Tradie Taxtime

Listen up Tradies. It’s TAXTIME!

We spoke to CAT Workwear’s very own Tax Manager, Finance Guru and all-round good lad, Sinclair Dias to give you the lowdown on what tax return time means for you, and some advice on how you can maximise your returns.

Over to you Sinclair….

Whether you’re leaving everything to your accountant or educating yourself, it’s important to make sure you’re getting every cent from your tax returns. We recommend visiting the ATO Website for the most up to date and official guidance.

Tradies working as an employee can generally claim deductions for work-related expenses, such as tools and uniforms, within certain limits. However, self-employed tradies or businesses have more opportunities to claim deductions related to running their business, such as advertising costs, office rent, and business insurance. We’ve split out our tips below whether you’re a business owner or an employee.

TAX TIPS IF YOU HAVE YOUR OWN BUSINESS

Take advantage of depreciating assets

Businesses can take advantage of Temporary Full expensing (TFE) which allows eligible businesses an immediate deduction, for the full cost of ‘depreciating assets’ bought and first used prior to 30 June 2023. In simple words – if you bought and used any assets before June 30th 2023, you can claim the entire cost of this asset as a deduction.

So what’s a ‘Depreciating Asset’? Here’s a general but not a full list:

• Hand tools

• Power tools

• Laptops and Tablets

• Office furniture and equipment

• Motor vehicles used for the business.

Whilst the TFE rules will expire on 30 June 2023, it was announced in the recent 2023-24 Federal Budget that small businesses (aggregated annual turnover of less than $10m) will still be able to claim an immediate deduction beyond 30 June 2023 (between 1 July 2023 and 30 June 2024) for eligible assets with a value not exceeding $20,000.

What else can you claim as an expense?

Some items are allowed for immediate tax deduction. Here’s a general but not a full list:

• Work Boots (Steel Toe, Composite Toe, Waterproof Boots or any special shoes your job requires you to wear)

• Safety Work Wear (Hi Vis Apparel, Reflective Jacket, Pants with knee pads, and so on)

• Sun protection gear (Tee shirts providing sun protection, hats, neck gaiters, sunscreen) • Care for your workwear like laundry and dry-cleaning expenses

• Safety eyeglasses

TAX TIPS IF YOU’RE AN INDIVIDUAL TRADIE

As an individual, you can claim deductions for work-related expenses like tools, protective clothing, and vehicle expenses directly related to your trade.

If you are a tradie working as an employee, you can claim the following expenses. This is a general but not full list:

• Tools and Equipment: You can claim deductions for the cost of tools, power tools, hand tools, and equipment used in your work. This includes both the purchase and repair costs. Here’s what you need to know about claiming these costs - If a tool or item of equipment is only used for work and:

1. costs more than $300 – you can claim depreciation for the cost over a number of years. 2. costs $300 or less – you can claim an immediate deduction for the whole cost.

• Protective Clothing and Safety Gear: Hard Hats, Steel Toe, Waterproof and Composite Toe boots, gloves, Hi-Vis apparel, Water resistant jackets and safety goggles, can all be claimed as deductions.

• Work-related Vehicle Expenses: If you use your vehicle for work purposes and meet certain eligibility conditions, you can claim deductions for expenses like fuel, maintenance and repairs, insurance, registration, and depreciation. Keep accurate records. This article from the ATO explains more about tax deductions and travel.

• Home Office Expenses: If you have a dedicated space in your home for admin tasks related to your trade, you may be eligible to claim deductions for expenses like rent, mortgage interest, utilities, and depreciation of office equipment. Read the latest from the ATO on Working From Home deductions.

• Training and Education: Costs associated with professional development, training courses, licenses, and certifications directly related to your trade can be claimed as deductions.

• Travel and Accommodation: If you need to travel for work-related purposes, expenses such as accommodation, meals, and transportation can be claimed.

• Union Fees: Pay a membership fee to a union or a professional association? You can claim that too.

• Worksite Safety Expenses: Expenses related to worksite safety, such as safety signage, safety equipment and even that first aid kit in your car can be claimed as deductions.

Rules of Thumb

If you’re using something for business as well as for personal purposes, only claim the portion attributed to your business. As an example – If you have a Ute that you use for work but also use on your camping trips, it’s a good idea to claim only the part used for your business.

The ATO may ask you to justify a claim you have made. If this happens, you’ll need to provide a detailed report on when the expense was made, vendor, amount, and reason for expense. Please note - If the tools, equipment, or any other costs are supplied by your employer, another person or you are reimbursed for the cost, you can’t claim a deduction.

The information in this article is general in nature. It doesn’t take into account your specific financial position, needs or circumstances. As with any major project, you should look at your own financial position, objectives and requirements and seek professional advice before making any financial decisions. Please keep tax records for everything.