Instant deduction for tools and equipment under $300 as a working holiday maker

The $300 rule is one of the most commonly missed deductions in working holiday maker tax returns, partly because workers do not realise the items qualify and partly because they have not kept the receipts.

What does the $300 rule actually say?

The rule applies to assets used for income-producing purposes. Specifically:

• The asset must cost $300 or less (each, not in total)
• The asset must be used predominantly to earn assessable income
• The asset must not be part of a set of assets that together cost more than $300

If all three are met, the full cost of the asset can be deducted in the year of purchase. There is no need to depreciate the asset over multiple years.

What kinds of items qualify?

Common items that qualify for working holiday makers include:

• Hospitality: kitchen knives, chef's whites, slip-resistant work shoes, aprons
• Farm work: picking buckets, secateurs, pruning shears, gardening gloves, work boots, high-vis shirts, sun hats
• Construction: steel-cap boots, hard hats, tool belts, hand tools (hammers, drills under $300), measuring tapes, work gloves
• Cleaning: vacuum bags, cleaning equipment, protective gloves
• Rideshare and delivery: delivery bags, phone holders, dash cams, bike accessories
• Office work: stationery, computer accessories under $300

The list is not exhaustive. Almost any work-related item under $300 that you bought during the financial year and used to do your job can be claimed.

What counts as "predominantly for work"?

If an item is used both for work and personal purposes, the deduction is limited to the work-related percentage. For example:

• A pair of steel-cap boots used only for work: 100% deductible
• A pair of work boots also worn casually: only the work-related percentage deductible
• A backpack used to carry farm picking equipment: deductible if predominantly for that purpose
• A phone holder for rideshare driving: deductible if used predominantly for that purpose

For items that are used solely for work and would be impractical to use otherwise (high-vis, hard hats, chef's whites), 100% is straightforward.

What about sets of assets?

The $300 rule does not apply if the asset is part of a set that together cost more than $300. The ATO uses a "set" definition that includes:

• Multiple items bought together for a single purpose (a knife set for a chef, for example)
• Multiple items bought separately but functioning as a set

If a chef buys a set of six kitchen knives for $450 in one purchase, no individual knife is treated as costing under $300, and the set must be depreciated over its effective life.

If the same chef buys one knife for $80, then a different knife for $90, then another for $100, each one is treated separately and each is fully deductible under the $300 rule.

What records do you need?

For every deduction, the ATO requires evidence of:

• The cost (a receipt or tax invoice)
• The date of purchase
• The supplier
• A description of the item
• Evidence of work use (or the work-use percentage if mixed use)

Without records, the deduction cannot be claimed, regardless of how genuinely work-related the item was. The receipts can be paper or digital. The ATO accepts photos of receipts kept in a phone or cloud storage.

What if you bought items in cash without keeping receipts?

If you have lost or never had a receipt, the ATO can sometimes accept alternative evidence:

• A bank or credit card statement showing the purchase
• A photograph of the item still in use
• A written record from the supplier confirming the purchase

The strength of alternative evidence varies. The most defensible deduction is one backed by an actual receipt.

What about items that cost more than $300?

Items that cost more than $300 are not lost as deductions, but they must be depreciated over their effective life. For example:

• A $400 chainsaw used for tree work cannot be deducted in full in year one
• It can be deducted over the effective life set by the ATO (usually 3 to 5 years for hand tools and small power equipment)

There is also a new $1,000 instant deduction rule that applies from 1 July 2026 onwards, which raises the threshold for items that can be deducted immediately. See our article on the $1,000 instant deduction rule for the detail.

How does this interact with the broader deduction rules?

The $300 rule applies to tools and equipment. Working holiday makers can also claim:

• Protective clothing and footwear under separate rules
• Vehicle expenses (see our article on vehicle expenses and logbooks)
• Phone and internet use for work, on a percentage basis
• Self-education if directly related to your current work
• Union dues, registrations, and licences related to your work

See our article on tax deductions for working holiday makers for the broader framework.

How does our service handle tool and equipment deductions?

When we lodge a tax return through our service, our team:

• Reviews every work-related purchase you have made during the year
• Identifies which items qualify under the $300 rule
• Applies the correct deduction (full immediate deduction or depreciation)
• Cross-checks the deduction against industry norms for your work type
• Substantiates each claim with the receipts and records you provide

Working holiday makers in trade-heavy and farm work often have several thousand dollars of legitimate tool and equipment deductions sitting in receipts that never make it onto the return. Get in touch with our team before the financial year ends to make sure your records are in place.