Construction and tradie expenses in Australia: instant asset write-off, FBT, and what you can claim

For Australian tradies, the expense rules that move the most money are the instant asset write-off and fringe benefits tax (FBT). One is a generous timing concession on the tools and equipment a trade business lives on; the other is a quiet liability that attaches to the ute parked in the driveway. Both reward good records and punish guesswork. Every figure below is sourced from ATO guidance in the Sources section.

The $20,000 instant asset write-off

A small business with an aggregated annual turnover under $10 million can immediately deduct the business portion of an eligible asset that costs less than $20,000, rather than depreciating it over years ^[1] . The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026 for the 2025-26 income year ^[2] .

Because the limit is per asset, a tradie can write off a nail gun, a compressor, and a generator in the same year as long as each is under the threshold. Anything at or above $20,000 goes into the small business pool and is depreciated instead. The threshold is legislated year by year, so confirm the current-year figure before relying on it.

The FBT trap on dual cab utes

This is the construction-specific liability most trade businesses underestimate. A dual cab ute is not automatically FBT-free. It is exempt only if it is an eligible vehicle (designed to carry a load of one tonne or more, or more than eight passengers) and private use is limited to travel between home and work plus other use that is minor, infrequent, and irregular ^[3] .

The ATO is explicit that a work ute doubling as the family taxi is not exempt ^[3] . You do not need a special logbook to claim the exemption, but you must be able to demonstrate the private use stayed within the limit, so a simple record of any non-work trips protects the position. Fringe benefits tax sits outside income tax and has its own April-based year, which catches trade businesses that only think about tax at 30 June.

Tools, protective gear, and consumables

Hand tools, power tools, and consumables used for the business are deductible (immediately if under the write-off threshold, otherwise pooled). Protective items required for the work are deductible: steel-cap boots, hi-vis, hard hats, gloves, and sun protection for outdoor trades. Ordinary clothing is not deductible even if only worn on site. Keep the receipt against each purchase so the business-use percentage is evidenced.

Vehicles and travel

A vehicle designed to carry one tonne or more is claimed on actual business-use running costs apportioned by records. A car under one tonne uses either the logbook method or the cents-per-kilometre method, covered in the claim mileage in Australia guide. Travel between sites is generally deductible; ordinary home-to-work travel is not, with narrow exceptions for bulky-tool transport. Overnight travel for distant jobs follows the claim travel in Australia rules.

GST and the BAS

Most construction supplies are taxable, so a registered tradie charges 10% GST and claims input tax credits on tools, materials, and fuel through the business activity statement. The mechanics, including the one-eleventh rule, are in the Australian GST and BAS guide. The recurring error is claiming a full GST credit on an asset with private use; the credit follows the business-use percentage.

Where ExpenseFlow fits

The trade-business pain is volume and timing: receipts pile up across suppliers and sites, and the instant asset write-off and GST credits both depend on having the document and the business-use split at the moment of purchase, not at year-end. ExpenseFlow captures each receipt and supplier invoice, extracts the line detail and GST, and syncs the transaction into Xero or QuickBooks Online with the image attached, ready for the BAS and the five-year record-keeping window. Its trade-aware checks flag the things a generic expense tool misses: a work vehicle that may carry FBT unless private use stays minor and infrequent, an asset under $20,000 that may qualify for the instant asset write-off, and protective clothing (deductible) against ordinary clothing (not). It surfaces these for you to confirm; it does not calculate FBT or lodge the BAS for you.

Common mistakes

• Assuming a dual cab ute is automatically FBT-free when private use exceeds the minor, infrequent, and irregular limit ^[3] .
• Treating an asset of $20,000 or more as an immediate deduction instead of pooling it ^[1] .
• Claiming a full GST credit on a vehicle or tool with private use.
• Keeping no record of private trips, leaving the FBT exemption undefendable in a review.