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Tradie Tax Deductions: Claim everything you’re entitled to

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.)

TIP: 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. YOUtax 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
Journals/Manuals
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
Insurances
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.
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.

TIP: Don’t think that cash jobs are untraceable. The ATO may question tradie tax deductions 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 watch this ATO video to make sure you get it right.

Need more advice on tradie tax deductions or simply need to get your tax return sorted?
No problem, simply CLICK HERE to book an appointment with one of our friendly accounting team . Alternatively upload your documentation through our secure client portal for processing.

YOUtax understands there are many things you would rather be doing than your tax return.

Whether you’ve got a basic tax return with a single group certificate, or you’re at the other end of the scale with rental properties and complex investments… we can help you get it sorted, fast!

Take advantage of our national network of Members, for face-to-face appointments, or simply get in touch with our national head office. We’ll create your tax return in our system so you can login in to the secure client portal to securely upload your supporting documents and personal details. Once this is done, your accountant will get on with processing you return.

You can communicate with your accountant AND view and sign your tax return electronically at any time, wherever you are. Plus your documents are stored, safe and sound but accessible whenever you need them.

Choose YOUtax to prepare your individual tax returns this year and you’ll get:

Peace of mind in knowing your individual tax return was lodged by a CPA-qualified tax agent company with over years’ experience in taxation and accounting.

Double review on every return prior to lodgement to ensure you get the best possible refund and a compliant, trouble-free return.

Customer service – we can explain everything in detail and ensure you’re aware of your obligations and rights as a tax payer.

6 Missed Tax Deductions

Every year thousands of people miss out on tax deductions that they are eligible to claim?
Are you one of them?

Quite often these missed tax deductions are simply forgotten but in many cases people just aren’t aware that an expense can be claimed.Tax deduction

We asked our accountants what the most commonly missed tax deductions are and they came up with the following list.

Do any of these tax deductions apply to you? If so it’s time to make amends and make sure you claim every cent you’re entitled to.

1. Last year’s tax agent fees

If you used YOUtax or any other tax agent, to prepare and lodge your tax return last year, the fee you paid is eligible for a tax deduction. You can claim last year’s fees on this year’s tax return. The fees you pay to a tax agent are always tax deductible but it’s quite surprising how many of us forget this.

2. Licenses, certificates and membership fees
Are you a member of a union or a professional body directly related to your job? Do you need a license or a certificate to do what you do? Don’t forget, you can claim the cost of these fees every year.

3. Conferences, seminars and training courses

Do you attend conferences, seminars or training courses that maintain or increase your knowledge in your current field of work? The expenses related to these fees are usually tax deductible so it’s well worth giving your career a boost with some personal development each year.

4. Work related Car Expenses

With the exception of driving to and from work*, if you use your personal car for ANY work-related travel, you can usually claim fuel and maintenance expenses as a tax deduction for that use. So remember, when you drive between work locations, deliver merchandise pick up or deliver an order for your boss, or attend a meeting away from your usual place of work, make sure you record ALL your mileage.

It’s worth noting that as of 2016, the ‘12 per cent of original value’ and ‘one-third of actual expenses’ methods of claiming have been dropped.

To record your work related care usage you now use either:

The 12 week logbook method (which generates numbers you can re-use for 5 years!)
The cents per kilometre method.
The cent per kilometre method has changed in 2016. This used to increase with the engine size of your car, now it’s a flat rate of 66 cents per kilometre.
*You may be able to claim trips to and from work IF you carry heavy equipment for work, or transport heavy tools required to do your job. Check with your tax agent to see whether your load makes you eligible.

5. Working from home expenses

Do you work from home occasionally? Perhaps you need to finish reports or meet tight deadlines in the evenings. Maybe you work from home one or two days a week, or a few hours a day, to fit in with school hours or child care.

If so, the cost of using your personal computer may be claimed as a tax deduction. The ATO also allows employees who occasionally work from home to claim the running expenses for a part of the home used as a home office.

If you run a home based business or work at home full time as a home based employee you can also claim the apportioned ”occupancy costs” of your home office space as a tax deduction.
Are research, emailing, social media or other online tasks included in the work you do at home?

If your internet connection is in your name, then it’s likely you could claim a percentage of your Internet expenses as a deduction.

For example: Let’s say your internet bill is $60 a month. If 40% of your internet usage is work related you can claim 40% of your monthly bill.

40% of $60 = $24 per month
$24 x 12 = $288 per year
Please note: If your internet costs are shared with another person, you can only claim on the percentage that you are responsible for, as follows:

Total internet cost: $60
Shared with one other = $30 each
40% of $30 = $12 per month
$12 x 12 = $144 per year
6. Mobile Phone Expenses

Do you need to make work related phone calls on your personal mobile phone? If so you can generally claim the cost of these calls as a deduction on your tax return.

It’s important to remember, you are only allowed to claim the cost of your work related phone calls, not your entire phone bill. It’s recommended that you keep a record of all the work related calls you make so you are able to work out the average percentage of your calls that are work-related.

For example: If you pay $49 per month for your mobile phone plan and estimate that 50% of your monthly calls are work related:

50% of $49 = $24.50 per month
$24.50 x 12 = $294 per year
You could claim a $294 tax deduction on your annual tax return for your mobile phone expenses.

Be Prepared

Keep good records of mileage, phone calls or internet usage so you are able to provide these to your tax agent.
Our most important piece of advice is: If you’re not sure whether or not you can claim a deduction for a purchase – KEEP THE RECEIPT! Our accountants will be happy to let you know. Remember, it’s always better to have too many receipts than not enough.
Not everyone will be eligible for all the above mentioned tax deductions as these can be governed by certain circumstances and whether or not allowances are paid by employers. Your tax agent will be able to advise which tax deductions are relevant to you.

Book an appointment with a YOUtax Accountant today. Alternatively upload your documentation for processing through our secure Client Portal.