing and Safety Gear
Tradies often need specialist clothing and safety equipment.
Examples may include:
- Steel-capped safety boots
- Protective eyewear
- High-visibility protective clothing
- Protective gloves
- Hard hats
- Fire-resistant clothing
- Other equipment designed to protect against workplace risks
The ATO distinguishes protective clothing from ordinary clothing.
You generally cannot claim everyday clothing simply because you wear it while working. For example, ordinary jeans, shorts or plain shirts do not become deductible merely because you wear them on a job.Protective clothing with specific protective features can be treated differently.
So before adding clothing expenses to a tax return, check whether the item is genuinely protective rather than simply normal workwear.
4. Laundry and Cleaning Costs
Some tradies regularly wash protective work clothing.Where the relevant requirements are met, laundry and cleaning costs associated with eligible work clothing may be deductible.
The important thing is to keep a reasonable record of how the amount was calculated.Don't simply choose a large figure because work clothes are washed frequently.
Your calculation should be based on your actual circumstances and the applicable ATO method.
5. Mobile Phone and Internet
Modern tradies increasingly use smartphones for work.
A phone may be needed for:
- Customer calls
- Job scheduling
- Digital quotes
- Invoices
- Photos of completed work
- Supplier communication
- Navigation
- Business messages
- Online work platforms
If you use a personal phone for both work and private purposes, you generally need to separate the work-related portion.For example, if your records demonstrate that 40% of your phone use relates to work, the deductible portion would generally need to reflect that work use rather than automatically claiming the entire bill.
The ATO specifically notes that records should support the work-related use of phone and internet expenses.
6. Work-Related Travel
Some tradies travel away from their normal work location for jobs.
Depending on the circumstances, work travel can involve costs such as:
- Accommodation
- Transport
- Fares
- Meals
- Incidental expenses
However, the tax treatment depends on why you travelled, whether you stayed overnight and whether an employer reimbursed the expense.
ATO guidance for tradies states that eligible employees may claim certain travel expenses when travelling away from home overnight in the course of employment duties. Reimbursed expenses cannot simply be claimed again.
Keep receipts, travel records and details explaining the business purpose of the trip.
7. Training and Education
Tradies may undertake training to maintain or improve their existing skills.Depending on the circumstances, relevant education expenses may have tax implications.
For example, training that directly relates to your current income-earning activities can be treated differently from education that qualifies you for an entirely new career.
Keep records of:
- Course fees
- Training materials
- Travel where applicable
- Registration costs
- Other directly related expenses
Do not assume every course is deductible simply because it could be useful for your future career.The connection between the education and your current income-producing activities matters.
8. Licences, Registrations and Certificates
Many Australian trades require licences, permits, registrations or industry certificates.Renewing a licence or credential required to continue performing your existing work can potentially be a work-related expense.
The ATO's tradie guidance specifically identifies renewal of certain licences, regulatory permits, cards or certificates needed to continue performing work duties as an example of an expense that may be claimable.
Keep the renewal notice, receipt or invoice.Again, the exact treatment depends on your circumstances.
9. Sunscreen, Sun Protection and Outdoor Work
Outdoor tradies can spend many hours exposed to Australian weather.Depending on the circumstances, work-related sun protection expenses can be relevant.
ATO guidance for tradies specifically mentions sunscreen, sunhats and sunglasses where work duties require prolonged outdoor work.
This can be particularly relevant for workers who spend most of their day on outdoor construction sites, roofing jobs, landscaping projects or similar work.
10. Home-Based Work Expenses
Some tradies run part of their business from home.
You might use a home office for:
- Preparing quotes
- Sending invoices
- Managing accounts
- Booking jobs
- Ordering materials
- Communicating with customers
- Business administration
If you genuinely work from home and meet the relevant requirements, certain home-based working expenses may be claimable.
The ATO says eligible taxpayers can use specific methods for calculating working-from-home running expenses, with record-keeping requirements applying.
Don't automatically claim part of your entire household bills. The claim needs to be calculated using the applicable method and supported by appropriate records.
11. Business Insurance
For tradies operating their own businesses, insurance can be a significant operating expense.Depending on the business structure and policy, relevant insurance can include cover connected with business operations, equipment or vehicles.
A sole trader should distinguish genuine business expenses from private insurance.If you're unsure whether a particular policy is deductible, check the treatment with a registered tax professional.
12. Repairs and Maintenance
Tradies can spend money maintaining business equipment.
