TRADIE TAX DEDUCTION TIPS
After a whirlwind year across the globe and especially here in Australia, we are finally approaching some normality. Now that tradies can all start to resume being back on the job sites – today is the perfect time to start thinking about the end of the financial year.
The June period does not need to be painful or expensive, as there are some good tax deductions on tools for tradies. To help with the burden of processing your tax return, we have put together a list of top tips that will help maximise your return and hopefully provide a little clarity about the full process.
1. Know what you can deduct on.
An effective way to be sure on claiming tools on tax return is to check the Australian Taxation Office website. We urge you to check the valuable information supplied by the ATO specifically for employee tradies here. The process is simple, fast, and hassle-free. Claiming your tax deductions for the cost of purchasing tools and equipment that you have used throughout the year will not only reduce your taxable income but also give you a tax refund faster than ever before!
2. Claim up to 100% for tools and equipment under $20,000.
For small businesses that turn over less than $2M annually, you can claim up to 100% of total cost. Tool purchases under $300 – are immediately deductible in the same year you purchased them if you kept your receipt. Please refer to the ATO website for eligibility criteria and thresholds here.
3. Keep all your receipts – this is super important!
Take a photo or screenshot of all your receipts and store them on the Cloud or Google drive - you will never be able to run out of space there! Even better if you join our Insider Rewards program, you’ll surely have access to all your receipts through our website or mobile apps (iOS and Android).
What can tradies claim on tax without receipts?
According to the ATO, if you don’t have any receipts for your purchased work-related items, you can claim them up to a maximum value of $300. You may be eligible for a refund of more than $300 – this could boost your tax refund.
4. Vehicle costs.
Travelling from site-to-site often? Well, your motor vehicle costs are deductible – just remember to hold on to all your receipts to maximise your return and always remember to carry a logbook for all kms done for work. You can also claim deductions on the following related to your work vehicle:
- Parking fees
5. Mobile/ work phone and internet expenses.
Are you on your phone at work? Well, you can claim on work/ business-related phone calls as well as internet use, ask your service provider to email you all your bills. Sorry, this does not include time spent scrolling through social media or tagging your mates in memes. But we do encourage you to follow us on Facebook and Instagram.
6. WFH-related office equipment.
Since COVID-19 has forced most of the population to work from home, many of us took the opportunity to update our home office equipment. So, for small businesses, any work-related home office equipment you have purchased could be tax deductible.
7. PPE, safety gear, and COVID 19 test expenses.
Obviously, a lot of your work is outside. Good thing, you can claim on protective wear, as well as various forms of sun protection, including:
- Respirators & Masks
- Work Boots
- Work Clothes
- Safety Glasses & Safety Goggles
- Hard Hats & Head Protection
- Hearing Protection
- Knee Pads
Be sure you are covered in terms of all your safety gear – as they can take a beating throughout the year.
COVID 19 test expenses.
Starting 1 July 2021, you can claim a deduction for any work-related COVID 19 tests (either PCR or rapid antigen tests). Click here to learn more.
8. Laundry expenses.
There's no doubt after working hard your clothes is going to get dirty so remember, you can also claim on certain Laundry related expenses. However, the ATO will be cracking down on this and deductions are quite different to how they were in previous years. We would recommend doing some reading on the topic which can be found here.
9. Download ATO myDeductions app.
To help keep your records accurate – this will save you a lot of time and is super convenient!
Join our Insider Rewards program to keep all your transactions in one easy spot. We also have plenty of great offers available within the app, so why not download the app and enjoy exciting deals and privileges today.
*Do note that this information is general and does not take your specific financial position or circumstances and are only some tips to provide some ideas on tax options for tradies, it is always best to refer to the ATO information or speak to a registered accountant or financial professional regarding anything to do with your tax lodgement before making any financial decisions.
Remember you can start claiming right away – now is the ideal time to start stocking up on all your favourite brands and tools!
FAQs(Frequently Asked Questions):
What can tradies claim on tax?
Right now, is the perfect time of year to stock up on epic amounts of all your favourite tools and then write them all off on tax. Over the last couple of years, tax rules have changed, and tools are tax-deductible for eligible small to medium businesses up to $150,000! Tax time does not need to be one big headache and it should not be costing you an arm and a leg - there are also some fantastic tax deductions tools available for both salary and wage workers.
Where can tradies file their tax claim?
You can file your tax return online or through the help of a tax agent. Download and use the ATO myDeductions app, so you can easily manage and keep track of your tax records.
When and how long does a claim take?
Do not get caught up in lodging your return as soon as possible – the best time to do so is generally between mid-August and September. This helps you take advantage of the pre-fill information available in myTax or with your tax agent.
You can complete your tax return in just 15 minutes, and you won't even have to leave the house. You can also expect to see your refund in 10 to 14 days (subject to ATO processing). You may also visit ATO Tax Time essentials to know more.
How to claim tax on tools?
- You can claim tax on tools that helped you generate income during the fiscal year and if you have proof that these tools were utilised for professional use.
- Tools purchased under $300 – you can claim a deduction for the total cost.
- Tools purchased more than $300 – you deduct the reduction in value of products that cost more than $300 (or that are part of a set that cost more than $300) year after year.
- For tool and equipment repairs, upgrades, and trade-related insurance.
- Plus, last year's tax lodgement cost can be claimed on this year's return - always good to know!