Claiming Tools on Tax Australia — a practical guide for Australian trades from the team at Power Tools Direct Australia.
Deduction thresholds, depreciation, the set rule that catches people out, and the records the ATO expects you to keep.
Claiming Tools on Tax Australia: In this guide
- The basic principle
- Immediate deduction vs depreciation
- Watch the set rule
- Apportioning private use
- What else is commonly deductible
General information only. Tax rules change and individual circumstances vary — confirm your position with a registered tax agent or the ATO before lodging.
The basic principle
If you buy a tool because your work requires it, and you paid for it yourself and were not reimbursed, it is generally deductible. The two questions the ATO cares about are whether the expense relates to earning your income, and whether you can prove it.
Immediate deduction vs depreciation
For employees, tools costing up to a low-value threshold (long set at $300 per item) can generally be claimed in full in the year of purchase. Above that, the cost is claimed over the tool’s effective life through depreciation.
For businesses, instant asset write-off provisions have changed repeatedly in recent years, with thresholds and eligibility varying by income year and turnover. Check the current year’s threshold before assuming — this is the single most common source of outdated advice in trade circles.
| Situation | Typical treatment |
|---|---|
| Employee, tool under the low-value threshold | Claim in full in the year purchased |
| Employee, tool over the threshold | Depreciate over the effective life |
| Business, eligible asset under current write-off threshold | Immediate write-off, if eligible that year |
| Set purchased together forming one functional unit | Assessed as one asset, not individual items |
Watch the set rule
Buying a twin-pack kit or a socket set does not let you split it into individual items to get under a threshold. If the items function as a set, the ATO treats the set as one asset.
This catches a lot of people who buy a kit and assume each tool counts separately.
Keep every receipt from day one. Reconstructing five years of tool purchases at audit time is not an experience you want.
Apportioning private use
If a tool is used for both work and private purposes, you claim only the work-related proportion. A drill used 80% for work and 20% at home is an 80% claim.
You need a reasonable basis for the percentage, not a guess made at lodgement time. A short diary over a representative period is the standard approach.
What else is commonly deductible
- Protective clothing and safety equipment specific to the work
- Tool repairs, servicing and replacement parts
- Insurance on tools of trade
- Consumables — blades, bits, abrasives, fixings
- Tool storage where it is work-related
- Union fees, licences and required training
Record keeping the ATO accepts
- Keep receipts — digital photos or PDFs are acceptable, and far more durable than thermal paper
- Record the date, supplier, item and amount
- Note the work purpose for anything that could be seen as dual-use
- Keep records for five years from lodgement
- Maintain a simple asset register for depreciating items — it doubles as your theft and insurance record
Every order placed with us generates a tax invoice with the GST component shown. A trade account keeps your purchase history in one place, which makes tax time considerably less painful — see the FAQs for details.
Buying tools before EOFY?
Tax invoices on every order, and free delivery over $1,000.
The bottom line
Deduction thresholds, depreciation, the set rule that catches people out, and the records the ATO expects you to keep. Everything we sell is genuine Australian stock with full manufacturer warranty, dispatched same day on orders placed before 1pm AEST from our Sydney warehouse. Standard delivery is $15.99, express is $32.55, and delivery is free on orders over $1,000.
Not sure which option suits your work? Talk to our team — we are tradies too. You can also browse the full power tool range, read the FAQs, or set up a trade account for ongoing pricing.
Frequently asked questions
Can I claim tools I bought before starting the job?
Generally only if they relate to earning your current income. Tools bought before employment commenced are usually not deductible.
Do I need receipts for everything?
For total work expense claims above the ATO’s substantiation threshold, yes. Keep receipts regardless — it is the only reliable position.
Can I claim a tool bought on finance?
Generally yes, based on the asset cost, with interest treated separately. Confirm the treatment with your tax agent.
Keep reading
- Building a First Tool Kit as an Apprentice
- Tool Theft in Australia: Prevention That Works
- Grey Imports: Why That Cheap Tool Has No Warranty
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