Posted on: 20 December 2021
If you run a small business as a contractor, you may think that tax accounting is a one-way street where you only seem to pay out to the ATO. Yet, the tax code is comprehensive and contains a number of different ways to help a business owner like you, and this may allow you to pay less at the end of the year than you might think. What are some of the available deductions that could be appropriate in your case?
If you are a tradie and may need to wear specialist protective clothing to carry out your work, you may be able to itemise this workwear on your tax return. For example, you may not be able to enter a particular type of worksite without a high visibility jacket, helmet or safety glasses, and if regulations dictate, you can certainly claim the cost of purchasing these items as a deduction. You need to clean them regularly, of course, and you may be able to claim associated costs here. It may not be a lot of money, but it can certainly add up over the course of a year.
You may also need to keep up with the latest information related to your profession and take training courses to study for qualifications. If you can show that this is important and that you need to pay these costs to maintain your level of skill, they can be tax-deductible. However, be careful if you want to take a training course to give you options elsewhere, as these costs may not be deductible.
As a tradie, you'll probably need a form of transportation. You'll always need to prove that you use the particular vehicle in question for business purposes, and if you can, you can claim back the purchase cost. However, if you also use the vehicle for personal reasons, you'll have to apportion the deduction instead.
As far as ongoing transportation costs are concerned, there are two different tracking methods. You can maintain a logbook and will need to enter an odometer reading as time goes by. Alternatively, you can claim a certain amount of money per kilometre travelled, but you should check with your tax accountant to get the latest figures. With the logbook method, you can claim a percentage of vehicle expenditure, petrol or diesel, based on business use.
Getting the Advice
You may have access to other deductions as well and should try and take advantage of every opportunity. To make sure that you are reducing your end of year bill as much as possible, get the relevant advice from a tax accountant.Share