As a tradie, it’s essential to understand the tax deductions you can claim to reduce your taxable income and maximise your tax refund. This article outlines five common tax deductions for both employee tradespeople (tradies) and business owner tradespeople (business owner tradies) in Australia, keeping in mind the Australian Tax laws:
Tools and Equipment
Both employee tradies and business owner tradies can claim tax deductions for tools and equipment used exclusively for work purposes. For tools or equipment costing more than $300, you can claim them over several years as depreciation. Items costing $300 or less can be claimed initially. Employee tradies may also claim the cost of trips between home and work when carrying bulky tools or equipment essential for their employment duties.
If you wear protective clothing or uniforms in your work, you can claim a deduction for their cost. This includes items such as safety boots, hard hats, high-visibility vests and work-specific uniforms. However, you cannot claim a deduction for items that are not specific to your work, such as black pants and a white shirt.
Travelling for work can be an exciting adventure, but it can also be expensive. The good news is that as a business owner or employee, you may be able to claim travel expenses as a deduction on your tax return. This means that you can potentially save money on your taxes by claiming expenses like accommodation, meals and transportation you incur while away on business trips. It’s important to note there are specific rules and regulations around what you can and cannot claim, so be sure to keep accurate records and speak to a tax professional for advice. With careful planning and attention to detail, you can make the most of your work-related travels and keep more money in your pocket.
Training and Education
As a tradesperson, it’s important to keep your skills and knowledge up to date. If you undertake training or education directly related to your work, you can claim a deduction for the associated costs. This includes course fees, textbooks and travel expenses. However, you cannot claim a deduction for training that is not related to your work, such as a hobby course.
To claim a deduction for training and education, you need to keep records of the expenses you incur. This can include receipts, invoices and bank statements. You should also keep a record of the course or program you undertake, the provider of the course and the date of the course or program you undertake, the provider of the course and the date you completed the training.
It’s also important to note that you can only claim a deduction for training and education directly related to your work. This includes courses that help you acquire new skills or knowledge that you can use in your trade. It does not include courses that are only tangentially related to your work or that are designed for personal development.
In addition to formal courses and programs, you can also claim a deduction for other forms of training and education, such as workshops, seminars and conferences. As with formal courses, these need to be directly related to your work to be eligible for a deduction.
Home Office Expenses
Business owner tradies who use a part of their home as a dedicated workspace for their trade, can claim a deduction for the associated expenses, including rent, utilities and internet expenses. However, you can only claim a deduction for the portion of the expenses that relate to your workspace, not your entire home.
Other Deductions to Consider
In addition to the deductions listed above, there are a range of other deductions that tradies might be eligible to claim. These can include:
- Union fees and professional association fees
- Vehicle expenses such as fuel and registration
- Self-education expenses directly related to your work
- Business-related phone and internet expenses
To learn more about these deductions, check out our blog post on 12 Less Common Tax Deductions You Didn’t Know You Could Claim.
If you’re keen to learn more about the tax deductions available for tradies, our team at Carbon Group is here to help. Specialising in tax and accounting services for tradespeople across all industries, we can assist you in maximising your deductions and minimising your tax liability. From claiming travel expenses to deductions for tools and equipment, we’ve got you covered. We also offer a wide range of services to help you manage your finances and grow your business. Contact us today and let us show you how we can help take your business to the next level.