2026 Vehicle Tax Changes Tradies Must Know

Right, let’s talk about the tax stuff that could actually affect your wallet as a tradie in 2026. Things are always changing with the IRD, and keeping your head above water with all the updates can feel like trying to nail jelly to a wall. We’ve had a look at what’s coming down the pipe regarding vehicle tax NZ and other bits and bobs that might tickle your fancy, or more likely, lighten your load. So, grab a cuppa and let’s run through the main points you need to know.

Key Takeaways

• The $20,000 Instant Asset Write-Off is looking likely to stick around until mid-2026, meaning you could still get a decent chunk back on new gear. Just keep an eye on the legislation, as it’s not quite law yet.
• Fuel tax is out the window for Aucklanders, but get ready for electronic Road User Charges (RUC) to become the norm for all light vehicles, not just diesels and EVs. Start thinking about how you’ll track your k’s.
• The ‘Ute Tax’ and the Clean Car Discount have been scrapped. This means no more extra fees for higher-emission vehicles or discounts for electric ones when you register them.

Instant Asset Write-Off Extension

Right then, let’s talk about the Instant Asset Write-Off. This is a bit of a lifesaver for many tradies, letting you claim the full cost of eligible business assets straight away, rather than having to spread the deduction over a few years. It’s like getting a tax discount right now, which is always a good thing when you’re running a business.

Good news is, the government has announced that the $20,000 threshold for this write-off is set to continue until 30 June 2026. This means if your business has a turnover of less than $10 million, you can still buy assets costing up to $20,000 and claim the whole lot as a deduction in the year you buy them. Think tools, equipment, maybe even a ute if it fits the bill and the cost.

This extension is a welcome bit of stability for your business planning.

However, and this is a big ‘however’, it’s important to know that this extension isn’t law just yet. While it’s been announced and budgeted for, the actual legislation needs to be passed by Parliament. So, while you can go ahead and buy eligible assets under $20,000 before 30 June 2026, there’s still a bit of uncertainty until it’s officially signed off. It’s probably wise to keep an eye on the news for that final confirmation.

If it does go through as planned, here’s what you need to remember:

• Eligibility: Your business needs to have an annual turnover of less than $10 million.
• Asset Value: The cost of the asset must be under $20,000.
• Business Use: The asset must be used for your business.
• Timing: You need to purchase and first use (or install ready for use) the asset before 30 June 2026.

It’s worth noting that if this extension doesn’t become law, the threshold is expected to drop back to just $1,000 per asset, which would be a significant change. So, planning your purchases around the official announcement is key.

For many tradies, the timing of purchases can make a real difference to your tax bill. Buying a significant piece of equipment just before the end of the financial year means you can claim that deduction in the current tax year, potentially lowering your taxable income straight away. This is especially useful if you’ve had a profitable year and want to reduce the amount of tax you owe.

Remember, this write-off applies to eligible assets. For vehicles, there are often specific rules and caps, like the car depreciation limit, which we’ll touch on later. So, while the $20,000 write-off is fantastic, make sure the specific asset you’re buying qualifies and that you meet all the criteria. Keeping good records is always your best friend when it comes to tax time, so make sure you’ve got all your receipts and documentation sorted.

Cents-Per-Kilometre Rate

Right then, let’s talk about claiming your car expenses. If you’re a sole trader, you’ve got a couple of ways to do this, and one of the simpler ones is the cents-per-kilometre method. For the 2025-26 financial year, this rate is set at 88 pence per business kilometre. This flat rate is designed to cover all your running costs – think fuel, insurance, registration, maintenance, and even depreciation. You can claim this for up to 5,000 business kilometres each year. That means the maximum you can claim using this method is £4,400 (5,000 km x £0.88).

It’s a pretty straightforward way to get a deduction without needing to keep every single receipt for every bit of petrol or every oil change. However, there are a few things to keep in mind. Firstly, you can only use this method if you’re a sole trader. Companies and trusts have to use a different approach based on actual expenses. Secondly, you can’t claim any other vehicle expenses if you choose this method; the 88p per kilometre is your lot.

