Tax Tips for Tradies
Tax tips for Tradies
Author: Aziz Hassan
May 26, 2021 · 5 min read
If you’re a tradie we understand tax time can often be a headache. We’ve put together a tax checklist to assist you this tax season.
CLAIM TOOLS AND EQUIPMENT
For the vast majority of people in the trades business, you’ll have a large assortment of tools and equipment that you use for your job. These assets can be claimed as a deduction against your tax.
Depending on the nature of your business (Business owner or Employed Worker) the method of claiming these assets will be different. Let’s explore both, and show you how to get the most out of a deduction claim.
All of your tools of equipment used for your trade can be deducted, up to a value of $30,000.
These assets must have been acquired after the 2nd of April 2019. If these tools were bought before then, your asset value limit will be between $20,000 to $25,000.
For the vast majority of sole traders, this means almost all of your tools and equipment can be written straight off your tax.
If you are employed by someone else, then you will not be able to enjoy as much of a generous write-off.
You can claim a deduction for all tools and equipment (including any office supplies, or other items used for your job) up to a value of $300 per tax year. However, if your claim for tools & equipment cost is more than $300 then you must write off the cost over the lifespan of the tool.
When it comes to claiming deductions for vehicles, there are two key areas where you can save a little extra on your tax return. This includes the purchase of the vehicle and the travel costs of the vehicle.
Let’s explore both of those more closely:
If you operate your own business, then you can write off the cost of a vehicle using the same $30,000 instant tax write-off mentioned earlier.
If the cost of the vehicle exceeds $30,000, then you will need to write off the cost of the vehicle over its lifespan. You can learn more about the specifics of how to do this by reaching out to our Immunity Accounting specialists, to make sure you get the largest deduction possible.
You cannot write off the cost of a vehicle if you are employed by someone else, nor can you write off the cost of a work vehicle you use whilst employed by someone else.
Regardless if you are a business owner or employed as a worker, the same rules apply for each group for deductions provided for vehicle use.
If you travel under 5000kms in the tax year, without a logbook you can claim a deduction of 68c per KM travelled.
Any travel done whilst working (Not including the commute to and from work itself) can be written off. You’ll be required to keep a logbook, and will be provided with a write-off of equal value to the travel shown in those records.
If you are required to wear specific clothing for your jobs, such as a compulsory uniform, or protective clothing to keep you safe, then you can claim the cost of these on your tax.
This includes, but is not limited to:
- Fire-resistant clothing
- Safety-coloured vests
- Steel-capped boots
- Hard hats
- Non-slip safety shoes
- Heavy-duty shirts and trousers
- Compulsory work uniform branded with the employer’s logo
- Sun protection costs including sunglasses and sunscreen
LAUNDRY AND DRY-CLEANING
For any work clothes, you are eligible to claim the cost of any dry-cleaning or laundry cost.
If your laundry expenses are $150 or less, then you can claim a deduction without providing any written evidence. This can be increased to $300 if you have claimed under this limit for your total work expenses.
For laundry or dry-cleaning that you do yourself, the ATO has outlined the following rates you are entitled to:
- $1 per load – this includes washing, drying and ironing.
- 50 cents per load if other laundry items are included.
CLEAR THE DECKS
For those operating a trade business, there are options to claim the cost of obsolete, damaged, or unusable materials left on your site at the end of the tax year.
These can be written off for the total value of their cost, as long as this will be shown as a loss on your books.
Furthermore, if you have customers that can’t, or won’t, pay you for your work, you can also write off the cost of this work to recoup the debt. You must conduct a write-off by the 30th of June. You must provide a clear written record for a deductable of this kind.
Final Tax Tips
Immunity Accounting also has two important tips to make tax time much easier:
- Remember to keep good records, including receipts, invoices, logbooks, and any other documentation that will help to support your claims.
- Don’t hesitate to reach out to our Immunity Accounting specialists, if you’re ever unsure how to make the most out of your tax return. We’ll be ready to make sure you have everything in order.
IMMUNITY ACCOUNTING CAN HELP
To find out more speak to one of our tax consultants by clicking this link to book an appointment online or call 1300 514 191.