Sunglasses and other things you didn’t know you could claim.
In simple terms, tax deductions equal more money staying in your pocket, so it’s important to get it right.
Some of the items you can claim might surprise you. Sunglasses, for example.
Here are seven things you may not have considered as expenses to your business that come into play at tax time.
#1 – Home office expenses
The nature of the trades industry doesn’t find you working from home a lot but you shouldn’t overlook the after-hours tasks you achieve sitting in the study at home, and how the costs associated with this space can be deducted from your business.
Your personal computer, office resources and the cost of lighting and cooling your study are all considered a business expense when you’re sitting at home taking care of business administration.
You can even claim part of your home mortgage or rental payments, as your office space is a part of this expense. Of course, you can’t claim the whole cost of owning/renting your entire home, but you can determine what proportion of the home your office space takes up and calculate the related expenses from this.
We’ve done an example for you…
Your home is 180 square metres and your study is 10 square metres.
Your weekly rental payments are $500.
Your study takes up 5.6% of your home.
10 ÷ 180 = 0.056 = 5.6%.
Weekly cost = 0.056 x $500 = $28.00 per week.
Yearly cost = $28.00 x 52 = $1,456.00.
#2 – Mobile phone and home internet
If you’re using your personal mobile to communicate with your staff, customers and contractors, this is another deduction you may be forgetting.
A bit like your office space, your home internet also doubles as your business internet connection when you spend any time working from home.
These can be trickier ones to calculate, as you need to estimate the percentage of your total mobile and internet usage which is work-related. A bit fiddly but remember that all deductions add up.
#3 – Business-related education
Gone back to study? Perhaps you’re updating your skills, learning something new or expanding your qualifications.
Of course, your study needs to be related to your business practices for the related expenses to be considered a possible deduction. Don’t forget though that as a business owner you often wear many hats. Tradesman, manager, human resources, payroll, marketing, finance and accounting; the list goes on.
Let’s say for example that you are completing a short online course around digital marketing so that you’re able to effectively market your business. This is a business-related study path and therefore the expenses of that study are possible deductions.
Some possible expenses include textbooks and study materials, printing, travel to and from campus, student amenities and service fees and accommodation and meals if you’re required to travel overnight.
Remember that home office space? If you’re using that space and the related resources in order to complete your study, it’s again a tax-deductible expense.
#4 – Clothing
No, your Ralph Lauren polo shirt and chinos are not business expenses. However, your branded uniforms and protective clothing are.
You can claim both the cost of buying and cleaning these clothes as tax deductions.
#5 – Cost of managing your taxes
If you’re a smart business owner, you know that your accountant is an expert at all things tax s, accounting, bookkeeping and business consultancy.
Utilising a tax professional doesn’t need to cost a lot but any expenses it does incur are deductible in the next financial year’s return.
#6 – Income protection insurance premiums
This one applies to the smaller businesses who are operating as a sole trader. In this instance, your business tax return is simply your personal tax return.
Your income protection insurance premiums are a deduction, although there are specific stipulations around this, so best to get an accountant’s advice.
#7 – Sunglasses (we’re serious)
Most tradies find themselves working outdoors for large portions of the day, so a sturdy good quality pair of polarised sunglasses are essential. And the ATO thinks so too.
Who knew? Well, now you do.
Still got questions about your tax return? Don’t risk missing out, let the team at Tradies Accountant take care of it for you so that you can get back to what you’re best at. Contact us today!