To use this method, you don’t need a detailed logbook like you do for the other method. What you do need is proof that the kilometres you’re claiming were actually for business. This could be diary entries, calendar appointments showing client visits or site meetings, or even just a simple trip record. The key is being able to show the tax office (the ATO) that your travel was genuinely for work purposes. Remember, commuting between your home and your regular place of work usually doesn’t count as a business trip.

Here’s a quick look at how it works:

• Rate: £0.88 per business kilometre.
• Maximum Kilometres: 5,000 per year.
• Maximum Claim: £4,400 per year.
• What it Covers: Fuel, maintenance, insurance, registration, depreciation.
• Record Keeping: Evidence of business trips (e.g., diary, calendar).

If you’re doing a lot of business driving, say over 5,000 kilometres a year, or if your actual car expenses are quite high, you might find the logbook method works out better for you. That method involves keeping a logbook for 12 weeks and tracking all your actual expenses, but it can lead to a larger deduction if your costs are significant. It’s worth doing the maths to see which method gives you the best result for your specific situation.

So, if you’re a sole trader and your business travel adds up, the cents-per-kilometre rate is a handy way to claim a deduction. Just make sure you’ve got the records to back up your business kilometres.

Electronic Road User Charges

Right then, let’s talk about Road User Charges, or RUC as you’ll hear it called. If you’re running a ute, van, or any light truck for your trade, this is a big one. The government’s decided it’s time to move away from paying fuel tax at the pump and get everyone onto electronic RUC. This isn’t just for diesel or electric vehicles anymore; petrol and hybrid vehicles are going to be included too. The idea is to make it simpler, fairer, and more transparent for everyone.

So, what does this actually mean for you? Well, the current system where you buy paper RUC licences is on its way out. Instead, everything’s going digital. You won’t have to worry about carrying physical labels or sticking them on your windscreen. Records will be digital, and you’ll likely use in-vehicle devices or plug-in gadgets to track your distance. This should make things a lot easier administratively, meaning fewer trips to the shop to buy licences and less chance of getting caught out with an expired one.

Here’s a quick rundown of what’s changing:

• All light vehicles will pay RUC: This includes petrol, hybrid, diesel, and electric vehicles. You’ll pay based on how many kilometres you travel and the weight of your vehicle.
• Paper labels are out, digital is in: Expect to use electronic tracking devices.
• Heavy electric vehicles get a bit more time: They’ll start paying RUC from 1 July 2027, so there’s a bit of a grace period there.

The main legislation is expected to be passed in 2026, but a specific date for when light vehicles will transition hasn’t been set yet. This gives you some time to get your head around it and prepare your business. It’s worth thinking about how you use your vehicles now. If you’re doing a lot of miles, especially with heavier loads, your costs will be directly tied to that usage. Heavier vehicles will naturally pay more per kilometre, which is pretty much how it works now with diesel RUC.

The shift to electronic RUC is all about making costs clearer and admin lighter. It means your expenses will directly reflect how you use your vehicles, making budgeting more predictable. Plus, ditching the paper licences and moving to digital systems should cut down on a fair bit of paperwork.

It’s a good idea to start auditing your fleet’s usage now. Pulling monthly kilometre data for each vehicle will give you a head start on forecasting what your new RUC costs might look like. You’ll also want to look into what kind of electronic RUC setup will work best for your business. Think about integrating this with your existing fleet management tools, as the new system is designed to be more compatible with telematics and GPS tracking. This could mean less double-handling of data and better oversight for your site managers. When planning your next vehicle purchase, keep in mind that the weight of the vehicle will affect your per-kilometre charges, so the spec you choose could have a direct impact on your running costs.

Vehicle Depreciation Caps

Right then, let’s talk about vehicle depreciation caps. This is one of those things that can catch you out if you’re not paying attention, especially when you’re looking to buy a new workhorse for the business. Basically, the taxman puts a limit on how much of a fancy car’s price you can actually claim as a deduction for depreciation. It doesn’t matter if you’ve splashed out eighty grand on a top-of-the-line ute or a company car; there’s a ceiling on what the ATO will let you depreciate.

