If you finish the day covered in dust, grease or paint, the last thing you want is to spend your evening sorting through a shoebox of receipts.
But your tradie tax return is worth getting right.
The difference between a rushed return and a properly prepared one can be significant. Tools, vehicles, protective clothing, phone costs, training and other legitimate work expenses can all affect your final tax position.
This guide explains what to prepare, what tradies can potentially claim, and where the biggest mistakes happen.
This guide reflects the rules applying to the 2025–26 financial year, which is the tax return most Australians are lodging from July 2026 onwards. Tax laws can change, so always check your circumstances before lodging.
Are Tradie Tax Returns Different?
They can be.
A PAYG employee might only have salary income and a handful of work-related expenses. A tradie may have vehicle costs, tools, equipment, training, phone expenses, insurance, multiple income sources or an ABN and business expenses.
The first question is therefore:
Are you an employee, a genuine independent contractor or running a business?
The answer affects what you can claim and how those expenses need to be reported.
For business owners, the rules are different again because business income and expenses are generally reported through business and individual tax obligations.
For a deeper look at the accounting side of running a trade business, see accountants for tradies in Australia.
Your Tradie Tax Checklist
Before sending your information to your accountant, gather:
- Income records: income statements, invoices issued, ABN income, interest and any other taxable income.
- Bank records: business and relevant personal statements showing income and expenses.
- Vehicle records: your logbook and odometer records if using the logbook method, or records of work-related kilometres if using the cents-per-kilometre method.
- Tools and equipment: receipts or invoices for tools, machinery, computers and other work equipment.
- Work clothing and PPE: receipts for protective clothing and equipment such as hi-vis clothing, safety boots and other eligible protective gear.
- Phone and internet: bills plus records showing the work-related portion of your usage.
- Training and licences: eligible courses, trade licences, accreditation fees and relevant professional memberships.
- Insurance: relevant business or professional insurance and personally paid income-protection insurance where the policy qualifies.
- Super contributions: records of personal concessional contributions you intend to claim as a deduction.
You don’t need to guess whether something qualifies. Bring the evidence and let your accountant determine the treatment.
The ATO generally requires tax records to be kept for five years, although specific record-keeping periods can differ.
Can a Tradie Claim Their Ute or Work Vehicle?
For many tradies, the vehicle is one of the largest tax deductions available — but it is also one of the areas where claims can go wrong.
For an employee using their own car for work, there are two main methods:
1. Cents per kilometre
For the 2025–26 financial year, the rate is 88 cents per work-related kilometre, capped at 5,000 work-related kilometres per car.
You need records that support the work-related kilometres you’re claiming.
2. Logbook method
The logbook method can be useful when you have substantial work-related vehicle use.
A valid logbook must generally cover at least 12 continuous weeks. The resulting work-related percentage can generally be used for up to five years, provided the relevant circumstances don’t change.
For a business vehicle, the rules can be different again, particularly where the vehicle is owned or provided by a company and private use creates potential FBT consequences.
The ATO’s vehicle rules are detailed, so don’t assume that because you drive a ute for work, every kilometre or every vehicle expense is automatically deductible.
Tools and Equipment
Tools are a normal part of working life for most tradies, but the way you claim them depends on your circumstances and the cost of the asset.
For employees, eligible depreciating assets costing $300 or less may qualify for an immediate deduction where the relevant conditions are met.
More expensive assets generally need to be dealt with under the depreciation rules rather than simply deducted in full.
For businesses, separate depreciation and capital allowance rules apply. The small-business instant asset write-off also needs to be checked against the legislation applying to the relevant income year.
Our tools on tax guide explains the employee and business rules in more detail. You can also use our business asset depreciation calculator to estimate the first-year treatment of business assets.
What About Work Clothes and PPE?
This is another area where tradies often get confused.
Protective clothing and equipment can be deductible when they meet the relevant requirements. Examples can include:
- hi-vis clothing
- steel-capped safety boots
- safety glasses
- hearing protection
- other protective equipment required for the job.
But ordinary clothing is not automatically deductible because you wear it at work.
A pair of normal work boots, for example, is not necessarily deductible just because you wear them on site.
Our work clothes tax deduction guide explains the difference between protective clothing and ordinary workwear.
Phone and Internet Expenses
Many tradies use their personal phone for calls, messages, photographs, job management, navigation and dealing with customers.
You may be able to claim the work-related portion of your phone and internet costs.
The important part is being able to support your calculation.
A reasonable estimate based on your actual work and private use can be appropriate in some circumstances, but you shouldn’t simply pick a percentage because it sounds reasonable.
Keep bills and records showing how you arrived at your work-related percentage.
Training, Licences and Professional Fees
You may be able to claim eligible costs associated with maintaining or improving the skills you use in your current income-earning activities.
Depending on your circumstances, this can include:
- Relevant trade courses
- Training directly related to your current work
- Accreditation and licence fees
- Relevant professional or industry memberships.
The key distinction is whether the expense relates to your current income-earning activities. A course that qualifies you for an entirely new occupation can be treated differently.
