by Craig Toyne
For tradespeople, tax time can feel like a daunting task. The good news is that there are numerous tax deductions available to tradies in Australia that can significantly reduce your tax bill. Understanding what you can and can’t claim is crucial to maximising your deductions while staying compliant with the Australian Taxation Office (ATO).
In this post, we’ll break down some of the most common and important tax deductions for tradies, providing clarity on which expenses can be claimed, and how to ensure you’re taking full advantage of the opportunities available to you.
What You Can Claim as a Tradie
As a tradie, you’re entitled to claim deductions for expenses that are directly related to earning your income. The ATO stipulates that the expense must be for work purposes, which means you can’t claim personal costs or expenses that aren’t directly related to your trade.
Here’s a closer look at what’s deductible:
1. Vehicle and Travel Expenses
For tradies who rely on their vehicle to get from job site to job site, vehicle and travel expenses are one of the most common deductions. The ATO allows you to claim:
- Fuel costs (for trips to and from work-related sites)
- Car maintenance and repairs (if the car is used for work purposes)
- Insurance (for a vehicle that’s used to transport tools, equipment, and materials)
- Registration and licensing fees
- Depreciation on original purchase price (on lease payments)
However, if you use your vehicle for both work and personal purposes, you can only claim the work-related portion. To calculate this, you can use the logbook method, which records your business vs personal use over a 12-week period, or the cents per kilometre method, which allows you to claim a fixed rate per kilometre for work trips.
2. Tools and Equipment
Tradies often have a range of tools and equipment that are necessary for the job. Fortunately, these are generally deductible. This includes:
- Tools of the trade such as drills, saws, hammers, and power tools
- Equipment like ladders, scaffolding, and machinery
- Protective gear such as helmets, gloves, safety boots, and high-vis clothing
Any tools or equipment under $20,000 can be immediately claimed (for 2025 financial year). Any item over $20,000 will need to be depreciation of the items useful like.
3. Work-related Clothing and Uniforms
As a tradie, certain types of clothing are essential for your safety and to comply with industry regulations. These are generally deductible if they meet the following criteria:
- Protective clothing such as safety boots, hard hats, and high-vis vests
- Work uniforms (branded with your company logo or a specific design that distinguishes you as a worker in your trade)
Note that everyday clothing or clothing that can be worn outside of work (e.g., plain t-shirts, jeans, and regular boots) is not deductible, even if it is worn during work hours.
4. Home Office Expenses
If you run your own business or spend significant time planning or managing jobs from home, you may be able to claim a portion of your home office expenses. This includes:
- Phone and internet bills (for business-related calls and online work)
- Office supplies like pens, paper, and printer ink
- Depreciation on office furniture and equipment (computers, desks, etc.)
- Portion of electricity for running your home office, based on the size of the space used and the time spent working there
Keep in mind that only the portion of your home expenses directly related to your work can be claimed.
5. Training and Education
To maintain or improve your skills, you might attend courses, workshops, or other training events. These expenses are deductible if they are directly related to your current trade or business. This could include:
- Course fees
- Textbooks and materials
- Travel costs related to attending courses (if you have to travel for a specific workshop or conference)
However, if the education is for a course unrelated to your current profession (e.g., a new trade or hobby), these costs are not deductible.
6. Business-Related Subscriptions and Memberships
If you belong to a professional association, union, or any trade body, the membership fees are deductible. This also includes subscriptions to industry-specific magazines or journals. If the cost is relevant to your business and helps you stay informed about industry changes, it can be claimed.
7. Insurance Premiums
Many tradies opt for business insurance to protect their equipment, their work, and themselves. Premiums for the following types of insurance are deductible:
- Public liability insurance (for accidents involving clients or the public)
- Tool insurance (covering damage or theft of your equipment)
- Income protection insurance (which can replace lost income due to illness or injury)
If you’re unsure about the deductible aspects of your insurance, check the policy to ensure it’s business-related and directly connected to your trade.
8. Subcontractor Costs
If you hire subcontractors to help with certain tasks or jobs, you can claim the expenses related to their services, provided they are necessary for the completion of your business work. These could include:
- Payments to subcontractors
- Subcontractor labour and materials
9. Advertising and Marketing Costs
If you promote your services through flyers, online ads, or sponsorship of local events, those expenses are deductible. This also includes website development, hosting fees, and business cards.
What You Can’t Claim
While tradies are entitled to many deductions, there are also expenses that the ATO does not allow. It’s important to know what you can’t claim to avoid potential fines or penalties. Here are a few common expenses that aren’t deductible:
1. Personal Expenses
Any expense that’s for personal use, such as groceries, home utilities (unless you can clearly attribute them to work), or clothing that can be worn outside work, cannot be claimed.
2. Depreciation on Vehicles Used for Personal and Business Use
If you use your car for both work and personal travel, the cost of depreciation (as well as running costs like fuel) must be apportioned based on the percentage of business use. The ATO will only allow a deduction for the work-related portion.
3. Fines and Penalties
If you’re caught speeding, parking illegally, or committing other infractions while working, those fines cannot be claimed as a tax deduction.
4. Non-Business Related Expenses
Expenses related to hobbies or other business ventures that aren’t directly related to your current trade are also not deductible.
Final Thoughts
Tax deductions can significantly reduce the amount of tax you pay, but understanding what you can and can’t claim is essential. As a tradie, you’re eligible to claim a variety of deductions for business-related expenses, from vehicle costs to tools, training, and insurance premiums. However, personal costs, fines, and non-business-related expenses cannot be claimed.
To maximise your deductions and stay compliant, consider consulting an accountant or tax professional who can guide you through the process and ensure you’re making the most of your eligible claims. Proper record-keeping throughout the year is essential to ensure you can back up your claims come tax time.
If you’re unsure about specific deductions, don’t hesitate to reach out for expert advice. Here at Toyne, we specialise in accounting and bookkeeping for tradies. A small investment in good accounting advice can lead to substantial tax savings and financial peace of mind. Book a meeting with us today.