For the 2025-26 financial year, this ‘car limit’ is set at $69,674. So, if you buy a vehicle that costs more than this, you can only claim depreciation on the capped amount, not the full price. This applies whether you’re claiming depreciation over several years or if you’re using the logbook method to track your business expenses.

Think of it like this:

• You buy a ute for $80,000.
• Your logbook shows 90% business use.
• The ATO car limit is $69,674.

Your maximum claim for depreciation isn’t 90% of $80,000. Instead, it’s 90% of the car limit: 0.90 * $69,674 = $62,706.60. See? That’s a significant chunk less than you might have expected.

It’s worth noting that this car limit is applied before you even consider your business usage percentage. So, you need to factor in the cap first, then apply your business use percentage to that capped amount.

This depreciation cap is a key reason why choosing the right vehicle for your business needs is so important. While it’s tempting to go for the top-spec model, understanding these limits can help you make a more financially savvy decision. Sometimes, a slightly less flashy vehicle that falls under the cap can actually give you a better tax outcome.

Now, if you’re using the cents-per-kilometre method for your vehicle expenses, you can’t claim depreciation separately. That’s because the rate you claim already includes an allowance for running costs, including depreciation. So, you’ve got to pick one method or the other.

• Car Limit: $69,674 (for 2025-26 financial year).
• Applies to: Depreciation claims and write-offs for cars.
• Calculation: Business use percentage applied to the car limit, not the actual purchase price if it exceeds the limit.

It’s a bit of a fiddly rule, but getting it right means you’re claiming exactly what you’re entitled to, and not leaving any money on the table. Always keep those logbooks and receipts up to date, and if you’re unsure, have a chat with your accountant before you sign on the dotted line for that new vehicle.

GST on Vehicle Purchases

Right then, let’s talk about the Goods and Services Tax (GST) when you’re buying a vehicle for your business. If your business is registered for GST, and you buy a van, ute, or car under the business name, you can usually claim back the GST you paid on the purchase price. It’s a nice little saving, but there are some rules, as you’d expect.

The main thing to remember is that there’s a cap on how much GST you can claim back on a passenger vehicle. For the 2025-26 financial year, this ‘car limit’ is set at $69,674. So, even if you splash out on a vehicle that costs more than that, the maximum GST you can claim is one-eleventh of that limit, which works out to be $6,334. It’s a bit of a bummer if you’re eyeing up something a bit pricier, but that’s the way it is.

Here’s a quick breakdown of the GST claim limit:

• Vehicle Cost: Up to $69,674
• Maximum GST Claimable: $6,334 (which is 1/11th of the car limit)
• Vehicles Over the Limit: You can still buy them, but your GST claim is capped at $6,334.

It’s worth noting that this limit generally applies to passenger vehicles. If you’re buying something more like a workhorse ute designed to carry a decent load, the rules might be a bit different, so it’s always worth double-checking.

Now, what happens when you decide to sell the vehicle later on? If you bought it through your GST-registered business, you’ll need to pay 10% GST on the sale price. Unlike the purchase, there’s no cap on the GST you pay when you sell it. So, if you sell it for $50,000, you’ll owe $5,000 in GST.

Be aware that if you’re buying a luxury vehicle, you might also be looking at the Luxury Car Tax (LCT) on top of everything else, which can add a fair bit to the overall cost. It’s not just about the sticker price; these extra taxes can really bump up what you end up paying.

So, while claiming GST on a vehicle purchase can be a good way to save some cash, make sure you understand the limits and what you’ll need to pay back when you sell. Keeping good records is key, as always!

Auckland Regional Fuel Tax Removal

Right then, if you’re based in Auckland and you’ve been filling up your work vehicle, you’ll be pleased to hear about this one. As of 30th June 2024, the Auckland Regional Fuel Tax has been scrapped. This means you’re now paying 10 cents plus GST per litre less for your fuel.

