You use your vehicle for work so it’s an automatic tax dedication, right? Probably yes, but maybe not. We cut through the jargon to let you know what tradies can claim on tax in the 2023-24 financial year.
Tax need-to-know
The Australian Tax Office (ATO) has three basic rules for claiming a tax deduction; the expense must be directly related to earning your income; you must have paid for it yourself without being reimbursed; and you must have written or digital proof of your expense – not only of the cost itself but when, what, how and from whom the expense was incurred.
Motor vehicles
Whether you’re a tradie who’s an employee, a sole trader or run your own small business, you’ll likely use some sort of vehicle for work. Different rules apply according to whether you use a car or a bigger vehicle like a panel van, and the method you choose to calculate your deduction. You can only claim for work or business use, not private, so if your vehicle is used for both, keep a record to show the work- or business-related portion.
Tools and equipment
You can claim a tax deduction for any tools and equipment you have bought to do your job (or a portion of the cost if you also use the item for private use), as well as the cost of repair, spare parts, servicing and the cost of insuring them. If you need to provide secure storage, such as a lock box, you can claim that, too. If any tool or set you buy is $300 or less, you can claim the whole amount in the relevant tax year. If more than $300, you’ll have to depreciate it according to the ATO’s decline in value guidelines.
Work clothing and safety equipment
While everyday clothing doesn’t count, you can claim for a uniform shirt that’s not supplied by your employer, as well as genuine protective items, like steel cap boots, ear plugs and earmuffs, hard hats and safety glasses.
Cleaning and repairing deductible clothing is also a recognised expense. If your laundry bill is $150 or less, you don’t need to keep receipts, but you need to be able to explain how you reached the figure you claimed.
Sun safety
Outdoor workers can claim for items that provide sun protection like sunscreen, headwear and even those funky wrap-around safety sunnies. Prescription sunglasses are also claimable, but only when you’re wearing them for work use.
Office equipment
If you run your business from home, you can claim deductions for items like a desk, storage, stationery and a printer, but if it’s a shared space or it doubles as a spot to kick back and watch TV, you can only claim for the time it’s being used for your work. The same goes for your laptop, tablet or mobile phone, as well as the cost of your internet and mobile plan.
Professional fees
Other deductible expenses can include the cost of getting your tax done; training courses, including first aid, if you are a designated first aid person; membership of industry bodies; union fees; journals or other professional publications; and getting or renewing permits and licences that are directly related to earning your income. See the ATO website for a comprehensive list.
Travel
If you’re an employee and your work takes you to a location where you’re away overnight, you can claim the cost of your accommodation, meals and incidentals in the (hopefully unlikely) event your employer is not reimbursing you. Small business owners can usually claim the cost of travel, such as flights, fuel, tolls, taxis and so on for a work-related trip, or for the work portion if you add on a few days for sightseeing.
When you don’t need a receipt
Small amounts under $10 or less that you intend to claim don’t require a receipt, as long as your total claim for such small items is $200 or less. However, you are required to keep a record such as a diary note, so it may be just as easy to pick up a printed receipt or electronic one via professional retail apps like Bunnings PowerPass app, or log them on the ATO’s own myDeductions tool in the ATO app.
For a deep dive into what tradies can claim on tax, have a look at the ATO’s overview for employees and small-business owners.
Keep in mind…
The information in this article is general in nature. It doesn’t take into account your specific financial position, needs or circumstances. You should look at your own financial position, objectives and requirements and seek professional advice before making any financial decisions.
Are you looking for more tax tips?
Check out Best online tax tools to help you run your business and Ten tax time mistakes to avoid this year.
