TAX DEDUCTIONS FOR TRADESMEN
Instead of covering every tax deduction claimed by tradesmen, I’m going to focus on a few areas that still seem to be a cause of confusion with the boys.
Protective clothing and laundry expenses
Many Tradies still don’t understand what the definition of protective clothing is according to the Tax Office. The ATO define protective clothing as:
Protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment. Items may include fire-resistant clothing, sun protection clothing, safety-coloured vests, steel-capped boots, gloves, overalls, aprons, and heavy-duty shirts and trousers.
Unfortunately, this definition is very vague, and still leaves countless questions unanswered. What is heavy-duty? Does it need to be a particular colour? Does it need to be a particular fabric? Lots of questions, with not many answers according to the ATO website. TR 2003/16 is the place you need to go if you’re really looking for answers. This ruling is packed with examples of what constitutes protective clothing and more importantly what doesn’t!
One last point on this topic – your protective clothing DOES NOT NEED A COMPANY LOGO to be able to claim a tax deduction for its purchase and associated laundry expenses.
Sunglasses are a legitimate claim for tradies if they are required to either:
- Work outside for most of the day; or
- They spend a lot of time driving as part of their job position.
Prescription sunglasses are also claimable. Note, however, that if your sunglasses cost more than $300 you will need to depreciate them.
Tradies often have to carry a mobile phone between work sites to make work related phone calls or be contactable by their boss.
If you use a mobile phone for both personal and work purposes, you can only attribute a percentage of the total cost to work-related expenses. The written evidence required for this is an analysis of 4 weeks of phone usage – dividing up how much usage was work-related, and how much was personal. This percentage can then be used as a calculation for the rest of the year.
Although the Tax Office suggests looking through a phone bill and working out the percentage of calls that were work-related vs. personal, it’s somewhat ambiguous now that mobile phone plans include add-on services like data, SMS, etc.
Just make sure whatever approach you take in working out your work related percentage of your mobile phone, it is defensible in the event of an audit. Note, that a letter from your employer stating why you need to use your mobile for work will be looked on favourably by the ATO. I suggest you obtain one of these to keep on record, especially if your mobile phone claim is large.
Sunscreen – do I need a receipt?
As a tradie working outside in the sun, you are entitled to claim sunscreen. Unless your total work related expenses are less than $300, then unfortunately you will need to keep a receipt to make this claim. There is, however, one small clause in the substantiation rules that will allow you to claim sunscreen without a receipt as long as you record the purchase in a diary. To be eligible for this bonus, each item of sunscreen must have cost less than $10, and you can’t claim over $200 in total under this part of the tax law. To find out more about claiming items without a receipt read my article You don’t need a receipt for every tax deduction you want to claim.
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