TRADIE TAX DEDUCTION TIPS 2024
With COVID-19 pretty much in the rear-view mirror, the last year has seen big changes in the market. Tradies look to have been as busy as ever and hopefully this trend continues for the upcoming year.
Processing your tax return during the June period doesn't have to be an arduous or costly task, particularly for tradies who can take advantage of some useful tax deductions on their tools. To assist you with this task and ease the burden of tax processing, we've compiled a list of expert tips that will help you maximize your return and gain a better understanding of the entire process.
*On May 14, 2024, the government unveiled the 2024–25 Budget, the $20,000 instant asset write-off for small businesses with an annual turnover of less than $10 million has been extended. This extension allows small businesses to immediately deduct the cost of eligible assets under $20,000 until June 30, 2025. Originally, this measure was introduced in the 2023–24 Budget for the 2023–24 income year.
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 purchase and costs.
As the end of the financial year approaches, many tradies in Australia are rushing to buy utes before the tax-break ends on June 30th. Instant asset write-off, also known as the instant asset deduction, is a tax break that enables companies to immediately deduct all the value of assets they've bought for their firm, such as cars, from their taxable income.
In recent weeks, many dealerships have reported a sharp spike in ute sales, with some even reporting stock shortages. In addition to the immediate asset write-off, there is a current global vehicle scarcity due to supply chain interruptions brought on by the COVID-19 epidemic. This has sparked a rush to buy utes, but great news for Total Tools Insider members, you get an exclusive offer from Mitsubishi Motors – find out more here!
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:
- Fuel
- Parking fees
- Repairs
- Oil
- Insurance
- Servicing
- Registration
- Others
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. To get the most accurate and up-to-date information regarding WFH tax claims in Australia, speak with a tax professional or visit the ATO website.
7. 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.
8. Download ATO myDeductions app.
To help keep your records accurate – this will save you a lot of time and is super convenient!
BONUS TIP
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.
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! 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. Please refer to the ATO website for eligibility criteria and thresholds here.
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?
The processing time for tax claims in Australia can vary depending on various factors, including the complexity of the claim, the accuracy of the information provided, and the workload of the Australian Taxation Office (ATO). Generally, the ATO aims to process individual tax returns within a period of 12 business days if lodged electronically. However, it's important to note that this is an average processing time, and some claims may take longer.
To get a more accurate estimate of the processing time for your specific claim, it's recommended to check the ATO's website or contact the ATO directly for the most up-to-date information.
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 – (or form part of a set that cost more than $300), you cannot claim an immediate deduction for the entire cost. Instead, you can claim a deduction for the decline in value over a number of years.
- 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!
In addition to the existing information, it's worth noting that Australian tax rules can be complex and subject to change. It's important to stay up to date with the latest tax legislation and seek professional advice when necessary to ensure compliance and maximize your tax deductions.
Find out more here. We strongly advise that you review and refer to ATO’s guidelines on claiming tax deductions on tools for employee tradies and eligible businesses.
The information in this article is general in nature and is intended to provide some insights to what tax deductions are possible for tradies. It doesn’t take into account your specific financial position, needs or circumstances. You should always look at your own financial position, objectives and requirements and seek professional advice before making any financial decisions as well as seek guidance from the ATO.