It’s a pretty straightforward change, but it can make a noticeable difference to your running costs, especially if you’re doing a lot of driving for your trade. Think about how many litres you go through in a week, or a month – that saving adds up.

This removal directly impacts the price you see at the pump for petrol and diesel in the Auckland region.

Here’s a quick breakdown of what it means:

• Lower Fuel Costs: The most obvious benefit is a reduction in the price of fuel. For every litre you buy, you’re saving that 10 cents plus GST.
• Impact on Business Expenses: For tradies who rely heavily on their vehicles, this is a welcome bit of good news for your bottom line. Less spent on fuel means more money potentially staying in your business or your pocket.
• Simplicity: It removes one layer of tax that was specific to Auckland, simplifying things a little.

While this change is specific to Auckland, it’s a good reminder to always keep an eye on fuel prices and how they affect your business expenses. Even small changes can have a cumulative effect over time.

It’s not a massive overhaul of the tax system, but for those of you in Auckland, it’s a definite win that should make your day-to-day operations a bit cheaper. Keep an eye on your fuel receipts to see the difference!

Clean Car Discount Repeal

Right then, let’s talk about the Clean Car Discount. If you were hoping for a bit of a sweetener when buying a more eco-friendly vehicle, that’s pretty much gone now. The government decided to scrap the Clean Car Discount scheme, and this change kicked in from 1st January 2024.

What this means for you is that the financial incentives for choosing electric or hybrid vehicles over their petrol or diesel counterparts have been removed. Before, you might have got a rebate, making those pricier greener options a bit more accessible. Now, you’ll be paying the full price, without that government nudge.

It’s worth remembering that the so-called "Ute Tax" was actually part of this whole Clean Car Standard. It wasn’t a tax in the traditional sense, but rather a way to add fees to vehicles with higher CO2 emissions. The money from those fees was then used to fund the discounts for the cleaner cars. So, with the discount gone, the fee structure for higher-emission vehicles has also been dismantled.

This means that whether you’re registering a vehicle that pumps out a lot of CO2 or one that’s super-efficient, the registration costs are now pretty much the same. There’s no longer a financial penalty for choosing a less environmentally friendly option, nor is there a financial reward for going green.

For tradies, this might change how you look at vehicle purchases. If you were leaning towards an electric ute or van because of the discount, you’ll now need to weigh up the upfront cost against the long-term running savings without that initial government boost. It’s a bit of a shame, really, as it was a good way to encourage people to think about their carbon footprint when buying a workhorse.

Here’s a quick rundown of what’s changed:

• No More Rebates: The financial discount you might have received for buying an electric or hybrid vehicle is no longer available.
• No More Fees for High Emissions: The charges applied to vehicles with higher CO2 emissions have been removed.
• Level Playing Field (Financially): The cost difference in registration based on a vehicle’s emissions has been eliminated.

While the intention behind the Clean Car Discount was to encourage a shift towards greener transport, its repeal means that the decision to purchase an electric or hybrid vehicle now rests more heavily on your own budget and long-term running cost calculations, rather than government incentives.

So, when you’re looking at your next vehicle, do your sums. The initial purchase price is what you’ll be looking at, without any government help to offset it. It’s a bit of a return to how things were before, where the choice was purely down to what you could afford and what suited your business needs, with less of a push from the taxman.

Ute Tax Repeal

Right then, let’s talk about utes. If you’ve been driving one for work, you might remember a bit of a kerfuffle a while back about a ‘ute tax’. Well, good news! That whole thing has been scrapped.

Basically, what people were calling the ‘ute tax’ wasn’t actually a tax in the traditional sense. It was part of the Clean Car Standard, which slapped extra fees onto vehicles that had higher carbon dioxide (CO2) emissions. The idea was that this extra money would then be used to offer discounts on cleaner, more eco-friendly vehicles like electric cars and hybrids. So, if you had a ute or a larger vehicle with higher emissions, you’d pay more when you registered it, and if you bought an EV, you’d get a bit of a rebate.

