Tax Hacks for Tradies: Keep More of Your Hard-Earned Money
Written by Bindi Gethen
Being a tradie is a demanding gig. You’ve got to deal with all kinds of uncertainties – weather conditions, tricky clients, fluctuating materials costs, the list goes on. But when it comes to taxes, there’s one question that can really throw a spanner in the works: “So what can tradies claim on tax without receipts?”
There are a few key categories where the Australian Tax Office (ATO) permits claims without receipts for tradies. These include work-related expenses totalling $300 or less, laundry expenses up to $150 for work-specific clothing, vehicle usage up to 5,000 business kilometres per car per year, and meal allowances when travelling overnight for work – although rates for this vary.
What Can Tradies Claim on Tax Without Receipts?
In an ideal world, the ATO would love to have a receipt for every little thing, but even they get that this isn’t always feasible. Before anything else, I highly recommend that you read this article: Tradesperson – income and work-related deductions.
First up, the “no-need-for-paperwork” rule. If your work expenses are $300 or less, you don’t need a receipt. But keep it realistic. If you tell them you bought a top-of-the-range power tool for just under $300, eyebrows will raise faster than you can say “It’s tax season already?”.
Next, we’ve got laundry. If you’re washing your work gear like high-vis shirts, fire-resistant clothing, and rugged pants, you can claim up to $150 without a receipt. Just remember, this doesn’t cover your personal wardrobe, no matter how often you wear your footy shorts on the job.
As for driving to work, you can claim 5,000 business kilometres per car, per year without a logbook. This doesn’t cover your trips to the servo for a pie and a Powerade, or your detour to Bunnings for a sneaky sausage sizzle.
Then there are meal allowances. If work’s got you travelling overnight, you can claim a daily amount for meals without needing to produce a stack of faded receipts. The ATO’s website has the most up-to-date rates, so make sure to check those out.
While the ATO allows for some leeway, it’s always better to keep records when you can. You’d be doing your future self a favour.
Pro tip
Don’t abuse the system. The ATO knows their game. They don't take kindly to anyone trying to cheat the system. Claim only what you're entitled to, be honest, and avoid a whole heap of trouble down the line.
Easy-To-Follow Tips to Organise a Trades Business’ Deductible Expenses
1. Establish a Dedicated System
Organising your deductible expenses is not just about collecting a bunch of receipts and throwing them in a shoebox. It’s about creating a system that works for you, a system that is simple, effective, and, most importantly, one that saves you time and money.
By having a dedicated system in place – like using a simple logbook or a vehicle tracking app – you can record expenses in real time. The moment you fill up the tank or pay a road toll, jot it down or enter it in the app. Not only does this keep all your vehicle expenses in one place, but it also means you have an ongoing, up-to-date record of your deductible expenses.
Now, consider Bob, an electrician from Melbourne. Bob used to struggle with managing his expenses. He had receipts stuffed in drawers, down the sides of car seats, even tucked away in old toolboxes. At the end of the financial year, he’d waste days trying to sort through everything, often missing out on deductions because he couldn’t find the right receipts or remember specific expenses. Let’s learn from his mistakes.
2. Categorise Your Expenses
The first step in categorising your expenses is understanding what expenses are deductible. Generally, these are the costs you incur while earning your income. These could include direct job costs like materials and supplies, indirect costs like vehicle expenses and tools, or overhead expenses like insurance and professional fees. The ATO has detailed guidelines on what tradies can and can’t claim, so it’s worth familiarising yourself with these.
Once you know what expenses are deductible, it’s time to set up categories that make sense for your business. This doesn’t have to be complicated. In fact, the simpler, the better.
Start by breaking down your expenses into broad categories (e.g., materials, labour, travel, overhead costs). Within these, you can have sub-categories if necessary. For example, under “travel,” you could have “fuel,” “maintenance,” and “tolls.”
Let’s take an example of a plumber, let’s call him Joe. Every job Joe does involves various materials – pipes, fixtures, sealants, etc. Instead of lumping these all under a generic “materials” category, Joe breaks it down further – “PVC pipes,”’ “Copper pipes,” “Bathroom fixtures,” and so on.
This not only makes it easier for Joe to track his expenses, but also helps him identify patterns and trends. He can see, for example, if the cost of certain materials is increasing and adjust his quotes accordingly.
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3. Store Digital Copies of Receipts
In an era where we can send people to space and communicate instantly with someone on the other side of the world, it’s astonishing that so many tradies still rely on a mound of paper receipts to track their expenses. This system is not only prone to losses and damage, but it also makes it harder to find the information you need when you need it.
There are plenty of apps available that allow you to snap a quick photo of a receipt and store it digitally. The real beauty of these apps is that they can often extract the key information – such as the date, supplier, and amount – and store it in a way that’s easy to search and organise.
4. Regularly Review and Reconcile Expenses
Regularly reviewing your expenses involves going through your records to make sure everything is accurate and up-to-date. It helps you catch any errors or discrepancies early, rather than discovering them at the worst possible time – during an audit or when you’re under the pump trying to get your tax return sorted.
Let’s take a look at a concrete example. Imagine you’re a painter, and you’ve recently completed a big job that involved purchasing a lot of new supplies. You’ve been diligent in keeping your receipts and recording the expenses, but when you review your expenses at the end of the month, you notice that one of the supplies seems more expensive than you remember.
By going back to your receipt and checking it against your bank statement, you realise there was a mistake. The supplier had accidentally overcharged you for a particular item. Because you caught this error during your regular review, you can now contact the supplier, clarify the mistake, and get a refund for the overcharge. Without a regular review, this error might have gone unnoticed, costing you money.
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How to Apply for a Tax File Number – Australia
Trust The Bookkeeping Studio to Handle Your Trades Business Finances
Look, no one’s expecting you to be a jack of all trades. You’ve got your craft down to a fine art – whether you’re an electrician making sure we’re not in the dark, a carpenter building homes, or a plumber saving us from disastrous leaks. Your trade is where your talent and expertise lie, not in wrestling with the ATO’s latest tax rules or chasing lost receipts.
There’s no shame in reaching out for help where it’s needed. It doesn’t make you any less of a pro at what you do. That’s where The Bookkeeping Studio comes in. Managing finances is our bread and butter – the paperwork, deductions, and unending tax laws. You do your trade, let us handle your books today.
Hey, my name’s Bindi Gethen! I’m the founder of The Bookkeeping Studio in Australia. With over 15 years of experience in the industry, I have a deep understanding of the challenges that small and medium-sized business owners face when it comes to managing their finances.
I am passionate about empowering my clients with the financial information they need to succeed. My team and I pride ourselves on our commitment to exceptional value, accuracy, and confidentiality. Our virtual bookkeeping services include payroll, budgets, and management reporting, among others.
Not to toot our own horn, but we can assure you that you won’t find a bookkeeping partner like us anywhere else in the Southern Highlands.
