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taxes

Top 10 tax deductions for tradies [2023 update]

Q: What can tradies claim on tax without receipts?

As per ATO guidelines, the maximum amount you can claim for work-related items purchased without receipts is $300.

Q: What can tradies claim on tax?

You can claim the expense must be directly related to generating your income and you must have paid for it yourself without receiving any reimbursement. Such as work-related travel expenses, tools, equipment, protective clothing, licences and certifications.

By Samuel Williamson

June 1, 20173 min read

Tax time / End of Financial Year (EOFY) is just around the corner, so it’s time to get your expenses in order. But with so many transactions involved in trade businesses, it’s easy to forget which ones you can claim in your return. Here are the top 10:

Eligibility

It is necessary that you have personally spent the money and did not receive any reimbursement for it.
It must directly relate to earning your income
It's essential to have proof of your transaction, which can be in the form of a receipt or any other record.

It's important to note that only the portion of an expense that is directly related to earning your income can be claimed as a deduction. Any part of the expense that doesn't have a direct connection to your income cannot be claimed.

1. Vehicle expenses

Vehicle purchases and costs associated with operating your vehicle are claimable when you can prove they are for business purposes (and you don’t receive a car allowance).

Under the logbook method, you need to show odometer readings for a period of at least 12 continuous weeks. Mileage tracking allows you to claim the percentage of vehicle expenses apportioned to business use, including running costs and depreciation.

Under the cents per kilometre method, you can claim $0.78 per kilometre on up to 5000 kilometres of business travel. Either way, you need to track your mileage, which you can use reputable tax software that will provide you with mileage auto-tracking.

2. Work-related travel expenses

You can claim work-related travel expenses, such as meals, accommodation, flights or taxi fares if you travel away from home overnight and you can show receipts and have not been reimbursed or given a car allowance. If your vehicle is under a novated lease, your employer is eligible to claim vehicle expenses.

3. Tools, equipment and other assets

GST credits are offered for the cost of tools, equipment or assets purchased to operate your business.

For an item that costs up to $300, an immediate deduction can be claimed.
Where the cost exceeds $300, you can claim a deduction for the cost over several years, accounting for its decline in value.

Tools and equipment repairs

Expenses involved in repairing or insuring your tools and equipment can be claimed too, as well as any interest charged on money borrowed to purchase the items. If you use these items for both work and personal use, you’ll need to show a diary that specifies how it’s used, so the deduction can be apportioned correctly.

4. Occupation-specific and protective clothing

If you buy certain protective clothing or items for your work where your duties require you to spend prolonged periods working outdoors or steel-capped boots, you can claim them as a deduction. Such as:

Hard hats
Sunglasses
Sunscreen
Sunhats

This also applies to occupation-specific clothing needed to distinguish you from the public, like a uniform.

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5. Laundry and dry cleaning

You can even claim GST credits on costs associated with cleaning your work clothes. If this expense exceeds $150 and other work-related expenses total more than $300, you need to provide receipts. Otherwise, a reasonable basis for calculating your laundry or dry cleaning deduction is $1 where the whole load is work clothes or $0.50 where it is partially work clothes.

6. Training courses, licences and certifications

Any training courses, licences or certifications you undertake to maintain or improve your skills, or that certify you to perform a task for work, are tax deductible. Courses that are not generally related to your work or new employment are not eligible.

If you are taking training from 29 March 2022 to 30 June 2023, tradies can benefit from an additional 20% deduction offered by the Australian Government. Hence, it's a highly advantageous time for them to invest in upskilling opportunities over the next few years.

7. Union and association fees

You can claim any union fees or subscriptions to trade, business or professional associations. Most unions provide members with a statement of fees or subscriptions paid, which you can use to prove your association in your return.

8. Mobile and internet

When you pay for work-related phone or internet expenses, include the cost in your return. If you plan to claim more than $50, you will need to determine the percentage related to work use over a four-week representative period, which can then be applied to the full income year. Records can be kept in the form of diary entries, electronic records, or bills.

9. Working from home related office equipment

If you run your business from home, or have recently updated your home office equipment, you would be able to claim the work-related portion of the costs associated with these when lodging your tax return at the end of the financial year.

10. Cost of managing tax

Costs related to lodging your tax return are deductible as well. This includes your accounting software, tax agent fees, any travel to tax advisors, appeals to court in relation to tax affairs or interest charged by the ATO. These costs are considered to be incurred in the year they are paid.

Every business is different, as is every tax return. But to maximise your deductions and save this financial year, it’s important you understand what you’re eligible for. If you’re still unsure, speak to an expert ProAdvisor.

FAQs

What can tradies claim on tax without receipts?

What can tradies claim on tax?

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