Construction and tradie expenses in Australia: the complete guide for builders and trade businesses

A trade business spends money in three big lumps (gear, vehicles and people) and a thousand small ones (screws, blades, fuel, tip fees, phone bills). The tax rules that move the most money sit on the big lumps: the instant asset write-off on tools and plant, the FBT exemption that a ute either keeps or loses, and the super and reporting obligations that follow every subbie you pay. This guide goes through the whole ledger of an Australian builder or tradie, category by category, with a verdict for each one before the detail. Every figure is sourced to the ATO in the Sources section, retrieved 10 October 2026.

What this guide covers: materials and consumables, tools and the instant asset write-off, plant and big equipment, utes, vans and FBT, vehicle running costs, subcontractors, TPAR and super, wages and employees, protective gear and workwear, repairs, insurance and licences, phones, software and the office, GST on what you buy and sell, and the records, BAS and year-end work that tie it together.

The trade ledger at a glance

The rest of this guide walks through each row, and every section opens with its verdict.

Where ExpenseFlow fits

The trade-business pain is volume and timing: dockets from the trade counter, fuel receipts, supplier invoices emailed to three different inboxes, and a write-off and a GST credit that both depend on having the document and the business-use split when the purchase happens. ExpenseFlow captures each receipt and supplier invoice (email forward, upload or phone), reads the line items and the GST, codes each line to your chart of accounts with a written reason, and routes anything uncertain to a person before it posts. Its construction checks are built from the rules on this page: a vehicle line that may attract FBT unless private use stays minor and infrequent, an asset under $20,000 that may qualify for the instant asset write-off, an asset at or above $20,000 that belongs in the small business pool, and protective clothing (deductible) against ordinary clothing (not). It also flags a document over $82.50 with no ABN and recomputes the GST against the printed totals. After approval the bill syncs to Xero with the source document attached and the decision trail written to the bill’s history, or to QuickBooks Online as a coded bill.

What it does not do: it does not calculate FBT, decide whether a subbie is an employee for super, run payroll, lodge the TPAR or lodge your BAS. Those stay with you and your accountant. The construction chart of accounts for Xero and for QuickBooks line up with the categories below.

The ExpenseFlow for construction and trade businesses page covers these checks across all five countries.

Materials and consumables

Timber, plasterboard, fixings, pipe, cable, paint, concrete, blades and abrasives are ordinary operating costs; trading stock purchases, including delivery charges, appear on the ATO’s list of deductible operating expenses ^[8] . The GST credit needs a tax invoice for anything over $82.50, and the supplier must be registered ^[9] . The trade-counter docket is usually a valid tax invoice; a bare card slip is not. Materials bought for a specific client job and on-charged are still deductible to you when you buy them; the recharge is income when you invoice it.

Tools and the instant asset write-off

A small business with aggregated turnover under $10 million that uses the simplified depreciation rules can claim an immediate deduction for the business portion of each eligible asset costing less than $20,000, in the year it is first used or installed ready for use ^[1] . The ATO confirmed on 4 September 2026 that from 1 July 2026 the $20,000 write-off is permanent rather than renewed each year ^[2] . Because the limit applies to each asset, a nail gun, a compressor and a generator bought in the same month are each written off in full; new and second-hand assets generally qualify; and an upgrade under $20,000 to an asset you already wrote off can be deducted too ^{[1] [2]} .

The business portion matters: a laptop used half for quoting and half by the kids is a 50% write-off, and the GST credit follows the same split ^[9] .

Plant and big equipment

An excavator, a trailer-mounted compressor, a scaffold system or a tipper bought for $20,000 or more is a depreciating asset, claimed through the small business pool under the simplified depreciation rules ^[1] . The depreciation glossary entry and the equipment guide carry the pool mechanics. Plant hire for a job is an operating cost deductible when incurred, which is why short jobs on hired gear and long contracts on owned gear can be the right answer in the same business.

Utes, vans and FBT

There is no FBT when an employee uses an eligible vehicle and private use is limited ^[3] . Eligible vehicles are a single cab ute; a dual cab ute designed to carry a load of 1 tonne or more, more than 8 passengers, or less than 1 tonne but not principally for passengers; and a panel van or goods vehicle ^[3] . The allowed private use is travel between home and work, travel incidental to work, and non-work use that is minor, infrequent and irregular, such as occasionally taking the domestic rubbish to the tip ^[3] . If the exemption applies, tolls and an associate’s equally limited use are covered too ^[3] .

Fringe benefits tax runs on an April to March year, which catches trade businesses that only think about tax at 30 June.

