Tradesman On Construction Worksite
17-Aug-2020 By - Anna Eydlish

What can tradies claim on tax?

Keeping careful records of your expenditures and saving all of your receipts is work that will pay you handsomely in the long run. It doesn't take much effort to stay on top of things if you just give some consideration to how you're going to accomplish it. Spending only a few minutes each day might potentially provide the greatest payoff, beginning with more money in your wallet.

There is a wide variety of tax relief available to tradespeople, regardless of whether they are apprentices or single proprietors.

People who work in skilled trades, such as construction workers, plumbers, or electricians, to mention a few, sometimes pay for job-related expenditures out of their own personal funds. And whether you're working long hours or are otherwise preoccupied with meeting deadlines, you don't have a lot of time or energy left over to think about your taxes.

Mutual fund management fees are tax deductible in non-registered accounts, but commissions or trading fees to buy stocks and other investments are not tax deductible.
You don't have to get and keep a receipt for work-related expenses that are $10 or less, as long as your total claim for small expenses is $200 or less. If you don't get a receipt for small expenses you can still claim a deduction as long as you make a record of the small expenses.
Tax Deductions for Sole Traders
  • Car Expenses. As a sole trader your car can be your biggest work-tool and claimable expense that can lessen your tax burden. ...
  • Tools and Equipment. ...
  • Travel. ...
  • Clothing and Laundry. ...
  • Home Office. ...
  • Self Education. ...
  • Other Common Deductible Work-Related Expenses.
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Because of this, however, many individuals who work in trades wind up paying more tax than they should, and they also miss out on hundreds or even thousands of dollars’ worth of expenditures that they might have claimed each year.

Due to the fact that many owners of tradie businesses find themselves working overtime, taxes are frequently the item that are on their minds the least. Unfortunately, this results in many business owners in the construction, building, and electrical industries, among others, paying an excessive amount of tax and missing out on hundreds of dollars’ worth of expenditures that are eligible for reimbursement each year.

Individuals, businesses, trusts, partnerships, and retirement funds can take advantage of the trustworthy and knowledgeable tax preparation services EWM Accountants offers.

The following are some popular pieces of advice for business owners in the sector about tax deductions.

Employee Tradie

Even though you are not the person in charge of the company, you may be able to claim a variety of tax benefits as long as your employer has not repaid you for the expenditure and you can demonstrate that you made the expense and that it is directly related to your employment.

Sole traders

As a proprietor of a small business, you will have the ability to submit cost claims. For example, suppose you have spent money on your company or on acquiring additional customers. In that case, you will be able to submit various tax claims for the various sorts of professional services you have utilised.

Tax & Deduction Claims for Tradies

The process of filling out a tax return is one that no one particularly enjoys, but since it is required of everyone, you may as well make the most of it by claiming everything to which you are entitled. The following is a guide to the best tax recommendations for tradespeople compiled by H&R Block:

Make a Tool and Equipment Claim

It’s likely that you employ a wide range of tools on a daily basis. According to the rule, you are eligible to claim them as a deduction against your taxes provided you have paid for them and you use them as part of your employment or business. If this describes you, then read on. If you use them as a part of your employment or business, you may be able to deduct the cost of those expenses from your taxable income.

Whether you are self-employed or work for someone else will determine the specifics of how you go about accomplishing your goal.

Let’s say you are a business owner and manager. In that situation, you are qualified to deduct any tools that cost less than $30,000 right away (if they were purchased after April 2, 2019; previous to that, the cost cap was $20,000 up to January 29, 2019, and $25,000 between January 29 and April 2, 2019).

For the vast majority of self-employed tradespeople, this suggests that virtually all of your tools may be promptly written off against your taxable income, which is fantastic news.

When you work for someone else, the regulations are stricter than when you work for yourself. If the cost of the tool is less than $300, you may take the deduction right away; however, if the cost is greater than $300, you will need to write off the expense over the life of the tool, which might be many years. You can take the deduction right away if the instrument costs less than $300. You can’t claim each item individually, so unless the cost of the set is less than $300, you’re looking at spreading the cost of the purchase out over a few years to deduct it from your taxes. Take cautious if you decide to buy a set of tools.

Credits for the Goods and Services Tax (GST) can be claimed against the cost of tools, equipment, or other assets that are acquired for your firm. An instant deduction can be claimed for purchases of items with a price tag of up to $300. In addition, you are allowed to make a claim for a deduction on the item’s depreciation in value if the cost is more than $300.

