Employee tradies – building and construction

It's worth finding out how tax and super works – what you're entitled to, the effect on any study and training loans, how to do your tax return at the end of the financial year and the services you can use. We have more information for those new to tax and super.

Tax file number (TFN) for tradies

Employee tradies need a TFN which you provide to your employer, so they don't withhold more tax than necessary. If you don't have one, it's free and easy to apply for a tax file number (TFN).

Australian business number (ABN) and employee tradies

As an employee, you don't need an ABN and aren't eligible for one, even if your employer calls it contracting. An employer shouldn't ask you to get an ABN as a condition of employment. If you're unsure if you've been hired as an employee or independent contractor, check whether you're an employee, business or both.

Check your payslip

Your employer will pay you a salary or wage, allowances, and super. They also deduct tax from your pay and send it to us. The amount will be shown on your payslipExternal Link. At the end of the financial year, the total of your wages and withheld tax will be pre-filled into your tax return.

You must report all income and allowances you receive during the income year as an employee in the building and construction industry in your tax return.

Cash jobs and tax

If your employer pays you in cash, or you do extra cash jobs, you must declare this income in your tax return.

If you're getting paid in cash, check you're getting the correct amount of cash for the work you do and your employer is taking tax out of your pay – this ensures you don't end up with a large tax bill.

Income as an employee and as a sole trader or independent contractor

If you're an employee, your employer will withhold tax each payday and send it to us. If you are self-employed, you are responsible for the tax you owe on your self-employed income.

Avoid unexpected tax bills by using pay as you go (PAYG) instalments to prepay small, regular tax amounts throughout the year to avoid a large tax bill at the end of the year.

Earning income from multiple sources can have implications when claiming the tax-free threshold, study or training support loans, and the Medicare levy.

Use our Employee, business or both information to understand your other tax, super and registration obligations from being a sole trader or independent contractor.

If you have multiple employers in one year

If you change employers during the financial year, or have multiple employers at the same time, it can have implications on claiming the tax-free threshold, study or training support loans, and the Medicare levy.

Tips

• Pay attention to how you're claiming the tax-free threshold. If you have more than one payer at the same time, generally, you only claim the tax-free threshold from one payer.
• Tell your employers about your study and training support loan as you'll have compulsory repayments if your repayment income is above the minimum repayment threshold.
• Avoid paying fees on multiple super funds by keeping track of your super.

Avoiding a possible tax bill

You can ask your employer to withhold additional tax with a written agreement in case you don't have enough tax withheld during the year. You can also choose to prepay tax by using PAYG instalments.

You can claim work-related expenses as deductions in your tax return. Deductions reduce your taxable income.

Avoid issues with your claim by following the 3 golden rules:

1. You must have spent the money without being reimbursed.
2. The expense must directly relate to earning your income.
3. You must have a record to prove it (usually a receipt).

Deductions tradies can claim

You can claim some of the expenses you incur while earning your income as deductions in your tax return. We've got guidance for:

• building and construction workers – deductions for work expenses
• other tradespeople, for example electricians, plumbers – deductions for work expenses
• apprentices and trainees – deductions for work expenses
• other types of deductions you can claim for example the cost of using a registered tax agent to lodge your tax return.

Not all your expenses will be work-related. You can't claim everything you buy from the hardware store. You can't claim drinks, snacks, regular clothing like socks or jeans – these are personal expenses.

If your expenses are for work and private purposes, you can only claim a deduction for the work-related use.

You need to lodge your tax return on time each year.

You can get help from a registered tax agent. You may also be able to get help from our Tax Help Program or a National Tax Clinic. Penalties may apply if you fail to lodge on time.

Generally, the best time to lodge your tax return is from late July. By then, your income statement will be marked as 'tax ready' and we'll have pre-filled the available information into myTax (or shared with your tax agent).

You must keep paper or electronic records of the:

• income you earn (including cash payments)
• expenses you want to claim as deductions.

Download and use the myDeductions tool in our ATO app. Using the ATO app makes it easier and more convenient to keep records in one place, including photos of your receipts and invoices.

Your employer will withhold any income tax you need to pay on your salary or wages and send it to us. When you lodge your tax return each year, you'll either get a:

• refund, if you've paid more tax than needed
• bill, if you haven't paid enough tax.

Pay your tax bill in full and on time to avoid general interest charges (GIC) and firmer actions.

Help with paying

If you’re experiencing financial difficulties and can't pay on time, you may be eligible to set up a payment plan. Payment plans require an up-front payment, and repayments should be completed within the shortest possible timeframe to help reduce GIC that continues to accrue.

If you owe $200,000 or less, you may be able to set up a payment plan using ATO online services.

If you need support, contact us or your registered tax professional before the due date. We’ll work with you to find a solution.

Australia's superannuation system is the way most people save for their retirement.

Superannuation (super for short) is a long-term investment that grows over time. The more you contribute during your working life, the more you'll have for your retirement.

It's important you understand how to choose a super fund and learn how to grow and keep track of your super.

Sometimes companies are liquidated, wound-up or abandoned to avoid paying debts. A new company is then started to continue the same business activities without the debt.

This is called illegal phoenix activity, and is particularly prevalent in industries relying labour hire, including building and construction. It causes significant harm to employees who can lose wages and super.

There are warning signs that indicate a business may be involved in illegal phoenix activity.