A Tradie's Guide to Calculating and Claiming Depreciation on Your Tools
27 September 2026 · 6 min read · By Heaney Accounting
When you buy expensive equipment like excavators or heavy-duty saws, you cannot claim the entire cost as an expense in one year. Instead, you need to spread the cost over the item's useful life through depreciation.
Why Depreciation Matters for Your Tax
Depreciation represents the wear and tear of your tools over time. By accounting for this, you lower your taxable profit while keeping an accurate record of your business assets.
- Date of purchase
- Total purchase price including GST
- Serial numbers for inventory
- Expected life of the equipment
- Determine the cost base of your asset.
- Choose between the prime cost or diminishing value method.
- Calculate the annual deduction based on the ATO effective life tables.
- Record the deduction in your annual financial statements.
Pro Tip: Always keep a copy of your purchase invoice for at least five years in case the ATO asks for proof of your claim.
Try the related tools
Found this useful?
Get each new guide by email as it's published. No spam, no lock-in.