Tools and equipment
You can claim a deduction for tools and equipment you use to perform your duties as a building and construction employee. For example, a chisel set or power tools such as angle grinders, circular saws.
You can only claim a deduction for the work-related use of the item.
If a tool or equipment cost you $300 or less, you can claim a deduction for it in the year you buy it, if:
- you use it for mainly work purposes
- it's not part of a set that together cost more than $300.
You can claim a deduction for the cost over the life of the item (that is, decline in value), if the tool or equipment:
- cost more than $300
- is part of a set that together cost more than $300.
If you bought the tool or item of equipment part way through the year, you can only claim a deduction for the decline in value for the period of the income year that you own it. To work out your deduction use the Depreciation and capital allowances tool.
You can also claim a deduction for the cost of repairs to tools and equipment that you use for work purposes.
You can't claim a deduction for tools and equipment that are supplied by your employer or third party supplies for use.
Example: tool allowance
Jan receives a yearly tool allowance of $500, and her tool expenses for the year are $300, to claim a deduction she would:
- include the whole amount of the allowance as income on her tax return
- claim a deduction of $300 for the expenses she incurred for the tools.
Example: depreciating (no immediate deduction)
Anna needed a new set of 16 spanners for work. She couldn't afford the $352 cost for the complete set, so she bought them all individually throughout the income year.
Although they only cost $22 each, Anna can't claim an immediate deduction for the spanners. This is because they are part of a set, she bought in the income year that cost more than $300.
Anna can claim a deduction for the decline in value of the set, which cost a total of $352.
If, in a following income year, Anna breaks one of the spanners and has to buy a replacement, she'll be able to claim an immediate deduction for the replacement. The replacement spanner won’t be part of a set she bought in that year that cost more than $300.
End of example
Example: effective life
Tal buys an electric tool set on 5 September for $1,500 and only uses it for work-related purposes.
He visits the ATO website and looks up the ruling on the effective life of depreciating assets. The ruling says the effective life of electric hand tools is 5 years.
He works out the deduction for the decline in value of his tool set using the prime cost method in this way:
Asset cost × (days held ÷ 365) × (work use percentage ÷ 5 years)
If Tal used the electric hand tool for private purposes as well, he would have to multiply the amount calculated using the formula above by the work-related use percentage.
Tal works out that he has held the tool for 300 days and calculates his deduction for the decline in value as:
$1,500 × (300÷ 365) × (100% ÷ 5) = $246
Tal can therefore claim $246 for the decline in value of his tool set in the first year. Using the same method, he will also be able to claim $300 per year in the following four years and $54 in the final (sixth) year.
End of exampleTravel expenses
You can claim a deduction for travel expenses you incur when your work requires you to both:
- travel for work
- sleep away from your home overnight in the course of performing your employment duties.
Expenses you can claim include your accommodation, meals and expenses which are incidental to the travel. For example, when you travel interstate to attend a work-related conference, seminar or training course.
You can't claim a deduction for travel expenses where you don’t incur any expenses, because:
- you sleep in accommodation your employer provides
- you eat meals your employer provides
- your employer or a third party reimburses you for any costs you incur.
You also can't claim a deduction if you are not required to sleep away from your home overnight in the course of performing your employment duties. For example, if you fly interstate for work and return home the same day, or you choose to sleep near your workplace rather than returning home.
Receiving an allowance from your employer doesn't automatically mean you can claim a deduction. In all cases, you must be able to show you:
- you were away overnight
- you spent the money
- the travel directly relates to earning your employment income
- how you work out your claim.
If you receive a travel allowance you must include it as assessable income in your tax return unless all of the following apply:
- the allowance is not on your income statement or payment summary
- the travel allowance doesn't exceed the Commissioner's reasonable amount
- you spent the whole amount on deductible accommodation, meal and incidental expenses, if applicable.
The Commissioner's reasonable amount is set each year. The amount is only used to determine whether an exception from keeping written evidence applies for the following expenses which are coved by a travel allowance:
- accommodation
- meal
- incidentals.
You don't need to keep written evidence such as receipts if both of the following apply:
- you received a travel allowance from your employer for the expenses
- your deduction is less than the Commissioner's reasonable amount.
However, you must keep written records for all your overseas accommodation expenses.
If your deduction is for more than the Commissioner's reasonable amount you need to keep written evidence for all your travel expenses, not just the amount over the reasonable amount.
Even if you're not required to keep written evidence such as receipts, you must be able to explain your claim and show you spent the amounts.
Example: living away from home allowance
Joe is an employee project manager. He lives in the city with his family and applies for a job to work on a large construction project near a country town for 12 months.
Joe receives a living-away-from-home allowance by the construction company to meet his accommodation and meal costs while he is working in the country town.
The allowance isn't income and isn't shown on Joe's income statement. He can't claim a deduction for his accommodation and meal costs while living away for work. The expenses are private living expenses.
End of example
Example: reasonable allowance amount
Antoni travels from Adelaide to Mt Gambier for a job and is away from home for 5 nights. His employer pays him a travel allowance of $110 per night to cover his accommodation, meals and incidentals. The allowance isn't shown on his income statement.
The travel allowance Antoni receives is less than the Commissioner's reasonable allowance amount and he spends all of the travel allowance on his travel expenses.
Antoni doesn't include his allowance on his tax return because:
- it isn't shown on his income statement
- it's less than the reasonable allowance amount
- he spends it all to cover his travel expenses.
This means Antoni can't claim a deduction for his expenses in his tax return.
End of example
Example: claim for less than reasonable allowance amount
Derek works for a national company. His employer provides him with a travel allowance that covers the costs of his accommodation when he travels interstate for work. Derek doesn't receive an allowance for his meals or incidental expenses.
The amount Derek claims as a deduction for accommodation costs he incurs, is less than the reasonable allowance amount. This means he can only claim the amount he spent on accommodation. He doesn't have to keep records of his accommodation expenses.
He does however have to keep records and other written evidence to support any deductions he claims for meals and incidental expenses.
End of exampleFor more information, see TD 2023/3 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2023–24 income year?
Union and professional association fees
You can claim a deduction for union and professional association fees you pay. If the amount you pay is shown on your income statement. You can use your income statement as evidence of the amount you pay.
Working from home expenses
You may be able to claim a deduction for working from home expenses you incur as an employee. Your expenses may include additional running expenses such as electricity, the decline in value of equipment or furniture, phone and internet expenses. You must:
- use one of the methods set out by us to calculate your deduction
- keep the records required for the method you choose.
There are some expenses you can't claim a deduction for as an employee. Employees who work at home can't claim costs:
- for coffee, tea, milk and other general household items your employer may provide you at work
- for your children and their education including
- setting them up for online learning
- teaching them at home
- buying equipment such as iPads and desks
- your employer pays for or reimburses you for the expense
- for the decline in value of items your employer provides – for example, a laptop or a phone.
Generally as an employee, you can’t claim occupancy expenses (rent, rates, mortgage interest and house insurance premiums) unless your home is your 'place of business'.
You can’t claim a deduction if your employer paid for your home office to be set up or they reimburse you for expenses you incur.
Use the Home office expenses calculator to help you work out the amount you can claim as a deduction for home office expenses.
For more information, see:
- PS LA 2001/6 Verification approaches for electronic device usage expenses
- TR 93/30 Income tax: deductions for home office expenses
- PCG 2023/1 Claiming a deduction for additional running expenses incurred while working from home
For more building and construction employee expenses, see:
- Building and construction employee expenses A–F
- Building and construction employee expenses G–O
- Building and construction employee expenses P–S
Find out more about building and construction employees: