Contractor Handbook: What You Can Claim on Tax in Australia (+ Checklist)

If you’re a contractor, freelancer, or self-employed professional in Australia, understanding your tax obligations — and what deductions you can legally claim — is essential to maximising your refund and staying ATO-compliant.

This guide breaks down what contractors can claim on tax, what records you’ll need, and includes a handy checklist to get your documents in order this financial year.

🧾 Who is Considered a Contractor?

You’re likely considered a contractor if you:

• Run your own business or operate under an ABN.

• Get paid per project, task, or contract (not salary).

• Provide tools, equipment, or expertise to do the job.

• Have control over how and when you work.

Whether you’re a tradie, designer, IT consultant, or gig worker — your tax situation is different from an employee, and so are your deductions.

✅ Common Tax Deductions for Contractors

1. Vehicle and Travel Expenses

If you use your own car or motorbike for work purposes, you may claim:

• Travel to clients or job sites

• Picking up supplies or tools

• Visiting subcontractors

Claim methods:

• Cents-per-kilometre method (up to 5,000km/year)

• Logbook method (if usage is more complex)

Note: You can’t claim travel from home to a permanent office unless your home is your primary base.

2. Tools, Equipment, and Asset Depreciation

You can claim immediate or depreciated costs of:

• Tools of your trade (drills, saws, laptops, etc.)

• Office furniture (desks, chairs)

• Business-use portion of phones or tablets

Instant asset write-off may apply for eligible purchases under current thresholds.

3. Home Office and Workspace Expenses

If you work from home or have a dedicated workspace, you may claim:

• Internet and phone bills (percentage used for work)

• Electricity, heating, and cooling

• Repairs or maintenance

• Depreciation of home office equipment

Tip: Keep a work-use diary for 4 weeks to calculate your average business use.

4. Business Operating Costs

These include the day-to-day costs of running your contracting business:

• Accounting or bookkeeping software (e.g. Xero, MYOB)

• Subscriptions to industry-related tools

• Bank fees on business accounts

• Business insurance (e.g. public liability, professional indemnity)

• Interest on business loans

5. Professional Development and Education

You can claim expenses that directly relate to your current contracting work:

• Short courses, webinars, or certifications

• Relevant books, trade magazines

• Conference and seminar fees

• Travel and accommodation if attending industry events

6. Other Deductible Expenses

• Marketing and advertising (e.g. Google Ads, flyers)

• Website domain and hosting fees

• ABN registration and renewal costs

• Uniforms with logos or safety gear (e.g. boots, hi-vis)

❌ What Contractors Cannot Claim

• Private or personal expenses (e.g. personal travel, clothes)

• Meals or entertainment not related to earning income

• Fines or penalties (e.g. speeding tickets)

• Childcare costs

• Home-to-job travel (unless home is your base of operations)

📋 Contractor Tax Deduction Checklist

Use this checklist to prepare for tax time:

Vehicle & Travel:

• Travel logbook or km records

• Receipts for fuel, servicing, and insurance (proportional to work use)

Tools & Equipment:

• Receipts for all purchases

• Depreciation schedule (if applicable)

Home Office:

• Internet and electricity bills

• Work-use diary

• Equipment depreciation records

Business Costs:

• Software subscriptions

• Bank statements for fees

• Insurance invoices

• Marketing or website expenses

Education & Professional Development:

• Course receipts

• Conference or webinar proof

• Accommodation/travel (if applicable)

General:

• ABN registration fees

• Accountant or tax agent fees

• Work-related uniform or safety clothing

🗂 Record-Keeping Tips for Contractors

• Keep all receipts for 5 years.

• Use software like Xero, QuickBooks, or Excel for easier tracking.

• Store receipts digitally (photos are acceptable).

• Categorise expenses monthly to avoid end-of-year stress.

Let TaxationHouse.com.au Help You Claim More

At TaxationHouse, we specialise in helping contractors, sole traders, and freelancers navigate their unique tax obligations. Whether you’re a tradie, creative, or remote worker — we’ll help you get the most out of your tax return.

👉 Book a consultation today and claim what you’re entitled to — stress-free.

Book appoinment