Mechanics and auto technicians often spend thousands of dollars of their own money on tools, and many tool purchases are claimed incorrectly. A $750 socket set is not claimed in one hit, a tool allowance is taxable income, and the drive to the workshop is usually private even with a toolbox in the boot.
This guide covers what employee mechanics can claim on the 2025-26 tax return, which is due by 31 October 2026 if you lodge yourself, and what changes for 2026-27. Every rate and rule was checked on 7 October 2026 against the ATO’s tradesperson occupation guide, its tools and equipment page and the 2026 car expense instructions.
It is written for employed motor mechanics, auto electricians, diesel mechanics and apprentices. If you run your own workshop with an ABN, the business rules in our sole trader deductions guide apply instead.
Key takeaways
- Tools $300 or less (not part of a set over $300) are claimed in full in the year you buy them.
- Tools and sets over $300 are depreciated over their effective life. Employees can’t use the instant asset write-off.
- Protective clothing such as steel-capped boots and overalls is deductible; jeans and T-shirts are not.
- Tool allowances are taxable income. You claim what you actually spend.
- Car: home to workshop is private unless the bulky tools test is met. Rates are 88c/km (2025-26) and 91c/km (2026-27).
- From 2026-27, all clothing and laundry claims need written evidence.
Mechanic deductions at a glance
| Expense | Claimable? | How |
|---|---|---|
| Hand tool or scan tool costing $300 or less | Yes | Full cost in the year of purchase, work portion |
| Tool set or scan tool costing more than $300 | Yes | Decline in value over effective life |
| Tool repairs and tool insurance | Yes | Work-related portion |
| Steel-capped boots, overalls, gloves, safety glasses | Yes | Protective items you paid for |
| Jeans, T-shirts, drill shirts | No | Conventional clothing |
| Home to regular workshop | No | Unless the bulky tools test is met |
| Licence renewals needed for your job | Yes | Initial licence to get the job is not deductible |
| Union fees | Yes | Shown on income statement or receipt |
| Tool allowance | Income | Declare it; claim actual tool costs |
Source: ATO tradesperson guide, ATO tools and equipment, ATO D1 car expenses 2026, checked 7 October 2026.
How do mechanics claim tools and equipment?
The ATO’s tools and equipment page has two paths, depending on cost.
Tools costing $300 or less
You can claim the full cost in the year you buy it if it cost $300 or less, you use it more than 50% for work, it is not part of a set that cost more than $300, and it is not one of a group of substantially identical items costing more than $300 in total. See the ATO’s $300 assets page.
This is where sets catch mechanics out. The ATO’s example is 16 spanners bought one at a time for $22 each, a total of $352. Because they form a set costing more than $300, none can be claimed outright. They must be depreciated.
Tools costing more than $300
For a diagnostic scan tool, impact wrench kit or large socket set, you claim the decline in value over its effective life, apportioned for the days you owned it in the first year and for any private use. The ATO’s tradesperson guide works through an electric hand tool costing $1,500 held for 300 days with a 5-year effective life: $1,500 x (300 / 365) x 20% = $246 for the first year.
You can also claim the work-related part of repairs, insurance and interest on money borrowed to buy work tools. You cannot claim tools your employer supplies. The instant asset write-off is a business concession, so employee mechanics cannot use it.
Can I claim protective clothing and boots?
Yes, if the clothing has protective features. The tradesperson guide says conventional clothing, such as jeans, drill shirts and T-shirts, is not deductible even if your employer requires it and you wear it only for work.
| Clothing | Claimable? |
|---|---|
| Steel-capped boots | Yes |
| Overalls that protect your other clothes | Yes |
| Gloves, safety glasses, masks | Yes |
| Compulsory uniform with employer branding | Yes |
| Jeans, T-shirts, drill shirts, plain work pants | No |
Laundry for claimable clothing is $1 per load of work clothes only, or 50c per mixed load. Dry-cleaning is claimed at actual cost.
2026-27 change to clothing records
For 2025-26 and earlier, a total laundry claim of $150 or less does not need written evidence if you can show how you worked it out. From the 2026-27 income year, the ATO’s clothing and laundry page requires written evidence for all clothing, laundry, repair and dry-cleaning claims. Keep receipts for boots and overalls and a simple laundry diary from 1 July 2026.
When can mechanics claim car expenses?
Travel from home to your regular workshop is private, however early you start. The ATO tradesperson guide allows car expenses in three main situations:
- Bulky tools: the tools are essential to your job, bulky enough to need a vehicle, and there is no secure storage at work. If the workshop has a lockable tool storage area and you choose to take tools home, you cannot claim.
- Shifting workplaces: mobile mechanics with no fixed workplace who travel from job to job before returning home.
- Between sites: driving directly between two jobs, or between two of your employer’s sites, on the same day.
The ATO D1 car instructions set the cents per km rate at 88c for 2025-26 and 91c for 2026-27, capped at 5,000 work km. The logbook method suits higher work use. If you drive a ute or van designed to carry one tonne or more, neither method applies and you claim actual work-related costs. Parking and tolls on work trips are claimable; on your commute they are not.
