What you can claim will largely depend on whether you are an employee or run a business as a sole trader, partnership, or company.

According to the ATO, as an employee, you can claim a deduction for your expenses 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 the item you’re claiming is for work and private use, you can only claim a deduction for the work-related portion.

According to the ATO, as a business owner (sole trader, partnership, or company), “you can claim a business tax deduction for most expenses from carrying on your business, as long as they are directly related to earning your assessable income.” In other words:

• The expense must be for your business and not for private use
• if it is for both, only claim the portion related to your business
• you must have a record to prove it.

You can learn more on the ATO factsheet – Tradies – be certain about what you can claim.

Needing to keep track of your receipts and invoices can be a real drain on your time; however, it’s a must. If you want to claim it, you need to have proof you bought it.

Here are some tips to get you going:

• Don’t leave it to the last minute. It’s never too late to have a system in place to make keeping your receipts easier.
• Go digital or keeping your paper receipts is fine as well – Figure it Out will show you how.
• If you’re not sure whether it’s claimable, keep the receipt anyway; we’ll be able to let you know if you can.

How you calculate your income as a tradie will depend entirely on whether you are an employee or if you own a business and the structure of your business.

As an employee, your income will already have been reported to the ATO through Single Touch Payroll.

As a sole trader, you are taxed as an individual, and all the profits and income you’ve paid yourself count as your taxable income.

A partnership is not a taxable entity; however, a partnership tax return still needs to be lodged. Your taxable income (or loss) will depend on how it is distributed across the partnership and will be included in your individual tax return.

For a company, taxation invoices have to be issued under the company name and ABN. Your expenses will be paid by the company as well. Figure It Out will show you how to pay yourself the profits.

An Australian Business Number (ABN) is an 11-digit-number businesses use to interact with government agencies. It also forms part of the Australian Business Register, which the ATO manages.

You do not need to register for an ABN if your annual turnover is less than $75K (however, there are benefits to registering). If your business turnover is more than $75K, you are legally required to register for an ABN.

If you don’t hold an ABN, other businesses that pay you are required to withhold 47% from payments to you for tax purposes.

Having an ABN will help you

• Register for GST so you claim tax credits
• Register for fuel tax credits if you are eligible
• Manage Pay-As-You-Go Withholdings if you have employees and more.

Not everyone is eligible to apply. You must be engaged in starting or running a business or enterprise to register. If you are not entitled to an ABN, the ATO will cancel it. Talk to Figure It Out and we’ll give you a hand understanding what you do and don’t need to do.

To register directly with the Australian Business Register is free. Simply start your journey on the Australian Business Registration Service.

If you are self-employed or are in a partnership, you are not required to pay yourself the super guarantee. However, we highly recommend you budget for super payments for yourself to ensure you have enough savings for when you retire. To make a super contribution as a sole trader or partnership, you will need to make a personal contribution and claim it against your tax at tax time.

Make sure your Superfund has your TFN to avoid paying extra tax and ensure you know what you need to do for your Superfund in order to claim personal contributions as a tax credit (as each fund may require a different process).

As a tradie, you will be able to claim most or all of your motor vehicle expenses at tax time, including the purchase price. How much you claim and the exact motor vehicle expenses allowable will depend on how much the vehicle is used for work and carrying on your business, as well as the type of vehicle. Your business structure will affect how your deductions should be calculated.

If you sell a work motor vehicle, you will need to ensure you report the sale in your Activity Statement. You will also need to account for the GST as it is a taxable sale.

Sound complicated? Not as much as you think. Give Figure It Out a call and we can help you with the paperwork.

Tax and accounting regulations in Australia change from time to time. We recommended you seek professional advice from a qualified Accountant or Taxation Agent for specific guidance tailored to your individual circumstances.

Give Figure It Out a call, and we’ll answer your questions based on your personal circumstances.