Vehicle running costs

For a sole trader or a partnership with an individual partner claiming for a car, the cents per kilometre method uses a set rate for each business kilometre, up to 5,000 business kilometres per car per year, needs no written evidence of the exact kilometres (though the ATO may ask how you worked them out), and the rate covers all running costs and depreciation ^[7] . Above 5,000 km, for a ute carrying a tonne or more, or for a company, claim actual costs apportioned by a logbook. Fuel, servicing, tyres and insurance carry 10% GST; registration is a government charge with none. The vehicle and mileage guides give the current rate, and fuel covers the docket rules.

Subcontractors, TPAR and super

Businesses that pay contractors for building and construction services report those payments in a Taxable payments annual report, lodged by 28 August each year; the 10% income test that applies to other reportable services does not apply to building and construction ^[4] . The subbie’s invoice is deductible and its GST claimable if the subbie is registered ^[9] .

Super is the second obligation. If you pay an independent contractor mainly for their labour (more than half the dollar value of the contract is labour), for their personal labour and skills rather than a result, and the work cannot be delegated, they are an employee for super guarantee purposes and you may need to pay super for them, whether or not they have an ABN ^[5] . The super guarantee rate is 12% from 1 July 2025 ^[6] , and from 1 July 2026 Payday Super means super is paid each payday ^[6] . A labour-only subbie on an hourly rate who turns up when told is the classic case; a subbie quoting a fixed price for a finished bathroom and bringing their own crew is not.

Wages and employees

You can claim the salaries and wages you pay employees and the super you pay on time to a complying fund, provided you first meet the PAYG withholding and reporting obligations for each payment ^[10] . Apprentices are employees for all of these rules. Award allowances (tool, travel, site) are wages and run through payroll like the rest. From 1 July 2026 the super guarantee charge you pay on late super is deductible, though penalties and interest after an assessment are not ^[10] .

Protective gear and workwear

Boots, hi-vis, hard hats, gloves, eye and ear protection and sun protection the business supplies are ordinary operating costs, and clothing expenses for uniforms and occupation-specific and protective clothing appear on the ATO’s list ^[8] . Employees can claim personal protective equipment they buy and use at work, such as sunscreen, a sunhat and sunglasses for outdoor work, but not if the employer pays for the items or reimburses them ^[11] . Ordinary clothing worn on site, jeans and a plain t-shirt, is not deductible for anyone.

Repairs, maintenance and improvements

You can claim repairs that restore an item to its original state, such as fixing defects or renewing parts, but not capital expenses such as substantial improvements, or repairs made immediately after you buy an item, because the price reflected its condition ^[12] . A new hydraulic hose on the excavator is a repair; rebuilding the second-hand excavator you just bought is part of its cost.

Insurance, licences and fines

Insurance premiums, including public risk, motor vehicle and workers compensation, and annual fees charged by statutory bodies are deductible operating expenses ^[8] . Builder and trade licence renewals, home warranty insurance where you buy it for a job, and white card training are ordinary costs of trading. Penalties and fines imposed under an Australian law are not deductible ^[8] , so the speeding fine in the work ute stays a private cost.

Phone, software and the office

Mobile phone plans, internet, off-the-shelf software subscriptions and small items costing $100 or less are on the ATO’s operating expenses list ^[8] . A phone used for both work and personal calls is apportioned, and the GST credit follows the business share ^[9] . The phone, software and home office guides cover the methods.

GST on what you buy and sell

Most construction work is taxable, so a registered business charges 10% GST and claims credits on materials, tools, fuel and subcontractor invoices through the business activity statement. A credit needs a tax invoice for purchases over $82.50, the supplier must be registered, and unclaimed credits can be claimed within four years ^[9] . The Australian GST and BAS guide and the BAS lodgment guide cover the return itself.

Records, BAS and year end

Records are kept for five years, as the record-keeping guide sets out. The year end for a trade business has three dates, not one: the FBT year closes on 31 March, the income year on 30 June, and the TPAR is due by 28 August ^[4] . The tax deadlines calendar and the year-end checklist walk the close, including the asset register for the write-off and the pool.

Common mistakes

• Treating a dual cab used as the family car as FBT-exempt ^[3] .
• Writing off an asset of $20,000 or more instead of pooling it ^[1] .
• Expensing a drill with the screws, or pooling a $900 tool that could be written off ^[1] .
• Claiming the full GST credit on a ute or phone with private use ^[9] .
• Missing the TPAR for payments to subbies ^[4] .
• Paying a labour-only subbie on an ABN without super ^[5] .
• Paying wages without PAYG withholding and STP, which forfeits the deduction ^[10] .
• Expensing the overhaul of second-hand plant as a repair ^[12] .
• Claiming fines as a business cost ^[8] .