Common Tax Deductions for Tradies and Contractors

Whether you're an employed tradie or running your own ABN business, the tools of your trade can add up. The key is knowing which rules apply to you.

Employee or ABN contractor?

If you're an employee, you claim work-related deductions in your individual return and can't claim business concessions. If you run a business with an ABN, you report business income and expenses and may be eligible for small business concessions. Some workers with an ABN may actually be employees — and the business engaging them may owe super.

Tools and equipment

Employees can generally claim tools costing $300 or less immediately, and depreciate more expensive tools. Businesses with aggregated turnover under $10 million can generally immediately deduct eligible assets costing less than $20,000 each under the instant asset write-off, which has been made permanent from 1 July 2026. More expensive assets can go into the small business depreciation pool.

Vehicles

For passenger cars, you can claim the business portion using the logbook method — or cents per kilometre if you're a sole trader. Utes, vans and other vehicles designed to carry a load of one tonne or more, or nine or more passengers, aren't 'cars' for tax purposes: you claim the actual business-use portion of costs, supported by records.

Other common deductions

• Protective clothing, steel-capped boots and high-vis workwear
• Licences, tickets and trade certifications
• Phone and internet, for the business-use portion
• Public liability and tool insurance
• Consumables such as fixings, blades and safety gear
• Accounting and bookkeeping fees

Personal services income

If most of your income is for your personal skills or effort — for example, 80% or more from one client — the personal services income (PSI) rules may limit what you can deduct, unless you pass the results test or another test. These rules apply whether you're a sole trader, company or trust.