Tax Tips for Tradies

Maximise Deductions, Minimise Tax

Keeping up with tax changes can save you hard-earned money. From instant write-offs to vehicle deductions, the timing of purchases and careful record-keeping really matter. Here are some updated tips and examples to help you maximise deductions and minimise tax.

Instant Asset Write-Off for Small Businesses: Where Is It At?

• Right now the $20,000 Instant Asset Write-Off for 2025-26 has been announced but not yet passed into law. If it goes through, we expect confirmation by the end of December 2025.
• If passed, you’ll have until 30 June 2026 to buy and claim.
• If not passed, the threshold is expected to revert to just $1,000 per asset, unless a new extension is introduced.

If you’ve been meaning to upgrade equipment, it may be best to hold off until the official announcement, then plan purchases accordingly.

Cents-Per-Kilometre Rate Rise & Vehicle Deductions

• For 2024-25 and confirmed for 2025-26, the cents-per-kilometre rate is $0.88 per km, for up to 5,000 business kilometres per car per year.
• This rate covers all running costs — fuel, maintenance, insurance, registration, and depreciation. If you use this method, you cannot separately claim those costs again.

Example of benefit:
Ben the sparky drives ~4,000 km for work in his personal car for the year. Using the cents-per-km method at $0.88/km, he can claim:

4,000 km × $0.88 = $3,520

If his actual car costs are higher (say $5,000), the logbook method may give him a better result, but for many tradies driving under 5,000 km, the cents-per-km method is a simple and effective deduction.

Vehicle / Payload / Car Limit Caps

• When buying vehicles, especially passenger vehicles or utes, there are car limit caps on how much you can depreciate. If the cost exceeds the cap, only the capped amount is eligible for depreciation.
• Payload capacity matters too. Vehicles designed to carry more than 1 tonne can qualify for different depreciation rules, while lighter passenger vehicles are restricted.

Choosing the right vehicle class can mean significantly larger deductions.

Depreciation & Low-Value Pools

• Assets that don’t qualify for an immediate write-off can go into a low-value pool.
• This allows grouping of items and applying a standard depreciation rate (15% in the first year, then 30% in subsequent years).
• Pools smooth out deductions over time and reduce record-keeping complexity.

Timing of Purchases: Why the End of the Financial Year Matters

The timing of equipment purchases can make a big difference to your tax position.

• Buying before 30 June means you can claim the deduction in the current financial year, lowering your taxable income right away.
• This is particularly useful if you’re having a strong income year and want to bring down your tax bill.
• For tradies, big-ticket items like tools, trailers, and equipment can often be written off under the instant asset rules (if the threshold applies), so the timing of purchase is critical.

Remember

• Time planned purchases
• Maximise deductions
• Keep excellent records.
• Review vehicle choices
• Use depreciation/pooling

Every dollar counts. By timing purchases wisely, using the right vehicle rules, and taking advantage of the instant asset write-off, you can save thousands at tax time.

Need Help? Let's chat.

If you need help crunching the numbers, structuring purchases, or getting the best outcome for your tools, vehicle, and business assets, talk to the accountants and professionals at Cashflow Financial. The right advice now can keep more of your hard-earned money in your pocket.