Tax deductions for tradies can include eligible work-related vehicle expenses, tools and equipment, protective clothing, overnight travel, phone and internet costs, work-related licences and permits, and, for eligible small business owners, home office expenses and the instant asset write-off. To claim a deduction, the expense must directly relate to earning your income, you must have paid for it yourself, you must not have been reimbursed, and you must keep records to support your claim.
ATO Warning to Tradies About Tax Obligations: Start With Good Records
One of the biggest reasons tradies get tax wrong isn’t because they’re claiming the wrong thing – it’s because they don’t have the records to back it up.
The ATO recommends keeping:
- Receipts
- Tax invoices
- Vehicle logbooks
- Travel records or diaries (where required)
- Bank statements
- Asset purchase records
For small businesses, records should generally be kept for at least five years. The free myDeductions tool in the ATO app is an easy way to keep receipts and track expenses throughout the year instead of scrambling at tax time.
Tax for Tradies: The Most Common Deductions
🚗 Motor Vehicles
Your work vehicle is probably one of your biggest expenses but not every trip is tax deductible.
You may be able to claim:
- Travel between different jobs on the same day.
- Travel between different work sites.
- Travel to an alternative workplace.
- Travel directly from home to work-related training.
- Travel between shifting work locations.
- Home-to-work travel in limited circumstances if you’re carrying bulky tools that are essential, awkward to transport and can’t be securely stored at work.
You generally can’t claim:
- Normal trips between home and your regular workplace.
- Private travel.
- Personal use of your work vehicle.
If your vehicle is used for both work and personal use, you can only claim the work-related portion. Different rules apply depending on whether your vehicle is classed as a car or a larger vehicle, such as some utes or vans, so it’s important to use the correct claim method and keep accurate records.
🧰 Tools & Equipment
If you’ve bought tools or equipment to do your job, you may be able to claim them.
This may also include:
- Repairs
- Servicing
- Spare parts
- Insurance
- Secure storage, such as a lock box
If an eligible tool costs $300 or less (and doesn’t form part of a set costing more than $300), you may be able to claim the full amount immediately. Tools costing more than $300 are generally claimed over time through depreciation. If you also use your tools privately, only the work-related portion can be claimed.
👷 Work Clothing & Safety Equipment
Not every work shirt is tax deductible.
You may be able to claim:
- Steel-cap boots
- Safety glasses
- Hard hats
- Fire-resistant clothing
- Protective hearing equipment
- Cleaning and repairing eligible protective clothing
You generally can’t claim:
- Jeans
- Drill shorts
- Plain shirts
- Everyday clothing
☀️ Sun Protection
If you spend long days working outdoors, you may be able to claim eligible work-related sun protection, including:
- Sunscreen
- Sun hats
- Work-related sunglasses
✈️ Overnight Work Travel
If your work requires you to travel away from home overnight and you aren’t reimbursed, you may be able to claim eligible travel expenses such as:
- Accommodation
- Meals
- Airfares
- Taxis
- Parking
- Tolls
- Public transport
- Hire cars
- Incidental expenses
If you’re travelling for six or more consecutive nights for business, you may also need to keep a travel diary. Private holidays, sightseeing and family travel aren’t deductible.
💰 Cashflow Considerations
If paying your tax bill and other tax time related costs is going to be a challenge this year, don’t ignore it. The ATO encourages small businesses experiencing cashflow pressures to get in touch early to discuss the support options that may be available.
If you need to free up cash while keeping your business moving, it’s also worth exploring your cashflow finance options before falling behind on payments. Comparing lenders early may help you find a solution that suits your business.
Learn more: ATO – Help with paying your tax debt.
Tradie Tax Deductions for Business Owners
If you’re a sole trader or run your own trade business, there are a few extra things worth knowing this tax time. To all see July 1 business changes and not just a tax guide read our breakdown here.
🛠️ Instant Asset Write-Off
Planning on buying new tools, equipment or other business assets? Eligible businesses with an aggregated annual turnover under $10 million may be able to immediately deduct the business portion of eligible assets costing less than $20,000 each. The limit applies per asset, meaning multiple eligible purchases may qualify.
🏠 Home-Based Business Expenses
If you run your trade business from home or regularly do quoting, invoicing, bookkeeping or other administration from home, you may be able to claim eligible home-based business expenses. Depending on your circumstances, this may include eligible running costs such as:
- Electricity
- Internet
- Phone expenses
- Office furniture
- Business equipment
The ATO also provides a 70 cents per hour fixed-rate method for eligible businesses, although different calculation methods are available depending on your circumstances.
💻 Digital Business Expenses
Running a trade business today involves more than just being on the tools. Depending on your circumstances, eligible business expenses may include:
- Accounting software
- Job management software
- Cloud storage
- Website costs
- Business internet
- Business phones and tablets
Some expenses may be deductible immediately, while others may need to be claimed over time.
📋 Construction Businesses: Don’t Forget Your TPAR
If your business operates in the building and construction industry and lodges a Taxable Payments Annual Report (TPAR), make sure it’s lodged on time. The ATO now uses TPAR information to help pre-fill contractors’ and sole traders’ tax returns. Most TPAR information becomes available after 28 August, so waiting until then may help reduce errors before lodging.
👷 Employers: Payday Super Is Changing
If you’ve got employees, apprentices or labourers, there’s an important change coming. From 1 July 2026, employers will generally need to pay super at the same time as wages instead of quarterly. If you’re currently using the Small Business Super Clearing House, you’ll also need to move to another payment solution before the changes begin. Preparing now could save headaches later.
What Can Tradies Claim on Tax?
Every tradie’s situation is different, but depending on your circumstances you may be able to claim eligible work-related expenses such as:
- Vehicle expenses
- Tools and equipment
- Protective clothing
- Sun protection
- Overnight work travel
- Phone and internet costs
- Work-related licences, permits and certificates
- Home office expenses (where eligible)
- Digital business expenses (for eligible business owners)
Tradie Tax Return Checklist
Before lodging your return:
- Gather your receipts and invoices.
- Make sure every expense directly relates to your work or business.
- Remove any private use from your claims.
- Keep vehicle logbooks and travel records where required.
- Check the ATO guidance if you’re unsure.
- Always speak with a registered tax professional if your circumstances are more complex.
The information in this article is general in nature. It doesn’t take into account your specific financial position, needs or circumstances. You should look at your own financial position, objectives and requirements and seek professional advice before making any financial decisions.
Tradies Tax Deductions: Official ATO Resources
The ATO has detailed guides covering different deductions and business situations. For more information, visit:
General Tax Time
Vehicles
Tools & Equipment
Home Office
Travel
Running a Trade Business
Employers