But here’s the change: from January 1st, 2024, that system was done away with. This means you no longer have to worry about paying extra just because your vehicle has higher CO2 emissions when you register it. Likewise, there’s no longer a discount for registering an electric or hybrid vehicle under that scheme. It’s a simpler system now, and for many tradies who rely on utes for their business, it means one less cost to consider.

So, what does this mean for you?

• No more extra registration fees for higher-emission vehicles: If your ute or work van has higher CO2 emissions, you won’t be hit with additional costs when you register it.
• No more discounts for low-emission vehicles (under this scheme): While the push for cleaner vehicles continues, the financial incentive tied to the Clean Car Standard has been removed.
• A simpler registration process: It’s one less thing to get your head around when it comes to vehicle costs.

It’s worth remembering that this repeal happened at the same time as the Clean Car Discount was also repealed. So, the landscape for vehicle purchasing and registration has seen a pretty significant shift. For many of you out there using utes as your trusty workhorses, this repeal is a welcome bit of straightforward news, removing a cost that was, for some, a real burden.

The removal of the ‘ute tax’ means that the cost associated with registering vehicles based on their CO2 emissions has been eliminated. This change simplifies the registration process and removes a financial penalty for owners of higher-emission vehicles, including many popular work utes.

Stamp Duty on Car Transfers

Right then, let’s talk about stamp duty on car transfers. If you’re buying a used vehicle for your business, you’ll likely need to factor this in. It’s basically a tax that state governments charge when ownership of an asset, like a car, changes hands. The amount you pay usually depends on where you are in Australia and the value of the vehicle – often it’s the higher of the sale price or its market value.

Think of it as a one-off fee to get the registration officially switched over to your name. For most states, you’re looking at a percentage of the car’s value, typically somewhere between 3% and 6%. It’s not a massive amount in the grand scheme of things, especially if you’re buying a decent work ute, but it’s definitely something you don’t want to forget about.

Here’s a rough idea of what you might expect, though remember these are just general figures and can change:

State/Territory	Typical Stamp Duty Rate
New South Wales	Around 3% – 6%
Victoria	Around 3% – 6%
Queensland	Around 3% – 6%
Western Australia	Around 3% – 6%
South Australia	Around 3% – 6%
Tasmania	Around 3% – 6%
Australian Capital Territory	Around 3% – 6%
Northern Territory	Around 3% – 6%

It’s really important to check the specific rates for your state or territory when you’re looking at a vehicle. You’ll usually have to pay this when you submit the paperwork to transfer the registration. If you don’t pay it, you could end up with fines, and nobody wants that hassle.

When you’re transferring a vehicle that’s been used for business, it’s worth seeing if there are any concessions available. Sometimes, depending on the vehicle type or how it’s used, you might get a bit of a break. But generally, as the buyer, you’re responsible for making sure the stamp duty is paid correctly. It’s just another cost to add to the purchase price, so get it in your budget.

Failing to account for stamp duty can lead to unexpected costs and potential penalties from your local revenue office. Always confirm the exact amount and payment process with your state’s transport authority before finalising a vehicle purchase.

Fringe Benefits Tax

Right then, let’s talk about Fringe Benefits Tax, or FBT as it’s commonly known. Now, if you’re a sole trader running your own show without any employees, you can probably stop reading this section right here. FBT is all about benefits you provide to your staff, not about your own vehicle use. So, if it’s just you and your trusty ute, FBT isn’t something you need to worry about for your own car. It’s a bit of a relief, really, as it simplifies things considerably.

However, if you’ve got a team working for you, things get a bit more complicated. When you provide a vehicle to an employee that they can use for private purposes – and that includes nipping to the shops or commuting home – FBT can kick in. The tax is calculated on the taxable value of that benefit. It’s a bit of a minefield, and you’ve got a couple of ways to figure out the taxable value:

• The Statutory Formula Method: This is a bit of a blunt instrument. It basically applies a flat rate of 20% to the car’s base value. Simple, but maybe not always the most accurate for your specific situation.
• The Operating Cost Method: This one’s more involved. You look at all the actual costs of running the vehicle – fuel, insurance, repairs, the lot – and then work out the business use percentage. You’ll need a logbook for this, meticulously recording every trip for a 12-week period to get a good average. This method can often result in a lower taxable value if you have a high percentage of business use.

