Every day in the life of a tradie is viewed as a busy day as work never ends; finding time to do your tax returns can be pretty tiring and stressful.
However, you can get the right advice from ATO-authorized tax accountants on things to do with your tax deductions, claims, entitlements, and more.
By filing your tax returns, you can ensure that your accounts are well-prepared and updated to comply with the Australian Taxation Office.
Our blog post will guide you on the common tax deductions for tradies with examples of expenses you can claim and more. Let’s get right into it;
What expenses can a tradie claim in ITR (Income Tax Return)?
With ATO, as long as you are a tradie and fully aware of the expenses you need to claim for your business, they will fully allow that to take place.
The government allows tradies to claim many business-related expenses, and being in the know can help reduce your taxable income.
You must claim these expenses because you will be saving yourself some coins that can be useful to you for later or future use.
Examples of what you can claim are as follows;
1. Tools and equipments
What happens when you purchase equipment for your trade? According to ATO, you can claim a deduction for the costs you purchased them for.
It doesn’t matter how basic or expensive the tool is. You can claim it on your tax if you purchased it for work.
2. Vehicle expenses
Vehicles used for work can also be claimed for. Some running costs, such as fuel, maintenance, and registration, are meant to be claimed.
Deduction claims can also be made if you use the car to travel from one job site to another.
3. Work clothes and protective gear
If you need to wear protective gear such as work boots, hard hats, and other items to protect yourself while working, you should know that these, too, are deductibles.
However, casual clothes worn outside work can be claimed as a deduction.
4. Home office
Working from home, whether you are a bookkeeper, admin, or other related office professional, it’s your right to claim a deduction on expenses.
The percentage you can ask for includes electricity, internet, and rent or mortgage costs.
5. Insurance premiums
Businesses covered under insurance, such as vehicle and public liability insurance, should also claim for their premium deductions.
For example, if you pay for insurance on your tools or business vehicle, you can claim the cost of the premiums.
FAQs (Frequently Asked Questions)
What can I claim on my tax return as an electrician?
As an electrician, you must know the unique expenses observed when filing your tax returns. Here are some of the expenses you can claim as follows;
- Specialized tools
You can claim on your tax return specialized tools needed by electricians for work, such as cable testers and wire cutters, among other insulated tools.
- Work-related travels
As an electrician, you must roam from one job point to another.
This means an extra charge to reach your place of work. You can freely claim for fuel, maintenance, and insurance for your vehicle.
- Safety equipment
Being an electrician means you will forever need safety gear to protect you at work.
Insulated gloves, boots, and eyewear, among other essentials, can be claimed and are considered deductibles.
- Training and certification
As an electrician, you must be qualified and have completed training or certification courses to demonstrate professionalism.
Upgrading your skills or renewing your license is one thing you can claim for the costs incurred to make the process successful.
What are the three golden rules of ATO?
The Australian Tax Office has introduced crucial rules and guidelines that need to be followed when it comes to tax deductions for tradies. Here are the rules;
- Your expense must be work-related- This informs individuals that any claim they wish to make must be directly related to their work or business.
- You must have proof- Keeping all records of purchases made, either receipts or invoices, as ATO will want to check on the evidence you have if you are audited.
- You can only claim a work-related portion. The rule applies if you need to buy anything, such as a phone or a car, and you can claim that portion for work-related purposes. For instance, if you use your ute 50% of the time for business, you can claim 50% of its operating expenses.
Conclusion
Filing your tax return as a tradie should no longer be tiresome. The key is to know the specific deductions available in your profession, and you’ll be good to go. With the help of a qualified tax account such as kshtax, you should consider your tax problems solved.
