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  • Tradies – be certain about what you can claim

    If you're a tradie, be certain about what you can claim on your tax return.

    What you can claim depends on whether you're an employee tradie or a small business (sole trader, partnership, company or trust).

    On this page:

    Buying assets for your small business

    If you are a small business owner, under the instant asset write-off you can immediately write off new or second-hand assets purchased for your business that cost less than the relevant threshold amount.

    Recent changes

    From 12 March 2020 until 31 December 2020 the instant asset write-off:

    • threshold amount for each asset is $150,000 (up from $30,000)
    • eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

    You can claim a deduction for each asset first used or installed ready for use, costing less than the following thresholds:

    • $150,000 – from 12 March 2020 until 31 December 2020
    • $30,000 – from 7.30pm (AEDT) on 2 April 2019 until 11 March 2020
    • $25,000 – from 29 January 2019 to 7.30pm (AEDT) on 2 April 2019
    • $20,000 – before 29 January 2019.

    From 1 January 2021, the instant asset write-off will only be available for small businesses with a turnover of less than $10 million and the threshold will be $1,000.

    You may purchase and claim a deduction for multiple assets provided each asset costs less than the relevant threshold.

    Examples of assets include:

    • a car or ute
    • drills
    • electric sanders
    • electric saws
    • grinders
    • leaf blowers
    • lawn mowers
    • nail guns
    • ladders
    • tool boxes
    • work lights
    • high-pressure water cleaners
    • concrete mixers
    • shelving and storage
    • computers, laptops and tablets.

    This deduction applies to most assets, whether the asset you bought is new or second-hand.

    You claim the deduction in the year the asset was first used or installed ready for use.

    A car limit applies to passenger vehicles (except a motor cycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers. The car limit is $57,581 for the 2019–20 financial year. If you purchase a car for your business and the car limit applies, your deduction under the instant asset write-off is limited to the business portion of the car limit. For example, if you use your vehicle for 75% business use, the total you can claim under the instant asset write-off is 75% of $57,581, which equals $43,186.

    Assets you purchased for the relevant threshold amount or more may need to be treated differently when added to the small business pool. To find out more, refer to our instant asset write-off information.

    See also:

    Claiming deductions this tax time

    What you can claim depends on whether you're an employee tradie or a small business (sole trader, partnership, company or trust).

    Employee tradies

    You can claim a deduction for expenses incurred as an employee tradie 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.

    If your expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

    Small businesses

    To claim business expenses:

    • the money must have been spent for your business (not a private expense)
    • if it is for a mix of business and private use, only claim the portion that is related to your business
    • you must have a record to prove it.

    Protective clothing or items

    Employee tradies

    You can claim a deduction for protective clothing or items, if they provide a sufficient degree of protection from the risk of illness or injury posed by the activities undertaken to earn your income and the risk is not negligible or remote. This may include:

    • protective clothing and footwear (for example, hi-vis vests and steel-capped boots)
    • protective and safety equipment as well as occupation health and safety equipment (for example, safety glasses, safety helmets and earmuffs, or sunscreen, sunhats and sunglasses where you are required to work outdoors).

    Small businesses

    You can generally claim a deduction for the cost of:

    • protective clothing (for example, hi-vis vests and steel-capped boots)
    • safety glasses, sunglasses, sunhats and sunscreen when your business activities require outdoor work
    • any other items that protect you or your employees from a health or injury risk in your work environment.

    Buying tools for work

    Employee tradies

    You can claim a deduction for tools or equipment if you use them for work purposes. If you also use the tools or equipment for private purposes, you can only claim the work-related portion. If you bought the tool or item of equipment part way through the financial year, you can only claim a deduction for the portion of the year that you owned it.

    If the tools or equipment are supplied by your employer, another person or you are reimbursed for the cost, you can’t claim a deduction.

    If a tool or item of equipment is only used for work and:

    • cost more than $300 – you can claim a deduction for the cost over a number of years (that is, depreciation or known as the decline in value)
    • cost $300 or less – you can claim an immediate deduction for the whole cost.

    If you buy an item for work that forms part of a set and the whole set costs more than $300 but the individual item costs less than $300, you can claim a deduction for the decline in value (depreciation) of the whole set. You can't claim an immediate deduction for each individual item. This is because the combined cost of the set is more than $300.

    For example, if you buy a ratchet set for $350 you can only claim the decline in value of the set, even if you could buy each of the individual ratchets for less than $300 each. However, if in a later income year, you buy an additional socket to replace part of the set you have lost, you can claim the full cost of the socket if it costs less than $300.

