7 Must-Know Tax Tips for Mechanics Running Their Own Shop

Most mechanics work hard, long hours. Whether you're running your own shop or taking jobs as a contractor, you’re hands-on all day. But when tax time rolls around, many mechanics miss out on hundreds or even thousands in potential deductions.

A lot of this comes down to not knowing what you can claim, or not having the time to stay on top of receipts, logs, and updates from the Australian Taxation Office.

As experienced accountants for mechanics, we’ve seen it firsthand, especially in Brisbane and across regional shops.

The following tax tips for mechanics are clear, legal, and practical. They’ve helped many self-employed mechanics, mobile techs, and shop owners reduce taxable income and avoid tax headaches.

Let’s break it down.

1. Keep Track of All Work-Related Expenses

What counts as a business expense for mechanics

Anything you buy or pay for that directly helps you do your job can be a business expense. This includes:

• Tools and equipment
  
  
• Protective clothing and uniforms
  
  
• Business-related vehicle expenses
  
  
• Licensing and insurance
  
  
• Software and training
  
  

Commonly missed write-offs

Many mechanics forget to claim everyday purchases like:

• Cleaning rags and hand cleaner
  
  
• Safety gear (gloves, goggles, steel caps)
  
  
• Sun protection (hats, sunblock, sun-safe glasses)
  
  
• Self-education costs (automotive repair courses, refrigeration testing equipment)
  
  
• Tool storage (tool chests, wall hangers)
  
  

Best ways to track expenses daily

Set up a system.

• Use a simple app like the Gotax Deduction Grabber App
  
  
• Take photos of all receipts (paper fades fast)
  
  
• Use a notebook or diary to log daily purchases
  
  
• Keep expenses separate from personal spending

2. Deduct Tools and Equipment Correctly

How tool deductions work

Tools under $300 can usually be claimed in full. Over $300? You may need to depreciate them over a few years using ATO guidelines. 

What qualifies and what doesn’t

You can claim:

• Tools used for business (sockets, jacks, diagnostic devices)
  
  
• Safety equipment (ear protection, gloves, steel caps)
  
  
• Second-hand tools, if you have a receipt
  
  

You can't claim:

• Tools used only for personal use
  
  
• Home tools not used for paid work
  
  

Why saving receipts matters

Without receipts, you can’t claim. Keep paper or digital records of every purchase. The ATO may ask for proof, and bank statements alone aren’t enough.

Need help categorising your tools and depreciation? Skyways Accountants are experienced accountants for mechanics in Brisbane, making sure your tools and equipment claims are done right. Call us today at 0400 348 482.

3. Claim Mileage and Vehicle Costs

Standard mileage vs. actual expenses

Mechanics can claim car costs using:

• The cents per kilometre method (up to 5,000 business kms)
  
  
• The logbook method, where you record business use % over 12 weeks and claim actual vehicle costs

What counts as business driving

• Travel to customers (for mobile techs)
  
  
• Trips to suppliers for parts or tools
  
  
• Attending training or trade shows
  
  
• Business errands, like banking

Easy apps to log mileage

Use tools like:

• Gotax Mileage Tracker
  
  
• ATO myDeductions app
  
  
• A paper logbook with odometer readings, dates, and reasons

4. Know What You Can Write Off in Your Garage or Shop

Home office vs. dedicated shop space

If you work from a home garage or a dedicated shed, you may be able to claim home office expenses.

Use the business-use percentage to figure out how much of the below can be deducted:

• Electricity
  
  
• Internet
  
  
• Rent
  
  
• Water
  
  
• Repairs
  
  

Utility bills, rent, repairs

Keep copies of all invoices. If your shop is rented, you can claim rent. If you own the space, you may be able to claim maintenance or repairs (but not the building itself).

Red flags to avoid

• Don’t overclaim business use
  
  
• Don’t claim the entire rent or electricity bill unless 100% used for work
  
  
• Keep home and work costs separate
  
  

5. Don’t Forget About Insurance and Licensing Fees

What you can claim

• Public liability insurance
  
  
• Income protection insurance (if not through super)
  
  
• Trade licences and renewal fees
  
  
• Machinery Operation Licence
  
  
• Union fees

Why these are deductible

They’re costs related to earning your business income. But they're often overlooked because they get paid once or twice a year and aren’t top of mind at tax time.

How to stay organised

• Store all insurance and licensing documents in one folder
  
  
• Set calendar reminders for renewals
  
  
• Add recurring costs to your expense tracker

6. Understand Self-Employment Taxes

What you owe beyond income tax

As a self-employed mechanic, you’re responsible for:

• Paying your own super (optional but smart)
  
  
• Lodging BAS if registered for GST
  
  
• Paying quarterly PAYG tax instalments

The ATO estimates your tax and sends PAYG installment summaries. Pay each quarter to avoid surprises.

Track:

• Business income
  
  
• Business expenses
  
  
• Any interest earned
  
  

Keep a separate tax savings account. Deposit 20–30% of each job’s income. Avoid the stress that comes with tax time.

7. Choose Accountants Who Specialise in Mechanics

Why industry-specific knowledge matters

Not all accountants understand the day-to-day of running an auto repair business. Mechanics face unique tax issues, like tool depreciation and vehicle expenses, that need specific attention. Working with specialists like Skyways Accountants means tailored advice that aligns with ATO rules and avoids audit risks.

What the right accountant can do for you

• Correctly claim tool and equipment deductions
  
  
• Track depreciation for expensive purchases
  
  
• Handle your vehicle logbook method or cents-per-kilometre
  
  
• Ensure you don’t overclaim or miss key expenses
  
  
• Help you stay on top of PAYG summaries and BAS
  
  

Why do mechanics rely on Skyways Accountants? We work with self-employed mechanics, shop owners, and mobile techs across Brisbane and beyond, keeping tax simple, legal, and tailored to your trade. Call us at 0400 348 482 to book your tax review today.

FAQs

Are repairs 100% tax deductible?

Repairs for your work vehicle or business equipment are usually 100% tax deductible, if used for business, not personal. Keep all invoices for your tax return.

What is the most overlooked tax break?

Commonly missed tax deductions for mechanics include protective gear, tool depreciation, work-related phone use, and travel between job sites. Track your business kilometres to claim them.

How to claim your work-related daily travel expenses?

Use the logbook or cents-per-kilometre method to track business vehicle use. Only work-related trips count, like driving to suppliers or job sites. Record odometer readings and trip purposes for your tax professional.

What are the best things for mechanics to claim at tax time?

Mechanics can claim tools, safety gear, training, travel, union fees, tool storage, and must include their PAYG payment summary. Good records help maximise your tax return without overclaiming.

Conclusion

Staying on top of your tax obligations doesn’t need to be overwhelming. If you’re a mechanic running your own shop, working mobile, or contracting by the hour, these tax tips can help you claim what you’re entitled to and avoid common mistakes. 

Whether you're in Brisbane, Ipswich, or anywhere in Queensland, Skyways Accountants are experienced accountants for mechanics, handling tools, vehicle expenses, PAYG summaries, and BAS, without the noise of financial product advice. For tax help that speaks your language, call us today on 0400 348 482 to book your appointment.