The current FBT rate is 47%. It’s a significant chunk, so understanding how it applies to your business is pretty important if you’re providing vehicles to your staff.

Remember, FBT is a tax on the employer for providing benefits to employees. If you’re a sole trader, you’re not an employee of your own business, so your personal use of a business vehicle doesn’t trigger FBT. It’s a key distinction that often catches people out.

It’s worth noting that the rules around what constitutes ‘private use’ can be quite broad. Even if the vehicle is primarily for work, if it’s available for personal use outside of work hours, it can trigger FBT. So, clear policies and good record-keeping are your best friends here. If you’re unsure, it’s always a good idea to have a chat with your accountant to make sure you’re getting it right and not missing out on any potential deductions or, worse, facing penalties.

Low-Value Pools

Right then, let’s talk about low-value pools. If you’ve bought some bits and bobs for your business that didn’t quite hit the threshold for an instant write-off, or maybe you just decided not to use that option, they can often be chucked into what’s called a ‘low-value pool’. Think of it like a communal pot for smaller business assets.

So, what kind of things end up in here? Well, it’s usually items that cost less than a certain amount, or perhaps assets that you’ve had for a while and their value has dropped below a specific figure. For tradies, this could be things like smaller power tools, hand tools, maybe some safety gear, or even accessories for your main work vehicle that weren’t expensive enough on their own to claim immediately. The idea is to group these smaller items together so you can claim depreciation on them collectively.

How does it work, you ask? Well, the taxman lets you apply a standard depreciation rate to the whole pool. For the first year, it’s usually 15%, and then for every year after that, it jumps up to 30%. This means you get to claim a deduction for these assets over time, rather than trying to claim a tiny amount for each individual item. It really does help to smooth out your deductions and, honestly, it makes keeping track of everything a whole lot less of a headache. No more hunting for receipts for a £20 drill from five years ago!

Here’s a quick rundown of how the depreciation rates typically apply:

• First Year: 15% depreciation on the pool’s value.
• Subsequent Years: 30% depreciation on the pool’s value.

It’s worth noting that if you sell an item from the pool, or it stops being a business asset, you’ll need to adjust the pool’s value. But for the most part, it’s a pretty straightforward way to get some tax relief on those smaller, everyday business purchases.

The key benefit here is simplifying your tax claims. Instead of tracking depreciation for dozens of small items individually, you group them. This saves you time and reduces the chance of errors, all while still getting a deduction for the wear and tear on your equipment.

So, if you’ve got a collection of tools or smaller equipment that didn’t qualify for an immediate write-off, definitely look into setting up a low-value pool. It’s a smart move to make sure you’re getting the most out of your tax deductions.

Working For Families Payments

Right then, let’s talk about Working for Families payments. If you’ve got kids, this is definitely something you’ll want to get your head around, especially with all the tax changes happening. It’s basically a bit of extra support from the government to help out with the costs of raising children.

So, what’s new for 2026? Well, the main thing is that the rates for these payments have had a bit of a bump. The government’s committed to keeping these payments increasing automatically, which is good news. For your eldest child, the Family Tax Credit is going up from $136 to $144 per week after tax. For any other children you have, that rate increases from $111 to $117 weekly. The Best Start tax credit, which is for very young children, also gets a boost, going from $69 to $73 a week after tax.

It’s worth noting that there were some plans to change the income threshold where these payments start to reduce, but those plans have been scrapped. So, the rules around how much you get based on your income haven’t changed in that regard.

Here’s a quick rundown of the increased rates:

• Eldest Child Family Tax Credit: Increased from $136 to $144 per week (after tax).
• Subsequent Child Family Tax Credit: Increased from $111 to $117 per week (after tax).
• Best Start Tax Credit: Increased from $69 to $73 per week (after tax).

