Tax Deductions for Tradies: 15 Tips to Maximise Your Tax Return
Are you ready for tax time?
June 30th is rapidly approaching and for most tradies, the end of the financial year can be stressful. If you’re working, contracting or running a small business, it can be hard to keep up with the range of tax deductions available to you.
That’s why we’ve put together our top tips to help you, or your small business, get the best tax return possible!
How can I maximise my tax return?
Tip #1: Know Your Business
There’s a lot of perks to having a small business, but how do you know if you qualify? To be classed as a “Small Business Entity” you’ll need an aggregated turnover of less than $10 million per year.
Tip #2: Explore Super Deductions
It might sound counterintuitive, but it could benefit you to pay out your super early. Superannuation is only deductible once paid and cleared, so consider getting it out of the way before the end of the financial year.
Tip #3: Learn About Instant Deductions and Asset Write-Offs
Instant asset write-offs have been extended to June 30, 2023 for certain businesses! To learn more, check out our 2022 Tax Time eBook.
Tip #4: Get Expenses Paid Early
If you’ve got the cash flow, consider paying expenses such as insurance, interest, rent, conference fees, subscriptions or travel costs in advance.
Tip #5: Claim Now, Pay for Committed Expenses Later
You can claim immediate deductions for future expenses that you’re locked into such as salaries and wages – even if these are not paid before the end of the year.
Tip #6: Spend Big…
If you’ve got low-cost items that need replacing, now is the best time!
Tip #7: Keep on Top of Repairs and Maintenance
Be mindful of any outstanding work that you could squeeze into this year’s tax return that could be attributed to your expenses or income.
Tip #8: Deduct Debt
In some situations, businesses are eligible to write off bad debt while it still exists. Consult a financial professional to see if you qualify.
Tip #9: Log Kilometres
If you’ve held onto your receipts, you can claim deductions by the kilometre, or as a flat rate up to 5,000 business kilometres.
Tip #10: Audit Assets and Inventory
Assess what you have on hand and see if there is any obsolete stock or inventory that could be reevaluated to receive a deduction, or in some cases, income.
Tip #11: Training, Qualifications and Certification
Starting a course is a great way to develop your skills and unlock your earning potential, a factor that is pushing more tradies to enrol in a Certificate IV in Building and Construction (Building). Better yet, if you enrol before June 30, the associated costs can be included in this year’s tax return!
Tip #12: Categorise Materials and Supplies
Double check to ensure that any materials and supplies included in your claim directly relate to earnt income for the financial year.
Tip #13: Pay On Time
Tradies are notoriously late, but when it comes to taxes it’s important to make sure you pay on time and accurately.
Tip #14: Working from Home
Did you know that if you’re self-employed you can claim time for things like invoicing, quoting and contacting clients while at home?
Tip #15: Government Support
Government grants and initiatives such as JobKeeper may be subject to tax. Find out if your payment is taxable on the ATO website.
There’s a lot of information out there about tax time, and sometimes a quick Google search can bring up more questions than answers. So we’ve put together a quick FAQ to answer your common questions.
What can tradies claim at tax time?
The ATO’s Building and Construction deductions list is lengthy, but spending a few minutes reviewing it could save you a small fortune at tax time. Check out our 2022 Tax Time eBook to learn more about what you could be entitled to claim!
How much can tradies claim on tools?
This number will vary based on your expenses but you may be eligible to claim the full cost of tools up to $300.
What expenses can apprentices claim?
Apprentices can claim related work expenses and self-education costs, such as their apprenticeship courses and related travel expenses.
The list of tax deductions available to tradies is only getting longer and more complex. So whether you’re new to the industry or looking to learn more about tax maximisation for your small business, join us at our upcoming Tax Time Webinar with Certified Practising Accountant (CPA), Tony Dimitriadis!
Register here to secure your place.
Remember, if you’re thinking about doing a course, enrol before June 30 and the associated costs can be included in this year’s tax return! Contact us to find out more.