Who This Guide Is For
This guide is for Australian workers who buy and use their own tools, equipment, or protective gear for work. This includes tradies (electricians, plumbers, carpenters, mechanics, builders), chefs, hairdressers, cleaners, landscapers, and anyone who purchases work-related items their employer does not fully reimburse.
If you spend your own money on tools, laptops, phones, safety boots, or specialist equipment to do your job, you are likely entitled to a tax deduction — but the rules depend on the cost of each item, how you use it, and whether your employer contributes.
What Tools and Equipment Can You Claim?
1. Hand Tools and Small Equipment (Under $300)
Items costing $300 or less per unit can be claimed as an immediate deduction in the year you buy them. This includes:
- Screwdrivers, spanners, wrenches, pliers, hammers
- Tape measures, levels, squares
- Tool belts, bags, and storage cases
- Basic power tool accessories (drill bits, blades, sanding discs)
According to the ATO, you can claim an immediate deduction for tools costing $300 or less if you use them primarily for work. No depreciation schedule required (ATO guidelines).
Example: A carpenter buys a new hammer ($85), a set of chisels ($120), and a tool belt ($65). Each item is under $300, so all three are immediately deductible. Total claim: $270.
2. Power Tools and Equipment Over $300
Items costing more than $300 must be depreciated over their effective life. Under the instant asset write-off rules for FY2025–26, small businesses (aggregated turnover under $10 million) can immediately deduct assets costing less than $20,000 each.
For employees who are not running a business, the general depreciation rules apply:
- Determine the effective life of the tool (ATO publishes guidelines per asset type)
- Use the diminishing value method (200% / effective life) or prime cost method (100% / effective life)
- Claim a percentage based on work-use proportion
Example: An electrician buys a $900 cordless drill kit. Effective life is 4 years. She uses it 80% for work.
Using diminishing value: Year 1 deduction = $900 × (200% / 4) × 80% = $360
Year 2 deduction = ($900 - $360) × (200% / 4) × 80% = $216
3. Safety and Protective Equipment
Protective clothing and equipment designed to prevent injury or illness at work is fully deductible:
- Steel-capped boots
- Hard hats and helmets
- Safety glasses and goggles
- High-visibility vests
- Ear plugs and earmuffs
- Respirators and face masks
- Sunscreen, hats, and sunglasses (for outdoor workers)
- Gloves (cut-resistant, chemical, thermal)
The ATO specifically allows deductions for occupation-specific protective clothing and equipment where there is a clear connection between the item and your work duties.
4. Electronic Devices and Tech Equipment
Laptops, tablets, phones, and specialist software used for work are deductible — but with apportionment:
| Device | Deduction Rule | Example |
|---|---|---|
| Phone/laptop (work + personal use) | Apportion by work % | $1,200 laptop × 60% work = $720 depreciable value |
| Specialist equipment (work-only) | Full deduction | Thermal imaging camera used 100% for electrical fault finding |
| Software subscriptions | Immediate deduction if annual cost under $300; depreciate if above | $25/month AutoCAD = $300/year, immediately deductible |
| Phone plan | Apportion by work use % | $60/month plan × 40% work = $288/year |
5. Tool Insurance and Repairs
Costs to maintain, repair, and insure your work tools are fully deductible in the year incurred:
- Tool insurance premiums
- Blade sharpening, drill bit replacement
- Battery replacements for cordless tools
- Calibration of measuring equipment
- Tool servicing and maintenance
Example: A mechanic spends $450 on insurance for his $15,000 tool collection and $180 on servicing for his diagnostic scanner. Total deduction: $630.
Instant Asset Write-Off vs Depreciation — Which One?
| Scenario | Treatment |
|---|---|
| Employee, item ≤ $300 | Immediate deduction |
| Employee, item > $300 | Depreciate over effective life (diminishing value or prime cost) |
| Small business owner, item < $20,000 | Instant asset write-off (FY2025–26) |
| Small business owner, item ≥ $20,000 | Depreciate over effective life |
*The $20,000 instant asset write-off threshold applies to small business entities with aggregated turnover under $10 million. Check the ATO website for current year thresholds as these are subject to legislative changes.*
Common Mistakes Tradespeople Make
| Mistake | Why It's Wrong | What to Do Instead |
|---|---|---|
| Claiming 100% of tools used for both work and personal projects | Overclaiming triggers ATO review and penalties | Keep a logbook for 4 weeks to establish work-use percentage |
| Trying to immediately deduct a $2,000 tool as an employee | Items over $300 for employees must be depreciated | Add the tool to a depreciation schedule and claim over multiple years |
| Not keeping receipts for cash purchases | Without proof, the deduction is disallowed in an audit | Take a photo of the receipt immediately; store digitally |
| Claiming tools your employer already reimbursed | Double-dipping — the ATO data-matches and will catch this | Only claim the unreimbursed portion |
| Assuming all clothing is deductible | Regular work clothes are not deductible, even if you only wear them to work | Only claim occupation-specific protective gear or compulsory uniforms |
Records to Keep
- Receipts or invoices for every tool and equipment purchase (digital copies accepted)
- A logbook showing work-use vs personal-use for items used for both (keep for at least 4 representative weeks)
- Bank or credit card statements showing payment
- Repair and insurance invoices
- Depreciation schedules for items over $300 (your tax agent or accounting software can generate this)
- Written evidence of employer reimbursement policy (to prove which items are not reimbursed)
Quick Checklist
- List every tool or equipment item you bought for work this financial year
- Separate items ≤ $300 (immediate deduction) from items > $300 (depreciate)
- For shared-use items (phone, laptop, vehicle tools), calculate work-use percentage
- Subtract any employer reimbursements — only claim the gap
- Keep all receipts (digital or physical) for at least 5 years
- For items over $300, create or update your depreciation schedule
- Claim tool insurance, repairs, and maintenance separately
- Review last year's return — carry forward any residual depreciation values
*Disclaimer: This is general information only, not tax advice. Individual circumstances vary. Consult a registered tax agent for advice specific to your occupation and spending. a registered tax agent (see the directory) Still unsure? See our full decision guide.*