Published: 30 March 2026 | FY 2025-26

Equipment Tax Deduction: How to Claim Work-Related Equipment in Australia

Whether you are a tradesperson hauling tools to job sites, an office worker who purchased a standing desk, or a freelancer investing in camera gear, work-related equipment can represent a significant out-of-pocket expense. The good news is that the Australian Taxation Office (ATO) allows many workers to claim equipment tax deductions, provided the items are genuinely used to earn income. Understanding exactly what qualifies, how to calculate your claim, and what records to keep can make a real difference to your tax refund at the end of the financial year.

Too many Australian workers either miss out on legitimate equipment deductions or claim incorrectly and risk ATO scrutiny. This guide walks you through the rules for the 2025-26 financial year in plain English, so you can claim with confidence. Before we get into the details, you might want to see how deductions affect your overall pay by using our take-home pay calculator. Knowing your baseline tax position makes it easier to appreciate how much an equipment deduction could be worth.

What Equipment Can You Claim as a Tax Deduction?

The ATO permits deductions for a broad range of work-related equipment, but the golden rule is that the item must be used to earn your assessable income. For employees, this means the equipment is required for your job and your employer does not provide or fully reimburse it. For sole traders and business owners, the rules are similar, though you may also be eligible for the instant asset write-off on business equipment.

Common examples of deductible equipment include hand tools and power tools for tradespeople, protective clothing and safety gear such as hard hats, gloves, and steel-capped boots, office furniture like desks and ergonomic chairs, specialised instruments or measuring devices, cameras and audio equipment for content creators, and medical equipment for healthcare professionals. If you use the item for both work and private purposes, you can only claim the work-related portion of the cost.

It is important to distinguish between equipment and consumables. While equipment is generally a capital asset that lasts for several years, consumables like stationery, cleaning supplies, and small replacement parts are usually claimed as immediate deductions in the year you buy them. If you are unsure whether an item counts as equipment, a good rule of thumb is whether it is expected to last more than one year and cost more than a trivial amount.

Immediate Deduction vs Depreciation: How to Claim Equipment Costs

How you claim your equipment depends largely on what it costs. The ATO sets clear thresholds that determine whether you can deduct the full amount immediately or spread the cost over the item's effective life. For the 2025-26 financial year, these rules remain a critical part of maximising your tax position.

If your work-related equipment costs $300 or less, and you use it predominantly for work, you can generally claim the full work-related portion as an immediate deduction in the year of purchase. This is straightforward and popular for smaller items like basic tool sets, office lamps, or modest computer accessories. Keep your receipt and note the work-related percentage if you also use the item privately.

For equipment costing more than $300, you must depreciate the asset over its effective life and claim only the work-related portion of the annual depreciation amount. The ATO publishes effective life estimates for different asset types. For example, hand tools typically have an effective life of around 5 years, while office furniture may be depreciated over 10 to 15 years depending on the specific item. Each year, you claim a portion of the cost until the asset is fully written off or no longer used for work.

Apportioning Work-Related Use for Mixed-Use Equipment

Most Australian workers use their personal equipment for both work and private purposes. When this happens, you must apportion your claim to reflect only the work-related percentage. The ATO expects you to have a reasonable basis for this calculation and to keep records that support your methodology.

The most common approach is to keep a diary for a representative four-week period, recording each time you use the equipment and whether the use was work-related or private. For example, if you purchased a $2,000 camera and used it 60% of the time for freelance photography work, your deductible base is $1,200. You would then depreciate that $1,200 portion over the camera's effective life. If your work patterns change significantly during the year, you should keep an updated diary to reflect the new usage.

For some items, apportionment is simpler. If you bought a set of tools that you only ever use on the job, you can claim 100% of the cost. Conversely, if you bought a home office chair that you use for work three days a week and for personal use the rest of the time, a 40-50% work-related percentage might be reasonable. The key is to be honest, consistent, and prepared to explain your calculation if the ATO asks. Overclaiming is one of the fastest ways to attract an audit, so it pays to be conservative and accurate.

Record-Keeping Requirements for Equipment Deductions

Good record-keeping is the backbone of any successful equipment deduction claim. The ATO can review your tax return for up to five years after lodgement, so holding onto the right documents is essential. Without proper records, even legitimate deductions can be disallowed, leaving you with a tax bill and potential penalties.

For every piece of equipment you claim, you should keep the original receipt or invoice showing the purchase date, supplier, description of the item, and the amount paid. Electronic receipts are perfectly acceptable, so scan paper receipts or save email confirmations in a dedicated folder. If you are depreciating an asset, retain the purchase documentation for the entire depreciation period plus five years. It is also wise to create a simple spreadsheet that tracks each asset, its cost, the work-related percentage, the effective life, and the annual depreciation claimed.

In addition to purchase records, keep your four-week usage diary or any other evidence that supports your work-related percentage calculation. If you use time-tracking software, project logs, or job sheets that demonstrate work use, save those records too. The more organised you are throughout the year, the easier and less stressful tax time becomes. The ATO's myDeductions tool in the ATO app can help you capture expenses and photos of receipts on the go, which is especially handy for tradies and mobile workers.

