ATO Changes for Tradies in 2025–26: What You Need to Know

Every 1 July, the ATO rolls out changes that affect how much tax you pay, how much super you must contribute, and what you can claim. Here's what actually changed for the 2025–26 financial year and what it means for your back pocket.

Individual Tax Rates 2025–26

The Stage 3 tax cuts that came into effect July 2024 continue to apply in 2025–26. The key rates for most tradies:

Super Guarantee Rate — Now 11.5%

The Superannuation Guarantee (SG) rate increased to 11.5% from 1 July 2024 and remains at 11.5% for 2025–26. It increases to 12% from 1 July 2025.

What this means for you:

• If you employ staff: You must pay 11.5% of their ordinary time earnings into super by the quarterly due dates. Missing this triggers the Superannuation Guarantee Charge — which is not deductible and includes penalties.
• If you're self-employed: There's no legal requirement to pay yourself super, but the concessional cap (below) gives you a tax-effective reason to do so.

Instant Asset Write-Off — Know the Current Rules

The instant asset write-off has had a complicated few years. For 2025–26, the current rules allow eligible small businesses (turnover under $10 million) to immediately deduct eligible assets costing less than $20,000.

Important: Assets costing $20,000 or more must be depreciated through the small business depreciation pool. This is different from previous years when the threshold was $150,000+.

Check the ATO website for any updates — the threshold has changed multiple times and may change again with the federal budget.

Super Contribution Caps 2025–26

GST and BAS — No Changes for 2025–26

Good news: GST remains at 10% and the registration threshold remains at $75,000 annual turnover. BAS lodgement deadlines are unchanged.

The one thing to watch: the ATO has increased its data matching activity, particularly around contractors and gig economy workers. If you're earning income without an ABN, expect scrutiny.

Your 2025–26 Action Checklist

• ☐ Confirm your super rate — if you have employees, check you're paying 11.5%
• ☐ Check asset write-off threshold — confirm current rules before purchasing equipment
• ☐ Review your super contributions — are you making concessional contributions up to the $30,000 cap?
• ☐ Logbook — if yours is more than 5 years old, start a new one
• ☐ BAS lodgement dates — Q1 (Jul–Sep) due 28 October; Q2 (Oct–Dec) due 28 February
• ☐ PAYG instalments — if the ATO has set these up for you, make sure you're paying them

## How the $20K Instant Asset Write-Off Works for Your Tools & Equipment in 2025–26 The $20,000 instant asset write-off threshold remains locked in until 30 June 2026, and for most tradies, this is one of the best tax breaks available. Here's the straight deal: if you buy tools, equipment, machinery, or vehicles under $20,000 each, you can claim the full cost as a deduction in the year you buy it—no depreciation required. **What qualifies:** - Power tools and hand tools (impact drivers, nail guns, saws, etc.) - Ladders, scaffolding, and access equipment - Vehicle modifications specific to your trade - Compressors, generators, welding equipment - Computer equipment and software (if under $20k) - Work vehicles purchased as a sole trader or partnership **What doesn't qualify:** - Items for personal use (even if you use them for work sometimes) - Land or buildings - Items you already owned before the 2025–26 financial year - Repairs or maintenance costs The key is **tangible depreciable assets** — things that wear out and lose value. If you're a sole trader or run a partnership, you can claim this immediately. If you operate through a company, the same rules apply to your business entity. **Real example:** You buy a new $18,500 cordless tool kit in September 2025. You can claim the full $18,500 in your 2025–26 tax return. No need to spread it across five years. That's a real cash flow benefit when you're running tight margins. However, remember that this threshold is **temporary**. The government has signalled it may change, so if you're planning a major equipment purchase, check the ATO website closer to June 2026 to confirm whether it's been extended. One important caveat: the asset must be for a business purpose. If you're mixing personal and business use (like a ute that's partly for personal drives), you can only claim the business-use percentage. Keep records of your usage to back this up. --- ## Vehicle Deductions and the 88c/km Rate: Get the Numbers Right The cents-per-kilometre deduction rate holds steady at **88 cents per kilometre** for 2025–26. This is one area where the ATO hasn't changed the rate, and it's worth understanding because it directly affects your tax bill. You have two options: claim the **fixed 88c/km rate** (simpler) or claim **actual expenses** (potentially more rewarding if you're meticulous with records). Most tradies should choose the 88c/km method—it's hassle-free and the ATO accepts it without question. **How it works in practice:** Let's say you drive 45,000 km for work in 2025–26 (site visits, supply runs, client meetings). Your claim is: 45,000 km × $0.88 = **$39,600 deduction** That's a significant reduction in your taxable income. At the marginal tax rate of 37% (plus Medicare levy), you're looking at roughly $15,000+ back in your pocket. **If you choose the actual expenses method instead:** You'd need to track every receipt—fuel, servicing, insurance, registration, depreciation, tyres, repairs. It's labour-intensive, but tradies with high fuel costs or expensive fleet maintenance sometimes come out ahead. However, you must keep a logbook for at least 12 weeks to establish your work-use percentage, and the ATO requires meticulous documentation. **Best practice for 2025–26:** 1. **Sole traders and partnerships:** Stick with 88c/km unless you're running multiple heavy vehicles with substantial maintenance costs. 2. **Keep a logbook:** Even if you don't need it now, maintain a record for 12 weeks every few years to verify your work-use percentage. The ATO spot-checks this. 3. **Don't double-claim:** If you claim fuel as part of actual expenses, you can't also claim the 88c/km rate for the same vehicle. 4. **Personal-use exclusion:** If your work vehicle is also your daily driver, only claim the business-use percentage. One more thing: if you're self-employed and using accounting software like Xero, you can track vehicle expenses and mileage automatically, which saves hours at tax time. --- ## ATO 2025–26 Changes: Quick Comparison for Tradies | **Item** | **2024–25** | **2025–26** | **What It Means** | |---|---|---|---| | **Vehicle deduction rate** | 88c/km | 88c/km | No change—use the same rate you did last year | | **Instant asset write-off threshold** | $20,000 | $20,000 (until 30 June 2026) | Still available, but expires mid-2026—plan purchases accordingly | | **Super guarantee rate** | 11.5% | 11.5% (increasing to 12% from 1 July 2025) | Effective 1 July 2025, employers must contribute 12%, not 11.5% | | **Tax-free threshold** | $18,200 | $18,200 | Unchanged—same as last year | | **Low and Middle Income Tax Offset (LMITO)** | Staged out | Removed | No longer available; incorporated into permanent tax cuts | | **Work-related expense claims** | Case-by-case | Tightened | ATO more strict on what qualifies (see below) | --- ## Frequently Asked Questions: ATO Changes and Your Tax --- ## Bottom Line for Tradies in 2025–26 The headline changes are minimal: the 88c/km vehicle rate stays put, the $20k instant write-off remains (for now), and the super guarantee bumped to 12% from 1 July 2025. What matters most is **execution**. Use the instant write-off before it expires, keep proper records for vehicle claims, and categorise your expenses correctly from day one. The ATO isn't out to get you, but they're watching more closely for dodgy claims, so stick to the rules and you'll be fine. Get your invoicing, mileage, and equipment records sorted now. Your future self and your accountant will thank you.