Remember, these payments are designed to help families with dependent children under 18. It’s a way the government tries to make things a bit easier when you’ve got little ones running around.

Now, if you’re a sole trader with children, these changes could mean a bit more money coming your way. It’s always a good idea to check the latest details on the IRD website or chat with your accountant to see exactly how these increases will affect your specific situation. It’s not a massive amount, but every little bit helps, right?

GST Collection Changes

Right then, let’s talk about Goods and Services Tax (GST) collection, because there have been some shifts that might affect you, especially if you’re a sole trader working through online platforms. It’s not a massive overhaul for everyone, but for those in the gig economy or using marketplaces, it’s worth paying attention to.

Basically, from April 1st, 2024, the way GST is handled has changed for certain sole traders. If you’re not registered for GST because your income’s below the $60,000 threshold, you don’t have to worry about collecting it yourself anymore. The platform you’re using – think Airbnb, Uber, or similar – will now be responsible for charging and collecting GST from your customers. They’ll then pass on 8.5% of that GST to you as a sort of untaxed rebate. The remaining 6.5% goes straight to the IRD. So, you still get a bit of a benefit, but the admin is taken off your plate.

If you are registered for GST, things are a bit different. You’ll still need to be registered, obviously. But instead of you collecting the GST and paying it over, the marketplace will do that for you. You’ll need to list your services on these platforms as zero-rated supplies in your GST return. The platform then collects the GST from the customer and sends it to the IRD on your behalf. You can still claim GST on your business expenses as usual, but if you receive that 8.5% flat-rate credit, you’ll need to make a debit adjustment in your GST return. It’s a bit of a balancing act, so make sure you get it right to avoid any penalties from the IRD.

Here’s a quick rundown:

• Not GST Registered (under $60k threshold): The marketplace collects GST. You get an 8.5% untaxed rebate. The marketplace pays the rest to IRD.
• GST Registered (over $60k threshold): The marketplace collects GST and pays it to IRD. You claim GST on expenses and make a debit adjustment if you receive the 8.5% credit.

It’s a bit of a shift in responsibility, aiming to simplify things for some traders while ensuring GST is collected effectively. Keep an eye on your platform’s communications and your own GST returns to make sure you’re compliant.

The key takeaway here is that if you operate through a digital marketplace, the responsibility for collecting and remitting GST has shifted, either entirely or partially, to the platform itself. This should make things a bit easier for many, but it’s vital you understand how it affects your specific situation, especially when it comes to claiming your business expenses and making any necessary adjustments on your GST returns.

Mortgage Interest Deductibility

Right then, let’s talk about mortgage interest deductibility. This is a bit of a game-changer, especially if you’ve got a rental property or, more relevantly for us tradies, if you’re using your home as a base for your business and have a mortgage on it. The rules around claiming back the interest you pay on your mortgage for business purposes have been a bit up and down, but there’s a significant shift happening that you need to be aware of for 2026.

Historically, claiming mortgage interest for business use has been a bit tricky. It’s not as straightforward as claiming other business expenses. The key thing to remember is that you can only claim the portion of the interest that relates directly to your business activities. This means if you’re running your business from home, you can’t just claim the entire mortgage interest. You’ll need to work out the business-use percentage of your home.

The big news is that mortgage interest deductibility for business purposes is being phased back in, making it easier to claim.

Here’s how it’s shaping up:

• 80% Deductibility: From 1st April 2024, you could claim 80% of the mortgage interest related to the business use of your home. This means if your business use percentage was, say, 30%, you could claim 80% of that 30%.
• 100% Deductibility: From 1st April 2025, this is set to increase to 100% deductibility. So, if your business use percentage is 30%, you’ll be able to claim the full 30% of your mortgage interest.

This change is a welcome one for many self-employed individuals and small business owners who use their homes as their primary place of business. It can make a noticeable difference to your taxable income.

