Attention tradies! As tax time approaches, there are some things you can claim that could be of huge value to your business.
If you missed this years budget announcement we don’t blame you. Fortunately we can help catch you up. So what's new this year and how will it affect tradies?
The big news is the extension of the tax claim program on small business purchases of up to $20,000, and the raising of the small business turnover ceiling from $2 million to $10 million. This means that if your business is turning over less than $10 million per year you can claim for 100% of the cost of equipment that used for your business, on items valued at up to $20,000, and you can claim for as many separate such purchases as you like until June 2018.
So I can get things for free?
No, sadly not. You may be able to claim the cost of items to reduce your effective tax rate, but you’ll still have to pay for the items upfront. You can, however, get the full tax benefits in the first year of purchase instead of needing to wait.
What you can claim?
Claims must be things that are relevant and necessary to your business, and directly relate to your business earning income. Machinery, tools, electronics, vehicles and anything else individually worth under $20,000, that it used for your business. If it's something that's used both personally and for your business, like a ute might be, then you can claim the proportion that's used for business driving.
If there are things that you often find yourself hiring, or if you need to upgrade some of your stuff, now is a good chance to do it.
Some items you might be able to claim
Things to keep in mind
Keep in mind though that this is a tax claim, it isn’t a refund. You’ll still have to buy the equipment upfront, and you won’t directly get any of the purchase money back. Instead, you get money back in the form of tax returns or reductions.
Frequently asked questions
DISCLAIMER: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information applicability to their own particular circumstances.