A small sample of the extensive list of tools that are necessary for the job includes automobiles and utes, drills, electric sanders, electric saws, grinders, leaf blowers, lawnmowers, nail guns, ladders, tool boxes and tool belts, work lights, high-pressure water cleaners, concrete mixers, computers, laptops, and tablets. But, of course, these are just some of the tools that are required. The cost of other products, such as masking tape, oil, new belts, and drop sheets, amongst other replaceable things, may also be eligible for reimbursement by tradespeople.

For their work, tradespeople require a more extensive collection of tools than the typical worker. Deductions can be taken on taxes for the money spent on purchasing, repairing, or cleaning instruments. You can immediately write off the value of tools or depreciate them over time.

While an immediate deduction can be taken for any tools that cost less than $300, any higher expenditures will have to be depreciated.

In order to be able to recover the cost of the tools they used in their profession, employee craftsmen must have personally paid for the instruments in question. If you run your own business as a sole proprietor, you can deduct the cost of your tools and also take advantage of the rapid asset write-off for larger pieces of equipment.

Not only are spending for tools eligible for deduction, but so are expenses for office equipment such as computers, phones, and printers, as well as mobile devices such as smartphones and tablets. These many types of expenditures all adhere to the same set of rules and regulations.

Keep in mind that the only component of the expense that can be deducted is the part that is relevant to either your work or your business. If you utilise the tools or equipment for your own personal use, you will be expected to pay your proportionate share of the total cost.

Accountant At Work


You are able to make a claim for the cost of a vehicle that you use in your business or for your employment, such as a van or a ute, as long as you were the one who paid for the vehicle (there is no deduction for cars that your employer-supplied).

If you own and run a business, you may qualify for the $30,000 tax deduction that was detailed previously for a “rapid write-off,” provided that the car in question costs less than $30,000. (this is something that many used cars have). If it costs more than $30,000, you will be required to depreciate the additional amount over the duration of the time that you own the car.

If you are unable to demonstrate that your vehicle purchases and the expenses connected with operating your vehicle are for personal reasons, you are not eligible to deduct them. However, if you are able to demonstrate that your vehicle purchases and the expenses connected with operating your vehicle are for business reasons, you are eligible to deduct them. If you want to go the route of keeping a logbook, you will be expected to report your odometer readings for a period of at least a year’s worth of consecutive weeks. You are eligible to file a claim for the portion of the vehicle’s running costs and depreciation that is related to the vehicle’s usage for business purposes if you keep track of the mileage driven by your vehicle.

Using the cents-per-kilometre technique, you can claim a maximum of $0.66 per kilometre for business travel up to 5,000 kilometres. In any case, you are required to keep track of your miles, which is a task that can be accomplished quickly and effortlessly using software such as QuickBooks Self-Employed.

If you are an employee, you can claim depreciation on the car throughout the course of its life; in order to do so, you are required to keep a logbook of the work and private usage of the vehicle. Your logbook can also be used to calculate a variety of additional vehicle-related deductions relating to your place of employment, such as the cost of gasoline, service, and so on.

You also can claim a flat rate of 68 cents per kilometre for every mile driven for business, provided that your annual mileage is less than 5,000 kilometres.

Keep in mind that unless your employer needs you to transport heavy tools that cannot be stored at work, you are not eligible to get reimbursement for the costs of driving from your house to your place of employment in your own vehicle.

Work-related Clothing

If you buy particular pieces of work-related protective clothing or equipment, such as steel-capped boots, hard helmets, sunglasses, or other items of a similar nature, you could be entitled for a tax credit for the cost of those items. This is also true if the clothing you wear, such as a uniform, is mandated by your employer and has the dual purpose of setting you apart from members of the general public.

Imagine that in order for your company to keep you safe on the job, you are required to wear either an obligatory uniform or protective apparel. Which option would you choose? (or to protect the normal clothing you wear underneath). If this is the case, there is a good chance that you will be able to take a tax deduction not only for the amount that it cost you to purchase the item, but also for the amount that it cost you to regularly have it laundered or dry cleaned. This is because both of these types of cleaning are considered business expenses.