Worked example: Jake, employed motor mechanic, 2025-26
Jake works at a dealership workshop with lockable tool storage. His employer pays a tool allowance of $1,040, shown on his income statement, which Jake includes as income.
Diagnostic scan tool: bought for $1,200 on 1 October 2025, used only for work. Using a 5-year effective life for the example, prime cost: $1,200 x (273 / 365) x 20% = $179.51.
Steel-capped boots: $180, under $300 = $180.00.
Two pairs of overalls: 2 x $65 = $130.00.
Laundry: 2 work-only loads a week x 46 weeks = 92 loads x $1 = $92.00.
Tool insurance: $160.00.
Total deductions: $179.51 + $180 + $130 + $92 + $160 = $741.51. At the 30% rate plus 2% Medicare levy, his tax falls by about $237 ($741.51 x 32% = $237.28).
Jake cannot claim his drive to work, because the workshop has secure tool storage, and his scan tool cannot be written off in one year.
What else can mechanics claim?
- Licence renewals: the guide says you can claim renewing a licence or certificate you need for your current job, but not the initial licence to get the job, or your ordinary driver’s licence.
- Self-education: courses that maintain or improve skills for your current role, such as manufacturer training for the vehicles you service. Study to move into a new career is not deductible.
- Union fees and professional association fees.
- Phone: the work-use percentage of your own mobile. Claims over $50 need an itemised bill showing work calls.
- Sun protection if you work outside in the sun for long periods, such as on a roadside service run.
- Overtime meals only if you receive an overtime meal allowance under an award or agreement. See our meal allowances guide.
What can’t mechanics claim?
- Jeans, T-shirts and other everyday clothing
- Your ordinary driver’s licence
- Food and drinks during normal working hours
- Prescription glasses
- Fines, including parking fines
- Music streaming or podcasts you listen to at work
- Tools your employer supplies or reimburses
Industry allowances, such as a rain work allowance, are taxable income but don’t give you a deduction, because they compensate you for conditions rather than expenses. See the ATO’s income and allowances page.
Apprentices should also check the ATO’s apprentices and trainees guide. The tradesperson guide says new apprentices can’t claim tools that were funded by a government program.
Rule of thumb: if a tool costs more than $300 on its own or as part of a set, plan to depreciate it. If it would be worn by anyone in everyday life, it is not protective clothing.
What records do mechanics need?
Keep tool receipts showing the supplier, date, amount and description, a note of work-use percentage for anything used privately, a car logbook or trip diary if you claim travel, and your income statement. The ATO’s records page says keep them for 5 years from lodgment. The myDeductions tool in the ATO app can store photos of receipts. Our tax return checklist lists what to bring.
Common mistakes mechanics make
- Claiming a set in full: a set or group of identical items over $300 must be depreciated.
- Using the instant asset write-off as an employee: it is for businesses only.
- Not declaring a tool allowance: it is income, even though you then claim actual tool costs.
- Claiming the commute: carrying tools does not make home to workshop travel deductible if there is secure storage at work.
- Using old car rates: 85c or 78c per km is out of date. Use 88c for 2025-26 and 91c for 2026-27.
FAQ about mechanic tax deductions
Can a mechanic claim tools on tax?
Yes, if you bought the tools yourself, use them for work and your employer did not supply or reimburse them. A tool costing $300 or less, that is not part of a set costing more than $300, is claimed in full in the year you buy it. Dearer tools and sets over $300 are claimed as decline in value over their effective life.
Can I claim a socket set that cost more than $300?
Not in one go. The ATO looks at the cost of the set, not each piece. If the set, or a group of substantially identical items, cost more than $300 in total, you claim its decline in value over its effective life. The ATO’s own example is 16 spanners bought for $352, which must be depreciated.
Can mechanics claim the drive to the workshop?
Usually not. Travel between home and your regular workshop is private, even if you carry tools. You can claim only if the tools are essential, bulky and there is no secure storage at work, or if you are a mobile mechanic with no fixed workplace who travels between job sites. Rates are 88c per km for 2025-26 and 91c for 2026-27.
Is my tool allowance taxable?
Yes. A tool allowance shown on your income statement must be included as income. You then claim a deduction for the tools you actually bought, repaired or insured for work, which is often a different amount from the allowance. If your employer reimburses a specific tool instead, you do not include the reimbursement and cannot claim that tool.
Can I claim steel-capped boots and overalls?
Yes. Steel-capped boots and overalls that protect your other clothes are protective clothing, so you can claim them and their laundry at $1 per work-only load. Jeans, T-shirts and drill shirts without protective features are conventional clothing and not deductible. From 2026-27 you need written evidence for all clothing and laundry claims.
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Nanak Accountants works with tradies and mechanics across Australia, as employees and as business owners. We can work out your tool depreciation, check your car claim and lodge your return. Call 1300 626 258 or visit nanakaccountants.com.au.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO tradesperson occupation guide and the ATO tools and equipment, car expenses, clothing and record keeping pages on 7 October 2026. Rates and thresholds change, so confirm the current position before acting.