How Equipment Deductions Affect Your Tax for 2025-26

Equipment deductions reduce your taxable income, which means you pay less income tax. The actual dollar value of a deduction depends on your marginal tax rate. For the 2025-26 financial year, Australia's individual income tax rates are structured as follows, not including the 2% Medicare levy:

Note: The above rates exclude the 2% Medicare levy. Higher income earners without private health insurance may also be liable for the Medicare Levy Surcharge.

As the table illustrates, a $1,000 equipment deduction saves a high-income earner $450 in tax, while someone in the lowest bracket receives no direct tax benefit. This is why it can be particularly valuable for middle and high-income earners to track every legitimate work-related purchase. However, it is worth noting that deductions do not reduce your income for all purposes. If you have a HECS-HELP debt, the ATO calculates your repayment income by adding back certain deductions, so equipment claims will not lower your compulsory HECS repayments.

For employees looking to build long-term wealth, combining equipment deductions with salary sacrifice into superannuation can be a powerful tax strategy. Salary sacrifice reduces your taxable income just like a deduction, but it also boosts your retirement savings. Like equipment deductions, salary sacrifice does not reduce HECS repayment income, so it is important to look at your complete financial picture before making decisions. Our income tax calculator can help you model different scenarios and see what works best for your situation.

Special Rules for Different Workers and Industries

Different occupations face different equipment deduction rules, and some industries have specific ATO guidance that makes claiming easier or more restrictive. Understanding where you fit can help you maximise your refund without overstepping the boundaries.

Tradespeople and construction workers: Tradies can claim the cost of tools, safety equipment, and protective clothing required for work. If your employer provides a tool allowance, that allowance is taxable income, but you can still claim the actual cost of your tools. Many tradies also claim the cost of toolboxes, vehicle-mounted equipment, and specialised gear. Remember that if a tool costs more than $300, it must be depreciated rather than claimed immediately.

Healthcare professionals: Nurses, doctors, dentists, and allied health workers can claim equipment such as stethoscopes, medical instruments, and specialised footwear. If you are required to purchase your own uniform or scrubs, these may also be deductible. Items used for both work and personal purposes, such as a personal tablet used occasionally for telehealth, must be apportioned carefully.

Office workers and remote employees: If you work from home and your employer does not supply office furniture or equipment, you can claim the work-related portion of desks, chairs, monitors, and other items. Since the pandemic, the ATO has seen a surge in home office equipment claims, so ensure your claims are realistic and well-documented. You cannot claim equipment that your employer has already provided or reimbursed.

Sole traders and small business owners: Business owners may be eligible for the instant asset write-off, which allows an immediate deduction for business equipment up to certain thresholds. The rules for instant asset write-off change from time to time, so check the latest ATO guidance for 2025-26. Even if you are not eligible for the instant write-off, you can depreciate business equipment and claim the full work-related portion over time.

Common Mistakes to Avoid When Claiming Equipment

The ATO reviews work-related expense claims closely, and equipment deductions are a frequent target because they are claimed by so many taxpayers. Steering clear of these common mistakes will help you stay compliant and protect your refund.

Claiming personal use as work use: It is tempting to stretch the definition of work-related use, especially for expensive items. Resist the urge. If you use a camera 80% for family events and 20% for freelance work, only claim 20%. The ATO has sophisticated data-matching tools and can compare your claims against averages for your occupation.

Forgetting to depreciate expensive items: One of the most common errors is claiming the full cost of a $1,500 laptop or power tool in the year of purchase. Unless the item costs $300 or less, or you qualify for an instant asset write-off as a business, you must depreciate it. Failing to do so can lead to amended assessments and penalties.

Double-dipping with employer reimbursements: If your employer reimburses you for equipment or provides an allowance that covers the cost, you cannot claim the same expense again. The allowance is taxable income, and your deduction is limited to your actual out-of-pocket costs. Check your pay slips and employment contract to avoid this trap.

Poor or missing records: Estimating your claims without receipts, invoices, or usage diaries is a recipe for trouble. The ATO requires written evidence for most work-related deductions. Keep digital copies of everything, and back them up in the cloud so they are safe even if your phone or computer fails.

Summary: Key Takeaways for Equipment Tax Deductions

Equipment tax deductions are a valuable way for Australian workers to reduce their taxable income and boost their refund, but only when claimed correctly. For the 2025-26 financial year, keep these key points in mind:

• You can only claim equipment that is used to earn your assessable income, and only the work-related portion if you also use it privately
• Items costing $300 or less can usually be claimed immediately; more expensive equipment must be depreciated over its effective life
• Keep a four-week representative diary to support your work-related percentage calculation
• Retain all receipts, invoices, and depreciation schedules for at least five years after lodging your tax return
• Do not claim equipment that your employer has already provided or reimbursed
• Equipment deductions reduce taxable income but do not reduce income for HECS-HELP repayment purposes
• Sole traders and businesses may have access to the instant asset write-off for eligible equipment purchases

By understanding the rules, keeping solid records, and claiming only what you are entitled to, you can make the most of your equipment tax deductions without attracting unwanted ATO attention. Whether you are a tradie with a van full of tools, a nurse with specialised medical gear, or a freelancer investing in creative equipment, every legitimate deduction helps.

To see how equipment and other work-related deductions could improve your tax outcome, try our income tax calculator and take-home pay calculator. These free tools let you explore different deduction scenarios and plan ahead for the 2025-26 financial year.