Tradie tax deductions 101

Disclaimer: This information is of a general nature only and should not be regarded as tax, financial, or legal advice. It does not take into account your individual circumstances or objectives. You should not act on the basis of this information without first obtaining advice from a suitably qualified professional advisor.

Prepare for your tax return

If you're running a business, that old cliché about working smarter, not harder, is just as relevant when it comes time to fill out your tax return. Before getting started, it makes sense to inform yourself about the tax breaks to which you may be entitled to.

Australian Taxation Office (ATO) guide for tradies

This article is a general overview. Always seek professional advice before making any financial decisions. The ATO has developed information specifically for tradies on its website, or you can speak to a registered tax agent.

Tip: If you pay for something that you use for both business and pleasure, remember that you can only claim the portion that is business related.

Vehicle costs

You can claim some expenses for motor vehicles used in running your business. However, if you use the vehicle for both business and private use (for example, taking the kids to school or driving on holiday) you can’t claim anything that relates to your private use. The ATO website has more detail on what expenses you can claim and what records you need to keep.

Tools and equipment

You are probably aware you can claim tools, equipment and other assets that you purchase to earn your income. This can include everything from your angle grinder and wheels, but also the paint along with the brushes. Generally speaking, any items that you have purchased for a job in order to get paid will fall into this category. You may even be able to immediately deduct all of the cost of some of your bigger business assets this year under one of the tax depreciation incentives for small business. You can find more information on the ATO website.

Protective gear

While you can’t claim ‘ordinary’ clothes like jeans and general workwear, you can claim for protective items including hi-vis garments, safety boots and goggles used in your business. You can also claim sun-protection items including hats, sunscreen and sunglasses that you use while working outdoors.

Business essentials

If you use a tablet or laptop to do your drafting and record keeping, the business-related element is a claimable expense. You can also claim the stationery, desk and other office equipment you use for running your business, even if your business is run from a corner of your study at home. And don’t forget to claim other equipment such as a clipboard organiser or protective case that you use to keep your technology safe at the worksite. But remember: if it isn’t business related, you can’t claim it.

Self-education expenses

You can claim the cost of any upskilling that is directly related to your existing business – for example, if you need to take an online course about CAD software. Journals and publications you need for work are also deductible, so if you’ve paid for access to Australian Standards, get your money’s worth.

Permits, licences and services

You can claim the cost of renewing permits and licences, such as a forklift or heavy vehicle permit. However, you can’t claim the cost of getting and maintaining a private driver licence.

You can also claim services that are directly related to your work, including laundry or dry cleaning costs of your protective clothing (but not ordinary clothing), and getting your tax done by a registered tax agent.

Phone and internet

Business-related phone calls and internet use can be claimed as tax deductions. Instead of trying to sort out the percentage of how many calls you make for work, just get a tough mobile for work with its own SIM card – it will make life so much easier. As a bonus you won’t get clients calling you on your personal number.

Charity donations

If you support a charity that is registered as a deductible gift recipient (DGR), you can claim your donations. Buying raffle tickets or contributing to your mate’s flood relief crowdfunding does not count, though.

The information in this article is general in nature and is intended for small business operators only, not employees of businesses. 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.

Are you running a business?

Take note of our useful tips on what you can claim at tax time in our ultimate guide to tax deductions in FY22.

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