Keep an eye out for the following things that are frequently claimed by tradespeople: 

  • protective clothing and footwear to protect you from the danger of disease or injury or to avoid damage to your regular clothes that may be caused by your work or the environment in which you operate. This kind of clothing is constructed to withstand more demanding environments, such as those in which ordinary clothes would be insufficient.
  • has a density of weave that gives it a UV rating sufficient to protect you from the sun in situations where your job requires you to work outside in the open air; for example, heavy-duty shirts and trousers, as opposed to regular cotton drill trousers, shorts, and short-sleeve shirts, which you might think are workwear but do not adequately protect you from the risk of injury or illness. 
  • is built with your safety in mind; for instance, protective shirts and pants, as opposed to regular cotton drill pants.

Among the things you could argue for are the following:

  • apparel that is resistant to fire
  • orange vests with reflective tape, steel-capped boots, gloves, overalls, and hardhats
  • safety footwear with non-slip soles
  • Rip-proof articles of clothing constructed with heavy-duty mesh meant to protect you and things with reflective stripes are examples of heavy-duty clothing that may be found in heavy-duty shirts and trousers.
  • Work uniforms are required to be worn, and they must bear the employer’s emblem.
  • If you work outside, you should budget for sun protection charges such as sunglasses and sunscreen.

It’s possible that the model work health and safety standards may supply you with further helpful information regarding matters of safety.

Laundry And Dry-cleaning

Even the expenditures connected with washing your work attire can be claimed as a credit against your GST bill. However, you are required to furnish receipts if this spending totals more than $150 in addition to any other work-related expenses that add up to more than $300. In any other case, a fair basis for determining your laundry or dry cleaning deduction is $1 when the entire load is comprised of work clothing, or $0.50 when it is comprised of work clothes in part.

You are able to make a claim for the money spent washing, drying, and ironing qualified work clothing, as well as the money spent having such garments dry cleaned.

If the entire amount of your laundry expenditures does not exceed $150 and the total amount of your work-related expenses does not exceed $300, you are exempt from the need that you submit documented documentation for your laundry expenses. Instead, you can calculate the cost of your laundry claim based on the following numbers, which the ATO will allow you to use if you perform the washing, drying, and ironing yourself:

  • If the load consists only of work-related apparel, the price per load is $1, which covers washing, drying, and ironing
  • but if the load also contains other items of laundry, the price per load drops to $0.50.

Travel expenses

If you can prove that you did not receive reimbursement or a car allowance for your travel costs, such as meals, lodging, flights, or taxi tickets, then you are eligible to deduct those costs as a business expenditure. In addition, if a novated lease covers your car, your employer may be able to deduct some of the costs associated with maintaining it.

Transporting bulky items

Because of the nature of their employment, employee tradies typically do not have a permanent place of business and so may be eligible to receive reimbursement for travel expenses between their homes and their workplaces. If there is no secure location to store the equipment and it is necessary to transport items that weigh more than 20 kilogrammes in order to finish the job, such as ladders, concrete mixers, or heavy toolboxes filled with equipment, the costs associated with this transportation can be claimed as car expenses.

You are going to need to keep a logbook and document all of your business travels in order to be able to claim these automobile expenditures. If your vehicle is not considered a car, for example, you drive a ute or panel van with a carrying capacity of one tonne or more or can carry nine or more passengers like a minivan, then you will be able to claim the work-related portion of fuel, oil, insurance, repairs and servicing, car loan interest, registration, and depreciation. However, if your vehicle is considered a car, you will not be able to claim any of these expenses. Because you cannot calculate these costs based on cents per kilometre, you will need to keep a logbook and records of your transactions to account for them properly.

Training courses, licences and certifications

You can deduct the cost of any training courses, licences, or certificates that you take in order to keep your skills current or enhance them or that certify you to perform a task for your place of employment. Courses that are not typically connected to your current or your new employment will not count towards your continuing education requirement.

Union and association fees

You are allowed to deduct any fees paid to unions or subscriptions paid to commercial, trade, or professional groups. You should be able to submit a statement of fees or subscriptions paid from the majority of unions as evidence that you are a member of that union when you file your tax return. For instance, membership dues are typically required of trade unions.

Mobile and internet

Include the amount of any work-related phone or internet charges on your tax return if you paid for them out of pocket. If you intend to make a claim for more than $50, you will first need to establish the percentage of time that was spent working over a sample period of four weeks. This percentage may then be applied to the whole income year. Bills, notes in a journal, or computerised records are some of the several types of records that can be stored.

Whether you are searching for Business Accounting Services or a start-up business accountant, you can rely on us to help set up your accounts. We are available for you whenever you have either of these needs.

