Being self employed as a Tradie is a way of life for some Australians. The flexible working hours, being your own boss, known as an expert / professional in a given field, extended holidays! are just a few reasons that entice most to choose a specialized line of work and be self employed. These tradesmen or Tradies as widely and fondly known amongst Aussies usually work on their own with a home / office, a vehicle (or Ute) and specialized tools, amongst others.
It’s quite lucrative if a Tradie consistently delivers a good, efficient and reliable service to his / her customers. However, unlike a fixed income or salaried employee, the tax time can be a challenge for most Tradies. The PAYG on income is not deducted monthly hence there could be a negative surprise in terms of a tax liability at EOFY. In addition all work related expenses may not be properly recorded, invoices may not be properly maintained, hence collections are a mess; the list goes on.
Whilst there are answers to most of the above, the undersigned has touched on tax deductible expenses available to Tradies. Some are commonly known expenses which are tax allowed, but if the list is carefully analyzed there are quite a few expenses one would easily miss! For a Tradie these costs add up, resulting in more taxes being paid annually than legitimately or legally required.
Protax has formulated a list of expenses that can be tax deductible (or not as the case may be) which should enable
most Tradies to save on their tax liability during the tax season. It is not an exhaustive list but intends to cover most
material expenses widely discussed today between Tradies. This is for work related expenses incurred in the normal
course of business to generate income. Hence any private expenditure should be identified and taken out.
| Expense | Details | Tax Deductible? |
|---|---|---|
| Protective clothing | All clothing inclusive of steel capped shoes, high viz, helmets, etc. | Yes |
| Laundry | For all work related clothing | Yes |
| Tools & equipment | Instant asset write off limits apply | Yes |
| Repairs | Incurred on assets used for work | Yes |
| Transport | Vehicle expenses like fuel, servicing etc or public transport | Yes |
| Learning / coaching | Any expenses incurred on learning a course to enhance the quality of work or to be up to date in the line of work, inclusive of travel expenses |
Yes |
| Mobile bills | If the mobile phone is solely for work and kept standby to receive customers |
Yes |
| Sun protection | Sunscreen, sunglasses used during work | Yes |
| Home office | If a part or a room at home is used for work related activity | Yes |
| Super contribution | Upto $ 25,000 per annum, paid before income tax is paid. | Yes |
| Stationery | Used for work | Yes |
| Bank charges | Only if the bank account generates interest income | Yes |
| Interest | Borrowed for work related financing of assets etc. | Yes |
| Tolls / parking | Incurred during work related travel | Yes |
| Trade union / professional association fees |
Expenses related trade or association bodies, including annual practicing fees costs |
Yes |
| Technical publications |
Related to the line of work | Yes |
| Tax / accountancy fees |
Services obtained for tax and accounts preparation, plus travel to meet your tax agent |
Yes |
| Public liability insurance |
If required to carry out work | Yes |
| Legal expenses | For work related contracts etc. | Yes |
| Insurance | Income protection | Yes |
| Meals | Routine meals during work and travel | No |
| If worked after normal hours and overnight travel | Yes | |
| Fines | Imposed by court or authorities | No |
| Entertainment | Drinking or dining out with friends | No |
| Conventional clothing / grooming |
Not related to work | No |
| Driver’s license | Renewal and acquiring fees | No |
| Club membership | Social clubs fees | No |
| Child care | Child support expenses | No |
| Other | Any other costs incurred to generate work income ,its most often | Yes |
Need more details? We specialize in Tradie tax returns! So why not call Protax Accountants Pty Ltd for a free confidential discussion? You will be amazed on the legitimate tax deductions you have been missing out all these years.
Yohan 0451 011 399, or Dirk 0449 917 046 or our general line 03 8512 0338/7