An ABN holder deducts genuine business expenses from income before tax is calculated, the compensation for having nothing withheld. Tools, protective gear, vehicle running costs, the work share of phone and internet, licences and agent fees all qualify.
What is the actual test for a deduction?
That the expense was incurred in earning your ABN income, and that you can show it. Most claims fall down on the second part.
Claims are disallowed for no record of the cost, no record of the work connection, or no defensible basis for the split between work and private use. An expense that genuinely happened but cannot be evidenced is not a deduction.
What can a working holiday maker on an ABN claim?
Which categories matter depends on the kind of contracting. A delivery rider and a farm contractor with their own equipment share little beyond the phone.
- Tools and equipment required for the work, such as a chainsaw for tree work or a courier's delivery bag
- Protective clothing and safety gear: high visibility vests, steel capped boots, gloves, hard hats
- Vehicle running costs for work travel: fuel, registration, insurance and maintenance, apportioned to work kilometres
- The work related percentage of mobile phone and internet costs
- Licences and tickets the work actually requires, such as a White Card or an RSA
- Bank and merchant fees on a business account, including platform commissions
- Fees for managing your tax affairs
Anything used for both work and private purposes is claimable only at the work percentage. A phone used 60% for work is 60% deductible, and that 60% cannot be a guess.
What records does the ATO actually require?
A receipt or tax invoice showing the supplier, the date, the amount and what was bought, for every claim. Apportioned items also need a basis for the percentage: a logbook for vehicles, a representative period of usage for phone and internet.
Two thresholds change what is needed. An item costing $300 or less is deductible in full in the year you buy it rather than depreciated. From 1 July 2026 a flat $1,000 work related deduction is available with no receipts at all, which for lighter contracting can beat itemising. Our guide to the $1,000 instant deduction sets out when to take the flat figure and when to itemise.
What cannot be claimed, however much it feels like it should be?
Several costs look deductible and are not, and they account for most disallowed claims here. The common thread is a private cost that occurs around work rather than a cost of doing the work.
- Travel between home and a regular work location, private travel however early the start
- Clothing that is ordinary rather than protective or a branded uniform
- Food and drink during the working day, private for contractors as it is for employees
- Accommodation at your own base, including where you work from it
- Costs incurred before the ABN was registered and the activity started
The vehicle rules carry the most money and the most misunderstanding. Our guide to vehicle logbooks on an ABN covers what a logbook has to contain to be accepted.
Why do deductions matter more on an ABN than on wages?
Because nothing was withheld. On wages the employer has already taken tax out, so a deduction increases a refund. On ABN income the full invoice reached you and the tax is still owed, so a deduction reduces an amount payable.
That changes the stakes, not the arithmetic. A wage earner who misses deductions gets a smaller refund. A contractor gets a larger bill, and if nothing was set aside during the year it arrives without funds behind it.
Why do so many claims never get made?
Because the records were never kept, not because the expenses were not incurred. Farm contracting with your own gear, or delivery work with your own vehicle, incurs deductible costs continuously and keeps almost none of the paperwork.
There is also a knowledge gap between the two regimes. People who worked as employees before going onto an ABN carry over the employee rules, and the vehicle and equipment treatment is not the same.
Which of these apply to your year?
Which deductions are available, and whether they survive scrutiny, depends on how the work was structured and what you kept.
- What kind of contracting it was, since the categories differ between delivery, farm work and trades.
- Whether you kept receipts as you went, which is what makes a claim defensible.
- Whether a logbook exists for any vehicle claim, the most commonly disallowed item.
- Whether individual items cost more or less than $300, which decides immediate deduction or depreciation.
- Whether the flat $1,000 deduction from 1 July 2026 exceeds what you could itemise.
- Whether you had wages in the same year, since that withholding often absorbs the ABN tax.
- Whether you registered for GST, which decides whether amounts are claimed inclusive or exclusive of it.
The combined position is worked out in the working holiday tax return. You can estimate your tax refund once you know what each side of the year came to.