Tax Savings for Tradies in Australia
Silver Peacock is an Accounting and Tax Firm from Sydney employing accountants, chartered tax advisors, and financial planners that specialize in particular industries such as Building & Construction, Tradesman, Medical & other small & local businesses. By doing so, we are able to offer a more specialized and expert service to our clients.
Silver Peacock believes that your success is your success, therefore, the aim of Silver Peacock accountants and tax specialists is to save you as much money as you can so you can put it into good uses whether it is reinvesting into your business as it grows to expand or other healthy investments to provide you with a healthy return on investment (ROI).
How to Reduce Tax as a Tradie
The first question to ask yourself, are you getting the maximum legal tax return you are eligible for?
To be able to answer this question, you should become familiar with some of the common deductions that you may be eligible for as a tradie!
These may include the following but not limited to:
- Instant asset write-off
If you purchased a car, ute, or other large work equipment such as machinery regardless of whether it was brand new or used, you will be eligible for an instant write-off as long as the asset cost is less than the threshold.
This initiative has been extended to 30 June 2020 and businesses with a turnover of $50 Million dollars can now access this concession. We encourage you to take advantage of this concession while it’s still valid.
If you have any questions about this, contact Silver Peacock.
The maximum amount is $30K depending on when the asset was purchased. Below is a table to provide you with guidance:
|Date range||Threshold for each asset|
|7:30pm (AEDT) 02/04/2019 to 30/06/2020||$30,000|
|29/01/2019 to before 7.30pm (AEDT) 02/04/2019||$25,000|
|7.30pm (AEST) 12/05/2015 to 28/01/2019||$20,000|
2. Car Expenses
Claiming car expenses is not as straightforward a calculation, simply because there are several options and methods that are available to a business when working out this expense. We advise you to get this right since it’s almost always the focus of the Australian Taxation Office (ATO), particularly for the trades industries.
Some of these methods include one-third of actual expenses and the 12% of original value method, however, these methods no longer apply to any purchases after 1 July 2015.
After 1 July 2015, we can use Cents per Km and logbook method. The first method uses a single rate of 66 cents per kilometre for all motor vehicles (regardless of the engine size) up to a maximum of 5,000 business kilometres per car. This rate increased to 68 cents per kilometre from 1 July 2018 (ie for the 2018-19 income year).
If a business wants to claim more than 5,000 business kilometres, the second method requires you to keep a logbook for a minimum continuous period of 12 weeks. This sets your business use percentage for 5 years. Odometer readings are needed and you can claim fuel costs based on the logbook records, or from actual receipts. All other car running costs will need written evidence.
Silver Peacock accountants and tax specialists will workout the best method to use for your business that will place you in the best tax position.
3. Electronics Purchased for Business
Since April 1, 2016, small businesses don’t incur fringe benefits tax when providing employees with multiple portable electronic devices.
Covering work-related laptops, tablets, calculators, GPS navigation receivers and mobile phones, this is a welcome provision recognizing how crucial these devices are to businesses nowadays. However, it is always best to contact your accountants and tax professionals when making a decision to supply your employees with benefits.
4. Business expenses
Businesses can now deduct a range of expenses associated with starting a new business, such as professional, legal, and accounting advice.
This is in addition to other general expenses that are tax-deductible for tradies, which includes:
- Vehicle expenses in travelling between work sites (repairs, registration, insurance as well as petrol). In some circumstances, you may be able to claim the costs of trips between home and work if you carry bulky tools or equipment (eg an extension ladder)
- Accommodation and meal expenses if you are required to travel away from home overnight for work
- General work-related travel expenses including public transport
- Work-related phone expenses
- Uniform and protective clothing/equipment, including sunglasses/protective eyewear/hi-vis clothing
- Laundry and dry cleaning of uniforms
- Insurance specific to your trade
- Union and association fees.
- Education costs (this depends on each person’s circumstances)
- Licensing fee, subscription fee