Tradies often do not want to think about taxes, GST, financials or cash flow. However, these are things that business owners, employees and self-employed contractors need to manage. These can come with red tape and to control and understand your finances, you need in-depth financial knowledge. We are not the best option for building a cabinet or wall, laying a carpet or laying a pipe and you may not be the best at managing finances.
We are a team of taxation and accounting professionals dedicated to tradies. If you are a contractor, an employee or business owner, we are here to be of help.
Does your accountant make you confused and feel like you have no idea what’s going on with your taxes and finances? At Sky Accountants, we provide a solution for the unique accounting needs of tradies. We understand you, the tradie industry and your trades business. We understand how your industry works, what tax requirements and laws are relevant to you and how to make the process clear and easy for you.
Nobody enjoys completing tax returns but you would have to do it so you might as well get the best outcome by claiming all the deductions you are entitled to.
You use various tools every day and if you have paid for them and use them as part of your business or job, you can claim them as deduction against tax. The process depends on whether you work for someone or own your own business.
If you run the business, you can claim the deduction for the cost of all tools that cost less than $30,000 right away. Most self-employed tradies can have all their tools be written of right away against their taxable income. Those employed by someone can claim a deduction right away for tools that cost less than $300 but would need to write off tools costing more than that over its life which could be a couple of years. For a set of tools, you cannot claim for each individually so unless that set costs less than $300, you will have to write the cost off for several years. The same rules apply to equipment items like phones, computers, printers, tablets and mobile phones. Claim only the business or work part of the cost.
You can claim the cost of a vehicle that you use in the job or business, provided you paid for it. If you run this business, you can use the aforementioned $30,000 instant write-off tax break if the cost is less than $30,000. If it costs more, you will need to write it off over its life. If you are an employee, you can claim depreciation over the life of the vehicle so you need to keep a logbook of work and private use. You can also use this logbook to claim for work-related deductions such as servicing, fuel, etc. If you travel less than 5,000 km, you can claim a set 68c/km allowance for every business kilometer traveled.
If your work required a uniform or protective clothing, you may be able to claim a tax deduction for both the cost of its purchase and laundry. Tradies typically claim for protective clothing and footwear that protect them from illness or injury risks, prevent damage to clothes, are made to cope with rigorous conditions, designed to protect them like heavy duty shirts and trousers and have a density of weave that gives a sufficient UV rating that protect from the sun. These can be fire-resistant clothes, safety-coloured vests, gloves, steel-capped boots, overalls, hardhats, non-slip safety shoes, uniform with business logo, etc.
You can also claim the costs of cleaning them. If the laundry expenses are less than $150 or total work-related work-related costs are less than $300, you do not need to provide written evidence. If you do the cleaning yourself, you can claim $1 per load or 50 cents per load if other non-work related laundry items are included.
You can also write-off the cost of any obsolete, unusable or damaged materials before the year ends to claim a deduction. If your customers won’t or can’t pay you, you can also write it off by 30 June to claim a bad debt deduction. This should come in the form of a board minute or similar.
Other possible tax deductions are equipment lease and repair, sunscreen, accounting software, home office running expenses, office furniture, Internet expenses, training courses, professional libraries, parking, accommodation and meal expenses, union dues, insurance costs, licenses, permits and certifications.
Keep good records such as receipts and invoices to make completing your tax return easier. Consider using Sky Accountants to make sure you get your taxes right.
Tradies like plumbers, electricians and builders often pay for work-related expenses on their own. Because of their busy schedules, tradespeople often pay too much tax and miss out on thousands or hundreds of dollars worth of claimable expenses each year.
To know if you can claim it as a tax deduction, ask if the cost is directly related to work or required for work. Do you have an invoice, bank statement or receipt to prove the purchase? Did you pay for it or was it part of an allowance? Was it reimbursed by anyone? If you are not sure, talk to a tax agent and get help.
Remember that the ATO can see inflated or fake tax deductions so it is important to claim only real deductions. If you get caught claiming items that you are not entitled to, the ATO will get a payback and investigate your previous tax returns as well. Tradies have many items they can claim so don’t take risks.
As a tradie, you may be too busy and pay too much tax or miss legislation changes and all of a sudden find your cash flow not as healthy as you thought. It’s a good habit to check with your tax accountant every year to make sure you are up to date. Your status may change financially and legally so check if your business structure remains cost effective tax wise.
Keep clear, itemised records of all expenses and see if you should invest in an accounting software to help you. Photograph receipts so you have an electronic back up on your computer. Need advice on tradie tax deductions or help in your tax return? Contact Sky Accountants or fill out our contact form and we will get back to you as soon as possible.
As a tradie, you spend a lot of time on site and traveling so you need to be organised to be able to claim everything you can. You can use an app to photograph receipts as little expenses can add up. You can also keep a folder for expenses and reimbursements. Be organised so you can remember your purchases and what they are for. If you have any questions, call us or send us an email. We would love to hear from you.
Tax for Tradies
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
You can click here to speak to a business, accounting and bookkeeping firm. We will give you a call to know more about your needs. We will explain to you how we can improve your business.
We would love to help you formulate investment strategies and streamline your processes to take your business to the next level. Our goal is to help you grow your business, find ways to invest more and increase your productivity.
Email Address: firstname.lastname@example.org
Ballarat Accountants | Business Accountants Ballarat | Bookkeepers Ballarat | Mortgage Broker Ballarat | Financial Planning Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Melbourne Accountants | Business Accountants Melbourne | Bookkeepers Melbourne | Mortgage Broker Melbourne | Financial Planning Melbourne
Sunbury Accountants | Business Accountants Sunbury | Bookkeepers Sunbury | Mortgage Broker Sunbury | Financial Planning Sunbury
Gisborne Accountants | Business Accountants Gisborne | Bookkeepers Gisborne | Mortgage Broker Gisborne | Financial Planning Gisborne
Phone: 03 97444522
Sunbury Office Address: Suite 13, 33-35 Macedon Street, Sunbury, Victoria 3429, Australia
Gisborne Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437