Here are top tips on lodging a Tax Return for Tradies. Professional tradespersons or contractors incur many costs on the job. From purchasing tools, clothing and travel expenses, they can add up. Here are some common tax deductions you should know about, to trade your costs for a better return.
Top tax deduction tips for tradies:
Usually, travelling between home and the workplace in a personal vehicle is considered a private cost.
However, for a tradesperson, the rules are slightly different.
You can claim the cost of travel if you carry bulky tools and equipment to and from work (because they cannot be left at the worksite due to a lack of secure storage). To claim these travel costs, it must be a requirement to take the equipment home rather than it being a personal choice or out of convenience.
Parking fees at work sites are claimable expense, as well as travel costs between all other work sites.
Travelling from work to a social function is not a cost that you can claim. Likewise, you cannot claim parking fines and other infringements incurred during work-related travel.
If you are required to travel to a worksite and it involves an overnight stay for one or more nights, you can claim associated costs provided they are not paid or reimbursed by your employer.
Travel expenses associated with this include meals and incidental expenses, accommodation and travel costs between home and the worksite (for example petrol, cab rides, airfares and/or public transport tickets).
Claim your clothing
Tradespersons can claim their protective clothing because it reduces the risk of injury during work. Protective clothing includes fire-resistant clothing, overalls, sunscreen, hats, safety vests, steel-capped boots, gloves, overalls, aprons and heavy-duty clothing. Easily identifiable occupation-specific clothing, such as a chef’s checked pants, can also be claimed.
In addition, the cost of all compulsory uniforms or clothing with a business logo are tax deductible.
You can also claim the costs of washing, drying and ironing these clothes including the cost of dry cleaning or using a laundromat. Other ordinary clothes, like jeans, shirts, socks and shoes, are not considered protective clothing so you will be unable to claim the purchase or cleaning cost.
The cost of food, snacks and drinks consumed during work hours is considered a private expense. However, you can claim the cost of food and drink during overtime hours, provided your employer pays you a reasonable overtime meal allowance, and it is reflected in your tax return correctly.
Tools and protective gear
Tools, protective equipment and other assets such as laptops or a desk can be claimed as an immediate deduction if you purchased them and your employer did not reimburse you for them. Personal protective equipment includes items like; hard hats, safety harnesses, earplugs, goggles, and breathing masks. These are some obvious deductions to consider when lodging a tax return for tradies.
Any tools and equipment purchased with a value of $300 or more are not claimed as an immediate deduction. Instead, you can claim an annual deduction over a number of years (the life of the asset as defined by the ATO).
Equipment used for private purposes must be apportioned correctly to reflect the percentage of time the tools or equipment are used for work. If you use items for both personal and work-related activities, it’s a good idea to keep a record, such as a diary, so that, if required, you can show how you calculated the amount of time for each use. If you are an apprentice and received government-funded tools through your employer, you cannot claim costs or the depreciation for those tools.
Fees and insurance
As a tradie or contractor, any fees and subscriptions you pay as a member of a union or professional association, are tax deductible. You can also claim the cost of public liability insurance as a tax deductible. If you also have income protection insurance, you can claim the cost of premiums against the loss of any income in the event you are unable to work.
It helps to know what you can claim, so you can maximise your tax return. Having a registered tax agent like ezytaxback will also ensure you get the best return. If you’re short on time, contact our friendly Customer Care Team at email@example.com and we can assist you in getting the most out of your return.