Understanding expenses associated with trades
When you hire a bookkeeper, you want one that is familiar with the unique tax deductions associated with your trade. They are vastly different to other small businesses.
Basic tradie expenses
Your bookkeeper should understand the following a very minimum:
- Car Expenses. You can claim vehicle expenses when you do not have a permanent workplace and travel from home to different work sites, and when you have to carry the tools of your trade with you.
- Clothing and footwear expenses. You can claim clothing and footwear expenses when you repair, buy and hire it when it is a uniform, protective and specific to your trade. Overalls and steel capped boots fall into this category.
- First aid training. First aid training is claimable when you are the designated first aid person in emergency situations for your organisation.
- Insuring tools and equipment. Insurance for tools and equipment is tax deductible to the extent that you use them for work. If you use them privately, this portion is not tax deductible.
- Laundry expenses. All clothing you can claim as tax deductable, you can claim a deduction for washing, drying and ironing it.
- Licenses and permits. Driver’s licences are not tax deductable but you can claim fees for regulatory certificates or permits you need that directly relate to your work.
- Parking fees and tolls. You can claim parking and toll fee expenses for work-related travel between two workplaces.
- Phone and internet. The work-related part of your phone and internet is claimable. So, you need to work out a percentage for private and work use. You need to keep records if you claim more than $50.
- Repairing tools and equipment. Repairs to tools and equipment you use for work are claimable. But if you also use them privately, you can only claim the amount that is work-related.
- Self-education expenses. You can only claim expenses for self-education when it improves or maintains your skills and knowledge for your current employment, and is likely to increase your earning power in your current job.
- Glasses and sunglasses. You cannot claim prescription glasses but you can claim sunglasses if it reduces the risk of illness or injury while working as a tradesperson. If you wear them outside of your employment, you cannot claim the portion that is private use.
- Professional magazines. Professional and trade magazine expenses are claimable if they are directly related to your employment.
- Tools and equipment. Tools and equipment are tax deductible when you use them in your job. This is quite complicated so you need your bookkeeper to understand the complexities of claiming these as a deduction.
- Travel expenses. You can claim overnight travel expenses when it is work related. This includes accommodation costs, meals and incidentals.
- Union and professional association fees. Union and professional association fees are tax deductible.
- Working from home. Tax deductible working from home expenses you can claim include:
- devaluation of home office equipment
- repairs to your office fittings and furniture at home
- lighting, cooling, heating and cleaning.
These are just the basic expenses you can claim as tax deductions but it is much more complex than this. You need a bookkeeper who completely understands the complexities of what tradespeople can claim as expenses to reduce your tax burden.
Want to know more?
Alexilum is a registered BAS Agent and has extensive history working with tradies like you. Contact us today to find out more.