Tradies - How to Maximise Your Tax Refund (Employee Tradies & Subbies)What you may be able to claim on your tax return to maximise your refund.....
Are you a Tradie (Employee or Subbie) and wondering how to maximise your tax refund and what you can claim on your tax return to help this happen?
Well, the answer to this depends on whether you are an employee or a business. In this blog, we’re going to look at Employee tradies and tradies who are sub-contractors. If you are a tradie who runs a business we have put together another separate blog for you.
As a general rule, Employee tradies can claim a deduction for expenses incurred if:
• you spent the money yourself and were not reimbursed
• it was directly related to earning your income
• you have a record to prove it
Please note that that if your expense was for both work and private purposes, you can only claim a deduction for the work-related portion! For example, if you use your mobile phone for both work and personal calls, you will need to work out what percentage of usage is work related and what percentage is personal (this may 70/30 or 50/50 etc).
To claim a tax deduction, the invoice or receipt must show:
• that you spent the money
• what you spent the money on
• who the supplier was
• the date of purchase
Bank or credit card statements usually won’t contain this information so it is important to keep all receipts from the supplier of the goods or services. These invoices or receipts MUST be kept especially if your purchase is over $200 and for a minimum of five years from when you lodge your tax return.
If you’re claiming for the cost of a depreciating asset used for work – such as a laptop – you must keep purchase receipts and a depreciation schedule or details of how you calculated your claim for decline in value, for five years following your final claim. As part of doing your tax return we do a depreciation schedule for you.
Other items that you may be able to claim include:
• protective clothing your employer requires you to wear (for example, hi-vis vests and steel-capped boots) or clothing which has a logo on it
• laundry/cleaning of work related clothes that have the employer logo
• work related tablet, computer or mobile phone expenses
• home office expenses
• training courses, licenses and certifications (if directly related to your current role and it has not been reimbursed by your employer)
• union fees
• travel & accommodation expenses when working away from home
• protective equipment such as safety glasses, sunscreen, sunhats and sunglasses where you are required to work outdoors
• hand tools, such as spanners, hammers and screwdrivers or power tools, such as grinders, sanders and hammer drills
• tax agent fees
Note that if your item costs more than $300 you will need to claim a deduction for the cost over a number of years (the length of time depends on the item purchased) however if your items costs less than $300 you can claim an immediate deduction for the whole cost.
Do you need to transport bulky tools for work?
In some circumstances, you may be able to claim the cost of trips between home and work. One of these is if you carry bulky tools or equipment for work (e.g an extension ladder), as long as:
• your employer requires you to transport the equipment for work
• the equipment is essential to earning your income
• there’s no secure area to store the equipment at the work location
• the equipment is bulky – at least 20 kg – and difficult to transport.
If you claim car expenses, you must either keep a logbook of your work trips or be able to show that your claim is reasonable by using the cents per kilometre method which allows you to claim up to 5,000km per vehicle.
Your vehicle is not considered to be a car if it is a vehicle with a carrying capacity of:
• one tonne or more, such as a ute or panel van
• nine passengers or more, such as a minivan.
In these circumstances (for example, if you use a ute) you can claim the proportion of your vehicle expenses that relate to work. Again, you must keep receipts for your actual expenses. You must also use a log book to show work-related use. You cannot use the cents per kilometre method for these vehicles. Your expenses may include:
• repairs and servicing
• car loan interest
If you’re still confused about what you can claim or have any questions, please give us a call & we’d be happy to help.
– Dean Kennedy