Nobody likes completing a tax return but you have to do it, so you might as well get yourself the best possible outcome by claiming everything you’re entitled to.
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So, if you’re a tradie, here’s H&R Block’s tax guide tailor-made for you:
Tools and equipment
You probably use a variety of tools every day and the rule is that if you’ve paid for them and you use them as part of your job or business, you can claim them as a deduction against your tax.
Exactly how you do that depends on whether you run your own business or work for someone else.
If you run your own business, you can claim a deduction straight away for the cost of all tools costing less than $150,000 (if acquired from 12 March 2020, before that the cost limit was $30,000).
For most self-employed tradies, that means that pretty much all your tools can be written off straight away against your taxable income.
If you’re employed by someone else, the rules are less generous. You can claim a deduction straight away for tools costing $300 or less but if the cost is more than $300, you’ll need to write off the cost over the life of the tool, which could be several years.
Take care if you purchase a set of tools – you can’t claim each tool individually so unless the cost of the set is less than $300, you’re looking at writing off the cost over a few years.
It’s not just tools you can claim either – the same rules apply to items of equipment for the office like computers, phones and printers as well as mobile phones and tablets.
Just remember to only claim the work or business use part of the cost. If you use the tools or equipment for private use, you’ll need to apportion the cost.
You can also claim the cost of a vehicle, such as a van or a ute, which you use in your business or for your job, provided you paid for the vehicle (so there’s no deduction for work-provided vehicles).
If you run a business, you can use the same $150,000 instant write-off tax break outlined above. Note that the $150,000 limit only applies to ‘commercial vehicles’ broadly meaning vehicles with a payload capacity of more than one tonne.
So, if you buy a vehicle such as a dual cab ute that can carry more than one tonne, as well as other commercial vehicles like trucks and vans, you can write-off the entire cost up to $150,000.
The rules for normal passenger vehicles (including smaller utes) are less generous. There is a cap of $59,136 ($57,581 up to 30 June 2020) and this overrides the $150,000 limit. So the maximum depreciation claim is $59,136 if you purchase a car costing more than that.
If you’re an employee, you can claim depreciation on the vehicle over its life, but only if you keep a logbook of your work/private use. Your logbook can also be used to work out your various other work-related vehicle deductions, such as the cost of fuel, servicing, etc.
Alternatively, if you travel less than 5000kms, you can simply claim a set 72c/km allowance for every business km travelled (68c/km up to 30 June 2020).
Remember, you can’t claim for the costs of traveling from home to work in your vehicle, unless your employer requires you to transport heavy tools which can’t be stored securely at work.
If your work requires you to wear either a compulsory uniform or protective clothing to keep you safe (or to protect the normal clothing you wear underneath), the chances are you’ll be able to claim a tax deduction both for the cost of purchasing the item and the cost of getting it periodically laundered or dry cleaned.
Look out for the following commonly claimed items by tradies:
protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment. This type of clothing:
is made to cope with more rigorous conditions, where conventional clothing would be inadequate.
is designed to protect you – for example heavy duty shirts and trousers, distinct from ordinary cotton drill trousers, shorts and short sleeve shirts that you might think are work wear but do not adequately protect you from the risk of injury or illness
has a density of weave which gives a UV rating sufficient to protect you from the sun where your job requires you to work outdoors.
Amongst the things you could claim are:
non-slip safety shoes
COVID-19 protection such as masks and face shields
heavy duty shirts and trousers such as rip proof items of clothing made with heavy duty mesh that are designed to protect you or items with reflective strips
Compulsory work uniform branded with the employer’s logo.
Sun protection costs including sunglasses and sunscreen if you work outdoors
Laundry and dry-cleaning
You can claim the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned.
If the total amount of your laundry expenses are $150 or less and your total work-related expenses are $300 or less, you don't need to provide written evidence for your laundry expenses. Instead, for washing, drying and ironing you do yourself, the ATO allows you to use the following amounts to work out your laundry claim:
$1 per load - this includes washing, drying and ironing - if the load is made up only of work-related clothing, and
50 cents per load if other laundry items are included.
Two tips for making your taxes easy:
Keep good records, including invoices and receipts. It makes completing your tax return easier and ensures you can claim for everything you’re entitled to.
Consider using a tax agent like H&R Block. Tax is complicated and an agent can ensure you get it right.
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