Cost of managing tax

Additionally, deductible are expenses you incurred due to lodging your tax return. This includes any trips to tax consultants, appeals to court in respect to tax issues, and interest levied by the ATO. It also covers any accounting software you use and any costs paid by your tax agent. The year in which these expenditures are paid for is the year in which they are regarded to have been incurred.

Each every tax return must be prepared individually since each company is unique. However, to make the most of your deductions and savings opportunities throughout this fiscal year, you need to have a solid understanding of the benefits available to you. Talk to an experienced advisor if you are still confused about something.

What courses am I eligible to claim a self-education expense for?

The ATO outlines the requirements for self-education costs; in general, they are deducted when the course you complete leads to a valid degree and satisfies the following standards.

The course must have a sufficient connection to your current employment and meet one of the following criteria: 

  • maintain or improve the specific skills or knowledge you require in your current employment; 
  • you are upgrading your qualifications for your current employment; 
  • you are employed as a trainee, and you are undertaking a course that forms part of that traineeship; 
  • you can show that at the time you were working and studying, your course led, or was likely to lead, to an increase in income from your current employment; 
  • you are employed as a trainee, and you are undertaking

What type of expenses can I claim as part of my self-education expenses?

The ATO provides a number of publications that detail the deductions that are available to individuals. In most cases, they will include the following costs on the list of those that can be claimed as a deduction for self-education:

  • include both meals and lodging (if away from home overnight)
  • course fees paid to the institution a reduction in value for depreciating assets (cost greater than $300) computer consumables used during your studies course fees paid to the institute a fall in value for depreciating assets
  • repairs will be done on the equipment you use as a part of your course, and you will be responsible for the costs of such repairs. Any equipment or technical instruments cost less than $300 that you need for your studies.
  • home office overhead and operating expenses
  • interest internet usage (excluding connection fees)
  • parking costs (only for work-related claims)
  • calls on the phone
  • textbooks, postage, stationery, fees for the student union, student services and amenity costs, and student union fees
  • commercial, professional, or academic journals
  • transportation to and from the educational facility (only for work-related claims).

What other expenses can I claim?

The kind and extent of the deductions available to you will be heavily influenced by the nature of the job that you perform as well as your personal circumstances. This will also depend on your employment arrangement with your employer, namely, whether you are employed on an ABN or TFN basis. According to the Australian Taxation Office, the following items are generally considered to be tax-deductible:

  • Certifications, licences, and permissions are required.
  • Things to wear (must-have business logo)
  • Purchase, rental, or repair of several types of tools and equipment
  • Instruments of a technical nature.
  • Items that offer protection (hard hats, steel cap boots, safety glasses etc.)
  • Laundry and dry cleaning of working attire
  • Sunscreen and sunglasses are a need (if you work outside)
  • Tablet, computer and mobile phone expenditures (work-related portion only)
  • Software and computer accessories connected to the workplace
  • Expenses incurred in operating a home office (if applicable)
  • Cabinets for storing files and shelves for books
  • a table, some seats, and some lighting
  • Internet expenditures (apportioned)
  • Instructional seminars, etc (if directly related to your current role)
  • Professional libraries
  • Journals/Manuals
  • Expenses related to cars and other vehicles, such as parking, tolls, running costs, gasoline, kilometres travelled, and so on.
  • Travel costs (between sites, to pick up equipment, to training courses or meetings)
  • When working away from home, accommodation costs must be covered.
  • Fees charged by unions
  • Insurances

What documents do I need to claim these expenses?

The Australian Taxation Office mandates that taxpayers maintain source papers as documentation of their expenses. These source papers could include tax bills or payment receipts, travel diaries, or logbooks, depending on the nature of the trip.

If your employer paid for it or you received it as part of an allowance, or if you paid for it and your employer reimbursed you, you will not be eligible for a deduction because the ATO will only allow the deduction if you paid for it yourself. So if your employer paid for it or you received it as part of an allowance, or if you paid for it yourself and your employer reimbursed you, you will not be eligible for a deduction.

Owners of tradie businesses have a wide variety of choices accessible to them in terms of tax management. However, if you want to be more confident in your decisions as a business owner and improve the way you manage your cash flow, you need to take a closer look at your budgeting. This will allow you to manage your cash flow better.

We are always excited to learn new ways in which our bookkeeping services for small businesses might assist you in streamlining your accounting processes.

Guest post by : Anna Eydlish Form -

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