As we fast approach the end of the financial year, did you know that as a trade business owner, you can legally minimize your taxation liability by seeing a professional adviser?
In order to claim tax deductions, a trade business must be able to produce proper receipts or invoices to prove any purchases and that the purchases are directly related to or required for work purposes. However, after putting in hard work to meet deadlines and reach targets, several trade businesses are usually unable to find time to file their tax claims. Therefore, it is so crucial to use a professional bookkeeper.
Below is a list of a few common expenses that tradies could be claiming back in their tax returns to save a lot of money.
1. Vehicle expensesIf you purchased a vehicle and use it for business purposes, you can claim depreciation on your vehicle and costs associated with operating the vehicle. However, you will need to prove that you are using your vehicle for business purposes and that you don’t receive a car allowance.
The government has also lifted the instant asset write off limit, so if you require a new vehicle, purchasing before 30 June 2019 would be an ideal time. Kindly check with your adviser to ensure you satisfy the criteria with respect to the instant write off.
2. Replacements and ToolsYou can claim the expenses involved in repairing or insuring your tools and equipment as well as claim any interest charged on money borrowed to purchase the items. However, if you use the tools or equipment for both work and personal use, you’ll need to show a diary that specifies how it’s used, so the deduction can be apportioned correctly.
Again, you may be eligible for an instant write off for the purchase of a lot of equipment if it relates to work purposes.
3. Occupation-specific and protective clothingSafety is one of the most important aspects in the trade industry and certain protective clothing or items for your work, such as hard hats, sunglasses or steel-capped boots, can be claimed as a deduction. However, remember that you will need proof of purchase in the form of a receipt or invoice.
4. Training courses, licences and certificationsIn order to stay competitive, you constantly have to master your craft and take part in courses that will help you scale. These training courses, licences or certifications you undertake to maintain or improve your skills, or that certify you to perform a task for work, are tax-deductible.
5. Association feesYou can also claim any subscriptions to trade, business or professional associations. You can request a statement of fees or subscriptions paid, which you can use to prove your membership and payments.
6. SuperannuationYou can also claim any extra super contributions you make against your business profit up to a certain limit. Super funds have a lower tax bracket, and this means you may be able to lower the overall amount of tax you pay if you make use of making extra contributions to your fund.