    See also:

    Small businesses

    You can claim a deduction for most costs you incur in running your business. This includes assets, which you can immediately write-off if they cost less than the relevant instant asset write-off threshold. This includes, for example:

    • drills
    • electric sanders
    • electric saws
    • grinders
    • leaf blowers
    • lawn mowers
    • nail guns
    • ladders
    • tool boxes
    • work lights
    • high-pressure water cleaners
    • concrete mixers
    • computers, laptops and tablets.

    Assets you purchased for the relevant threshold amount or more may need to be treated differently when added to the small business pool. To find out more, refer to Instant asset write-off for eligible businesses.

    You may also be able to claim a tax deduction for additional items as operating expenses, for example:

    • drop sheets
    • masking tape
    • gaffer tape
    • oil
    • replacement belts for machines.

    See also:

    Transporting bulky tools for work

    Employee tradies

    You may be able to claim the cost of trips between home and work when you carry bulky tools or equipment for work purposes. You can only claim a deduction for the cost of these trips if all of the following conditions are met:

    • the tools or equipment are essential for your employment duties
    • the tools or equipment are bulky – this means that because of the size and weight, they are awkward to transport and can only be transported conveniently by the use of a motor vehicle
    • there is no secure storage area for such items at the workplace location.

    If you claim car expenses, you must either:

    • keep a valid logbook to determine the percentage of work-related use of your car along with evidence of your car expenses (logbook method)
    • calculate your work-related kilometres and be able to show that those kilometres were work related (cents per kilometre method – this is only available for claims up to 5,000 km).

    Your vehicle is not considered to be a car if it is a vehicle that:

    • has a carrying capacity of one tonne or more, such as a ute or panel van
    • can transport nine passengers or more, such as a minivan.

    In these circumstances – for example, if you use a ute – you can claim the actual expenses that relate to your work travel. Examples of actual expenses include:

    • fuel
    • oil
    • insurance
    • repairs and servicing
    • car loan interest
    • registration
    • depreciation.

    Keep records of all your actual expenses to prove your expense claims, as well as records that show how you have calculated your work travel as a percentage of your overall travel. While it is not a requirement to keep a logbook, it is the easiest way to show how you have calculated your work-related use of the vehicle.

    You cannot use the cents per kilometre method for these vehicles.

    See also:

    Small businesses

    As a small business, you will be able to claim motor vehicle expenses to the extent the vehicle is used in carrying on your business.

    Watch:

    Media: Motor vehicle expenses
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiunpjejpxExternal Link (Duration: 00:58)

    See also:

    Record keeping

    Employee tradies

    If you claim a tax deduction, you must have a receipt or other form of written evidence from the supplier and be able to show how you calculated your claims.

    The receipt or other form of written evidence must show the:

    • name of supplier
    • amount of expense
    • nature of goods or services
    • date the expense was paid
    • date of the document.

    Bank or credit card statements usually won’t contain this information.

    You don’t have to get and keep a receipt for work-related expenses that are $10 or less, as long as your total claim for small expenses is $200 or less. If you don’t get a receipt for small expenses, you can still claim a deduction as long as you make a record of the small expenses. For example, you can make a record by writing in your diary. Your record should show what you purchased, when, where, and how much you spent. You can use this to show how you calculated your deduction if we request this information from you.

    After you've lodged your tax return for the year, you must keep your records for a minimum of five years.

    If you're claiming a deduction for the cost of a depreciating asset used for work – such as a laptop – you must keep both:

    • purchase receipts
    • a depreciation schedule or details of how you calculated your claim for decline in value, for five years following your final claim.

    Small businesses

    You need to keep records that substantiate your business income and expenses.

    Your records must:

    • explain all transactions
    • be in writing (electronic or paper)
    • be kept for five years (some records may need to be kept longer).

    Depending on your tax obligations, you may also need to keep records for GST, fuel tax credits and records relating to your employees and contractors.

    You can keep your business records electronically or on paper, but keeping electronic records makes some tasks easier.

    Watch:  

    See also:

    The best time to lodge

    Generally, late July is the best time to lodge to take advantage of the pre-fill information available in myTax (or with your tax agent).

    Pre-fill information is the data we already have on our systems plus the information provided to us by third parties, including your employer, banks, government agencies and private health insurance providers.

    If you wait for pre-filled information to be available before completing your tax return, all you have to do is review the information and add any missing details or update incorrect details. This way you're less likely to miss any income that you must include.

    If you prefer to lodge sooner, you’ll need to ensure you declare all your income. This includes income from any cash jobs, the sharing economy, your second job, foreign sources and capital gains.

    Services and support

    Find out about our range of tools and services that help make it easier for you to get your tax and superannuation right at: