Mastering Equipment Depreciation for Tradies

For many tradies, buying big gear like excavators, work vans, or high-end power tools is a major capital expense. Understanding depreciation is key to managing your cash flow and ensuring you get the right tax benefit over the life of your equipment.

What is Depreciation?

Depreciation is simply the way the tax office lets you account for the fact that your machinery loses value over time as it gets worn down on site. Instead of claiming the full cost the day you buy it, you spread that expense out over several years.

1. Keep a detailed asset register of every tool purchased over $300
2. Record the purchase date and the invoice amount clearly
3. Discuss the effective life of the asset with your accountant to see how many years you should depreciate it over