Tradies work long and hard to meet tight deadlines, which often leaves little time or energy to think about finances and taxes.
As a result many tradespeople pay too much tax, miss changes in legislation or suddenly find their cash flow is not as healthy as they thought. Does this sound like you?
Stay in control
Apart from making sure you claim all the tax deductions you are entitled to, as we’ll discuss in a moment, we suggest getting into the habit of checking with your tax agent annually to make sure you’re up to date with legislative changes. Sometimes a business switches gear or changes direction which can affect it’s status legally and financially so it’s also important to know when your business structure is no longer cost effective tax wise.
Being organised with your expenses is an essential habit to get into. Keep a clear, itemised record of ALL of your expenses and consider investing in some accounting software to help you stay on top of it. (Etax Local can assist with subscriptions and set up of various popular products so feel free to get in touch for a chat if you are unsure.)
Photograph each receipt when you get it as many have a tendency to fade. This means any hard to read receipts can still be claimed and you have an electronic back up on your computer. Etax Local provide all clients with secure access to our Client Portal so securely uploading and storing your receipts and other personal documents is simple.
Don’t miss out
There are a great many tradie tax deductions you may be entitled to claim on your tax return. Unfortunately, a good number of tradies miss out on hundreds of them every year. This leaves their hard earned cash in the pockets of the ATO and that’s never a good thing.
So why are so many deductions missed? Because tradies, like many other occupations, simply don’t know these expenses can be claimed. In addition, expenses are often simply forgotten about. And that’s exactly why good record keeping is essential.
Tradie tax deductions for work related expenses are broad and span across equipment, tools, training, travel, clothing and more.
Common tradie tax deductions include:
- Clothing (must have business logo)
- Tools and equipment – purchase, lease or repairs
- Technical instruments.
- Protective items (hard hats, steel cap boots, safety glasses etc.)
- Laundry/cleaning of work clothes
- Sunscreen and sunglasses (if you work outside)
- Tablet, computer and mobile phone expenses (work related portion only)
- Work related software and computer accessories
- Home office running expenses (if applicable)
- Filing cabinets and bookshelves
- Desks, chairs and lamps
- Internet expenses (apportioned)
- Training courses, (if directly related to your current role)
- Professional libraries
- Car/vehicle expenses including parking, tolls, running expenses, fuel, km driven etc.
- Travel expenses (between sites, to pick up equipment, to training courses or meetings)
- Accommodation expenses when working away from home
- Union fees
- Licenses, permits and certifications
Please note: The content of this post is meant for general information purposes only. Not all items mentioned can be claimed by all tradies. Purchase limits and allowances can affect claims as can certain circumstances. Your tax agent will advise you on what you can and can’t claim, in keeping with your own particular circumstances.[/box]
Keep it real!
The ATO are very good at spotting fraudulent or inflated claims and they’re getting better all the time. Powerful tools can check up on you, even your “private” details such as bank transactions. The consequences of being caught out can put you and your finances in hot water – so keep it real. Only claim for items you paid for and that are directly related to your work.
Don’t think that cash jobs are untraceable. The ATO may question tradie tax deductions – and lifestyles – that aren’t ‘reasonable’ for your income.
Transporting bulky tools to work?
Generally you cannot claim the travel costs for the journey between your home and your place of work. However if you are required to transport heavy goods and tools, you can. There are some rules that apply though so always get advice before you do.