Examples include:
- Repairing power tools
- Servicing machinery
- Maintaining business equipment
- Repairing work-related assets
- Maintaining eligible business vehicles
Repairs and maintenance can have different treatment from purchasing a new asset.
This distinction matters because a repair may be treated differently from an improvement or new capital asset.Keep detailed invoices that clearly describe the work performed.
13. Software and Digital Business Tools
Running a modern trade business often requires more than tools and a ute.
Tradies may use software for:
- Invoicing
- Accounting
- Scheduling
- Customer management
- Quoting
- Payroll
- Cloud storage
- Business communication
Where the software expense relates to earning business income, it may be relevant to your deductions.Keep subscription invoices and make sure private-use portions are treated correctly.
14. What About the $20,000 Instant Asset Write-Off?
This is an area where tradies need to pay close attention to the financial year.For eligible small businesses, the ATO currently states that from 1 July 2026, the instant asset write-off limit is permanently increased to $20,000 for qualifying assets, subject to eligibility and the simplified depreciation rules.
The asset must generally be first used or installed ready for use in the relevant income year, and assets costing $20,000 or more are treated differently under the rules.
This means you should not automatically apply the $20,000 threshold to purchases made during the 2025–26 year.The date the asset was first used or installed ready for use can be important.
For tradies purchasing expensive equipment, machinery or business assets, getting the financial-year treatment correct is essential.
15. Keep Your Receipts
One of the simplest tax habits a tradie can develop is keeping receipts throughout the year.
Don't wait until tax time to search through:
- Email inboxes
- Bank statements
- Tool-shop receipts
- Fuel records
- Supplier invoices
- Phone bills
- Software subscriptions
The ATO says records generally need to be kept for five years, and work-related claims above the relevant threshold require written evidence for the expenses being claimed.
Digital records can make this much easier.
Take a photo of paper receipts and organise them into folders by category.
16. The Big Rule: Don't Claim What You Didn't Pay
One of the most important rules for employees is simple:
If your employer paid or reimbursed the expense, you generally can't claim the same expense as your own deduction.For example, if your employer purchases your required safety equipment and you don't personally pay for it, you cannot simply add the purchase to your tax return.
The same principle applies where an employer reimburses you for an expense.ATO guidance specifically warns against claiming expenses that have been reimbursed.
17. Don't Mix Personal and Business Expenses
A common issue for small trade businesses is mixing personal and business spending.
For example, a vehicle might be used for:
- Customer jobs
- Supplier visits
- Personal shopping
- Family trips
- Weekend activities
Only the eligible business or income-producing portion should be considered for a business deduction.The same principle can apply to phones, computers, tools and other assets with mixed use.
Good bookkeeping makes the calculation much easier.
18. A Simple 2026 Tax-Time Checklist for Tradies
Before finalising your records, work through this checklist:
Tools
Check your receipts for tools, equipment, repairs and work-related accessories.
Vehicle
Review your logbook, kilometres, fuel records, servicing and other relevant vehicle expenses.
Protective gear
Separate genuine protective equipment from ordinary clothing.
Phone
Calculate your work-related use and keep supporting records.
Travel
Collect accommodation, transport and other eligible work-travel records.
Training
Keep invoices for relevant courses, licences and professional development.
Home office
If you work from home, check that you meet the eligibility and record-keeping requirements.
Software
Review accounting, invoicing, scheduling and other business subscriptions.
Asset purchases
Check whether major purchases need to be depreciated or fall under an applicable small-business rule.
Reimbursements
Remove expenses that your employer or another party already paid back.
Final Thoughts
Tax deductions can be valuable for Australian tradies, but the goal should not be to claim as many expenses as possible.
The goal is to claim the deductions you are genuinely entitled to and support them with accurate records.Builders, electricians, plumbers, carpenters, mechanics, landscapers and other tradespeople should pay particular attention to tools, vehicles, protective equipment, phone use, travel, training, licences and business expenses.
The 30 June date is also a useful annual reminder to organise your financial records, but tax rules can differ depending on whether you are an employee or running a business.For the 2025–26 tax year, don't automatically use tax rates or thresholds that apply to 2026–27. For example, the ATO's 91-cent-per-kilometre rate begins from 1 July 2026, while the $20,000 instant asset write-off change applies from that date for eligible small businesses.
If you're unsure about a particular deduction, especially a large equipment purchase, vehicle expense or mixed personal/business cost, check the current ATO rules or speak with a registered tax professional before lodging your return.
Good records, accurate calculations and a clear separation between work and private expenses can make tax time much easier for any Australian tradie.
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