Tax Tips For Tradies: Dos and Don’ts

Tools & Equipment:

Tools are inevitable to carry out your everyday business. You may be able to claim the cost of those tools used as part of your job/business as a deduction against your tax if you’ve paid for them.

Below two cases further elaborates how you claim the deduction:

Case 1: You run your own business:

√ Under the temporary full-expensing measures, you may be able to claim an immediate deduction of FULL COST (up to $20,000 only) of all tools you purchase which are ready for use prior to the end of the last Financial Year 2023.

√ For the Financial Year 2024, there has been a provision for an Instant Asset Write-Off which allows businesses with a turnover of less than $10 million to be able to claim a deduction in full.

Case 2: You work for someone else:

√ You may be able to claim a deduction straight away for tools costing ≤ $300. For any cost you incurred ≥ $300, you can claim partial cost every year over the life of the tool which could be several years. This seems less generous compared to the provisions for business owners as depicted in Case 1 above.

√ This rule not only applies to the tools but also applies to the combined set of tools, computers, phones and printers as well as mobile phones and tablets costing ≥ $300.

 

× If you use the tools or equipment for private use, you’ll need to apportion the cost and can only claim the work or business use part of the cost.

 

× You can’t claim tools and equipment that are supplied by your employer.

 

 

Work-Related Clothing/Accessories:

√ You may be able to claim a tax deduction both for the cost of purchasing the clothing items such as protective clothing and footwear that are worn to protect you from the risk of illness or injury under rigorous work conditions where conventional clothing is not enough to protect you. Examples may include but not limited to:

 

•         heavy duty shirts/trousers, fire-resistant clothing
•         steel-capped boots, non-slippery safety shoes
•         gloves & hardhats
•         hi-vis-colored vests.
•         sunglasses and sunscreen if you work outdoors.
•         Safety helmet and earmuffs

√ Regarding dry cleaning/laundering expenses, up to $150 (Subject to total work-related expenses not more than $300) may be claimed without any documentary substantiation.

× You can’t claim the cost to buy/hire/repair/clean conventional (everyday) clothing such as jeans or plain shirts you wear for work.

 

× You can’t claim a deduction if your employer pays for/reimburses you for these expenses.

 

Vehicle:

Use of the vehicle such as car, van or a Ute is common for tradies to carry out the everyday business. You may be able to claim the cost of running a vehicle used as part of your job/business. This excludes the costs associated with using work-provided vehicles, so there is no deduction for such.

Below two cases clarifies more on this:

Case 1: You run your own business:

√ You can use the temporary full expensing measures to claim a deduction for the full cost of the vehicle. If the vehicle is a passenger car (that can transport less than 9 passengers) or a Ute with a payload of less than 1 ton, this will be subject to the car limit of $64,741 for the 2023 year.

Case 2: You work for someone else:

√ You may be able to claim depreciation on the vehicle over its life subject to keeping proper logbook of your work/private use.

√ If you travel less than 5000 km, following cent/km regime, you can simply claim a set allowance of 78 c/km for the year ended 30 June 2023.

√ The costs of trips between home and work if you carry bulky tools/equipment for your work essential for your employment duties and there is no secure storage for the items at your workplace.

× The ordinary costs of traveling from home to work in your vehicle.

 

Other Expenses:

√ You can claim the work-related portion of other expenses that relate to your employment, including:

 

•         renewing your license, permit, card or certificate to continue to perform your work duties.
•         telephone/internet costs showing your work-related use records.
•         overtime meal expenses (subject to conditions)

 

× You can’t claim expenses of private/personal nature such as childcare, personal subscriptions, fines   driver’s license etc.

 

A PRO TIP – Keep decent records of your invoices/receipts which makes your life easier. When you VISIT YOUR TAX ACCOUNTANT at the time of your tax return, it makes your life much  easier.

 

If you are a Tradie and are struggling to finalize your personalized tax return, please schedule an appointment with one of our experienced tax accountant Perth by calling us on 08-9386 0047.