Top Tax Deductions for Arborists: Equipment, Vehicles, and More

Equipment and Tool Deductions

Arborists rely heavily on specialised equipment and understanding how to claim these expenses can result in significant tax savings. The treatment of equipment deductions depends primarily on the cost of individual items.

Immediate Deductions for Smaller Tools

Tools and equipment costing $300 or less can be claimed as an immediate deduction in the year you purchase them, provided they’re used mainly for business purposes. This applies to items like hand saws, pruning shears, rope, carabiners, and other smaller climbing equipment. For example, if you buy a new chainsaw for $250, you can claim the full amount as a deduction in your current tax return.

However, if you purchase a set of tools together that costs more than $300, you’ll need to treat the entire set as a depreciating asset and claim the decline in value over its effective life rather than claiming an immediate deduction.

Decline in Value for Major Equipment

Expensive equipment like stump grinders, woodchippers, or comprehensive climbing gear sets costing more than $300 must be treated as depreciating assets. This means you claim a portion of the cost each year rather than the full amount upfront, based on the asset’s effective life.

The ATO provides guidelines on the effective life of different types of equipment through their depreciation and capital allowances framework. For specialised arborist equipment not covered in their standard determinations, you may need to make a reasonable estimate based on how long you expect to use the item in your business.

Instant Asset Write-Off for Small Businesses

If your arborist business has an annual turnover of less than $10 million, you may be eligible for the instant asset write-off, which allows you to immediately deduct the full cost of eligible assets costing less than $20,000. This temporary measure has been extended and can include items like stump grinders, woodchippers, specialised climbing equipment sets, and trailer-mounted equipment.

The $20,000 limit applies to each individual asset, so you can write off multiple pieces of equipment as long as each one costs less than the threshold. This provides significant cash flow benefits for growing arborist businesses investing in new equipment.

Vehicle Expenses and Deductions

Work vehicles represent one of the largest expense categories for most arborist businesses. Understanding the different claiming methods can help you maximise your deductions while staying compliant with ATO requirements.

Choosing Your Vehicle Deduction Method

The ATO provides two main methods for claiming vehicle expenses, and the best choice depends on your business structure and usage patterns. The cents per kilometre method allows you to claim a fixed rate per kilometre for business-related travel, while the logbook method allows you to claim the business-use percentage of your actual vehicle expenses.

For the logbook method, you’ll need to keep detailed records of all vehicle running costs, including fuel, registration, insurance, repairs, and maintenance. You’ll also need to maintain a logbook for at least 12 weeks that represents your typical usage pattern, recording business kilometres and trip purposes.

Vehicle Depreciation and Limits

For passenger vehicles, there’s a depreciation limit that caps the amount you can claim. However, many arborist vehicles fall outside this limit. Utes designed to carry loads of more than one tonne, commercial vehicles, and trucks are not subject to the car limit, meaning you can claim depreciation on their full purchase price.

When using the logbook method, you can claim the business portion of all vehicle running costs, including fuel, registration, insurance, repairs, tyres, and even interest charged on money borrowed to purchase the vehicle.

Safety Equipment and Personal Protective Equipment

Working with trees involves significant safety risks, making personal protective equipment essential for arborists. The ATO allows deductions for protective clothing and equipment that protects you from real and likely risks in your work environment.

Claimable safety equipment includes helmets, chainsaw protective clothing, cut-resistant gloves, safety boots, eye and hearing protection, high-visibility clothing, and fall protection equipment. Given that arborists work outdoors for extended periods, you can also claim deductions for sunscreen, sun hats, and sunglasses used for work protection.

First aid equipment and supplies used in your arborist business are also deductible, including first aid kits, emergency communication devices, and medical supplies kept on work vehicles or job sites.

Home Office Expenses

Many arborist businesses operate from home, handling quoting, scheduling, and administrative tasks in a home office. For the 2024-25 financial year, you can claim home office expenses using either the revised fixed rate method at 70 cents per hour for each hour worked from home, or the actual cost method.

The fixed rate method covers electricity, gas, home internet, mobile phone usage, and stationery costs. You can also claim separate deductions for the decline in value of home office equipment like computers, printers, and office furniture.

Home Office Equipment

Office equipment costing $300 or less can be claimed immediately if used mainly for business purposes. More expensive items must be depreciated over their effective life. When equipment serves both work and private use, you can only claim the work-related portion.

Professional Development and Business Expenses

Courses, training, and professional development directly related to your arborist business are deductible expenses. This includes arboriculture qualifications, chainsaw operation courses, first aid training, and business skills development.

Professional membership fees for organisations like Arboriculture Australia, trade licenses, and required registrations are all deductible business expenses. You can also claim union fees if you’re a member of a relevant trade union.

Investment Income and Interest Deductions

If you’ve borrowed money to purchase equipment or vehicles for your business, the interest charged on these loans is generally deductible. This includes interest on money borrowed to buy tools, equipment, or work vehicles used in your arborist business.

When claiming interest deductions, you must ensure the borrowed money was used for income-producing purposes. If a loan serves both business and private purposes, you can only claim the business portion of the interest expense.