Super Contributions
Self-employed tradies and sole traders should also look at personal super contributions.
For the 2025–26 financial year, the standard concessional contributions cap is $30,000. Certain taxpayers may have additional capacity through the carry-forward rules if they meet the eligibility requirements.
If you want to claim a personal super contribution as a tax deduction, there are also important notice and fund requirements. Don’t simply make the contribution and assume it can automatically be deducted.
Subcontractor Tax Returns
If you work under an ABN and invoice businesses for your services, your tax return can look very different from that of an employee.
You may need to deal with:
- business income and expenses
- GST and BAS obligations
- PAYG instalments
- depreciation
- business insurance
- accounting and bookkeeping costs
- vehicle and equipment expenses
- superannuation.
Some businesses also have obligations under the Taxable Payments Annual Report (TPAR) rules, depending on their industry and circumstances. Where applicable, the ATO can receive information about payments made to contractors.
An ABN by itself doesn’t automatically make you a contractor for every tax purpose. The underlying working arrangement matters.
What About Apprentices?
Apprentices can claim eligible work-related expenses in the same way other employees can, provided the normal deduction rules are satisfied.
Potential areas include eligible:
- protective equipment
- tools
- work-related travel
- training and study expenses
- other costs directly connected with earning employment income.
Government apprenticeship support payments are separate from tax deductions, and eligibility depends on the apprentice, occupation and training arrangements.
So don’t assume every payment or training expense is automatically taxable or deductible. Get the specific treatment checked.
How Much Tax Does a Tradie Pay?
There isn’t one “tradie tax rate”.
A sole trader pays income tax based on their taxable income, not their total business turnover.
For the 2025–26 income year, Australian resident individual tax rates are:
| Taxable income | Marginal rate |
|---|---|
| $0–$18,200 | Nil |
| $18,201–$45,000 | 16% |
| $45,001–$135,000 | 30% |
| $135,001–$190,000 | 37% |
| Over $190,000 | 45% |
These are marginal rates, so moving into a higher bracket does not mean your entire income is taxed at that rate.
A company is different again. An eligible company may qualify for the 25% company tax rate, but the overall tax outcome also depends on how profits are retained or paid to directors/shareholders and the company’s circumstances.
Our How Much Tax Does a Tradie Pay? guide goes deeper into tax, GST and PAYG instalments.
Don’t Forget PAYG Instalments
A common shock for newly self-employed tradies is receiving a tax bill and then discovering they also have PAYG instalments to pay.
PAYG instalments are effectively prepayments towards your future income tax liability.
If you’re starting out as a subcontractor or sole trader, don’t wait until tax time to discover how much cash you need to set aside.
Our sole trader tax calculator can give you an estimate of income tax and Medicare levy based on your business numbers.
What About the New $1,000 Work-Expense Deduction?
There’s an important change coming into play for the 2026–27 financial year.
The government has legislated a new standard deduction of up to $1,000 for eligible work-related expenses, starting from 1 July 2026.
However, this does not apply to the 2025–26 tax return you’re lodging now.
So don’t add the $1,000 deduction to a 2025–26 return simply because you’ve seen it discussed online.
For the current return, use the rules that apply to the 2025–26 income year.
Common Tradie Tax Mistakes
1. Claiming every kilometre driven: Driving from home to your regular place of work is generally treated differently from travelling between work locations or to other work-related destinations. Don’t label every trip as “business” and hope it passes.
2. Claiming 100% of a mixed-use expense: If you use your phone, vehicle, laptop or equipment for both work and private purposes, you may need to apportion the expense.
3. Treating every tool as an immediate deduction: The cost and nature of the asset matter, as does whether you’re an employee or running a business.
4. Assuming an ABN means everything is deductible: An ABN doesn’t turn personal expenses into business expenses.
5. Forgetting income you’ve received outside your main trade: Interest, side jobs, additional employment and other taxable income can all affect your return.
6. Leaving tax planning until after 30 June: Once the financial year has ended, many planning opportunities have already disappeared.
Our Perth tax planning service is designed to look at your position before the year closes, rather than simply telling you what happened afterwards.
When Should a Tradie Lodge Their Tax Return?
For individuals lodging their own return, 31 October is the standard lodgment deadline.
Using a registered tax agent may provide a later lodgment date under the agent’s lodgment program, depending on your circumstances and when you engage them.
The important thing is not to leave everything until the last minute.
The earlier your accountant has your records, the more time there is to identify missing income, deductions, depreciation and other issues before the return is lodged.
Ready to Get Your Tradie Tax Return Sorted?
Whether you’re an apprentice buying your first set of tools, a subcontractor working across multiple sites, or an established tradie running a team, your tax return should reflect the way you actually work.
At KSH TAX, we work with tradies, subbies, builders and trades businesses across Australia on tax returns, BAS, bookkeeping, vehicles, tools and business planning.
You can see our tradie accounting services or book a tax return with us.
Call 08 6285 8110 or book a free consultation online. We reply within two business hours.