How to Calculate Business Use Percentage

Working out the business-use percentage is where things can get a bit fiddly. It’s not just about the square footage of your home office. You need to consider:

1. Exclusive Use Area: This is the space used solely for your business, like a dedicated office room. You’ll need to calculate its area as a proportion of your home’s total floor area.
2. Apportioned Use Area: If you use other areas of your home for business purposes (like the kitchen for a quick call or the driveway for client visits), you might be able to claim a portion of those areas too. This is often based on the frequency and nature of the business use.
3. Record Keeping: Just like with your vehicle expenses, you’ll need to keep good records. This could include floor plans, details of how you use different areas of your home for business, and any associated expenses.

It’s really important to get this calculation right. The tax office likes to see clear evidence and a logical method for determining your business-use percentage. Don’t just guess; take the time to measure and document.

What About Interest on Loans for Business Assets?

It’s worth noting that this change primarily relates to the mortgage interest on your home if you’re using it for business. If you’ve taken out separate loans specifically for business assets, like tools or a work vehicle, the interest on those loans is generally deductible as a business expense anyway, subject to the usual rules. The key here is distinguishing between your home mortgage and specific business loans.

What This Means for You

For tradies who operate from home, this phased reintroduction of mortgage interest deductibility is a positive development. It means you can potentially claim more of your home running costs against your business income. Make sure you understand the rules and keep meticulous records to back up your claims. If you’re unsure about how to calculate your business-use percentage or how this applies to your specific situation, it’s always a good idea to have a chat with your accountant. They can help you make sure you’re claiming everything you’re entitled to, without running into any trouble with the taxman.

Income Tax Thresholds

Right then, let’s talk about income tax thresholds. You know, those magic numbers that decide how much tax you pay on your earnings. The government’s had a bit of a shuffle with these, mainly because inflation has been doing its thing, making everything cost more. Basically, because the thresholds have been nudged up, you now have to earn a bit more before you hit the next tax bracket. This means, for most of us, our overall tax bill should be a little bit lower.

These changes kicked in from 31 July 2024. It’s not a massive overhaul, but it’s definitely a step in the right direction to account for the rising cost of living. It’s worth remembering that tax thresholds here aren’t automatically adjusted for inflation like they are in some other countries, so these adjustments are a welcome move.

Here’s a quick look at how the thresholds have shifted:

Previous Threshold	New Threshold	Tax Rate
Less than $14,000	Less than $15,600	10.5%
$14,001 – $48,000	$15,601 – $53,500	17.5%
$48,001 – $70,000	$53,501 – $78,000	30%
$70,001 – $180,000	$78,101 – $180,000	33%
$180,001 and over	$180,001 and over	39%

So, what does this actually mean for you? Well, if you’re earning, say, $50,000 a year, you’ll now be paying tax at the 17.5% rate for a larger chunk of your income, rather than hitting the 30% bracket sooner. This effectively lowers the percentage of tax you pay on your total earnings. It’s a bit of a win, really.

The government has said they’ll keep an eye on how inflation affects average tax rates and might make further changes down the line. So, while this is good news for now, keep your ears open for any future updates.

It’s also worth noting that for the 2024/25 tax year, because these changes happened mid-year, the IRD has put in place some transitional rates to make things simpler. You might want to check their guidance if you’re doing your own calculations, just to make sure you’re using the right figures for the period.

This adjustment to income tax thresholds is one of the more significant changes that affects pretty much everyone earning an income, including us tradies. It’s a good reminder to keep an eye on these figures, as they can make a real difference to your take-home pay.

So, What’s the Bottom Line for Your Tools and Ute?

Right, so that’s a fair bit to take in, isn’t it? The tax rules seem to be shifting around a bit, especially when it comes to your work vehicle and how you claim things. It’s not exactly straightforward, and keeping track of it all can feel like a proper headache. The main thing is to stay on the ball with your record-keeping – those receipts and logbooks are gold. If you’re unsure about any of it, especially with the new RUC system coming in for all vehicles, it’s probably worth having a quick yarn with an accountant. A bit of advice now could save you a stack of cash and hassle down the track. Don’t let the paperwork get the better of you; make sure you’re claiming everything you’re entitled to.