If you spent it to earn your income, you can usually claim it — but "usually" hides the rules that get claims knocked back. Here is what a tradie can actually deduct, the traps the ATO watches for, and the three checks to run before you claim anything.
Tools & equipment — the $300 rule vs the write-off
How you claim a tool depends on whether you are an employee or running a business:
- Employee buying your own tools: a single item $300 or less (work-only) is a full deduction this year; a single item over $300 is claimed as decline in value (depreciation) over its effective life. Mixed work/private use → apportion and claim only the work-use share.
- Sole trader / small business: you use the instant asset write-off — assets under $20,000 each are immediately deductible, installed and ready for use by 30 June 2026 (then set to drop to $1,000 unless extended). Anything above the threshold depreciates. See the Instant Asset Write-Off card.
- Hiring plant (scaffold, diggers, cherry pickers, generators, site toilets) is fully deductible as a running cost — you are not buying an asset.
- Worked example: a $240 impact driver (100% work) is a full deduction now; an $1,800 mitre saw is written off immediately if you are a small business under the $20k threshold, otherwise depreciated.
- If your employer provided or reimbursed it, you cannot claim — you are not out of pocket.
Clothing and PPE — the trap that catches everyone
- Claim: protective gear that is specific to safety — hi-vis, steel-toe boots, hard hats, goggles, gloves, harnesses, ear protection, respirators, knee pads. Compulsory logo/branded uniforms. Laundry of deductible work clothing (a reasonable per-load rate the ATO publishes, or actual receipts).
- Cannot claim: ordinary clothes even if you only wear them to work and wreck them on site — generic jeans, T-shirts, hoodies, non-safety boots — and "smart casual" for quoting. The test is protective or compulsory uniform, not "I wore it for work."
Self-education — the nexus test
Deductible only where the training relates to your current trade — maintaining or improving the skills you already earn from: a sparky doing the AS/NZS 3000 update, a plumber doing backflow prevention, CPD, white-card and ticket refreshers, first aid, asbestos awareness. Not deductible if it qualifies you for a different trade or career (a carpenter studying engineering, a brickie getting a real-estate licence) — that is treated as capital or private.
Licences, tickets, union & memberships
- Claim: trade licences and mandatory registrations for your current work (electrical, plumbing, building, gas); renewing site/industry cards (white card; high-risk work licences — crane, dogging, rigging, forklift, EWP); union fees for your occupation; professional memberships that directly benefit your income (Master Builders, Master Plumbers, NECA).
- Cannot claim: your private driver's licence — even though you drive to every job. (Work-specific heavy-vehicle endorsements and permits can be deductible.)
Your vehicle
Either cents-per-km (88c/km, capped at 5,000 business km) or the logbook method (business-use percentage of all running costs plus depreciation, subject to the $69,674 car limit). The full detail and the worked comparison are on the Vehicle Deductions card — keep the Vehicle Logbook as you go.
What gets knocked back — and the audit red flags
Commonly rejected: 100% claims on mixed-use tools (the home pressure-washer), everyday clothing, career-change training, 100% vehicle with no logbook, and tools bought while you were an employee then used in your own business (not allowable unless properly introduced at market value).
The ATO red flags: deductions that are high versus others in your trade and income bracket; large clothing/laundry claims with no PPE or uniform requirement; a 100% business vehicle with no logbook; and round-number "guesstimates" with no receipts.
The three-filter check (run it before you claim)
- Is it clearly work-related to your current trade?
- Have you carved out the private-use portion?
- Can you prove it with paperwork — receipt, tax invoice, logbook?
Keep records 5 years after you lodge. Electronic copies are fine if they show the date, amount, supplier and item.
Common mistakes
- Claiming everyday clothes "because they got wrecked on site."
- Confusing the $300 employee rule with the small-business write-off.
- Claiming 100% on a part-private tool or ute.
- Treating training for a NEW trade as deductible.
- Trying to claim your private driver's licence.
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Templates you might need
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