Tax Advice for Trades Businesses

Running a trade business can be demanding, from managing projects to juggling expenses. However, understanding the tax benefits and obligations specific to your industry can save you time and money. Here’s some tailored advice for tradespeople to help optimise your tax position and ensure compliance with Australian tax laws.

1. Claiming Work-Related Expenses

As a trade business, many of your expenses are tax-deductible. Ensure you’re claiming everything you’re entitled to, such as:

  • Tools and Equipment: Costs of purchasing or maintaining tools and equipment used for work.
  • Vehicle Expenses: Claim deductions for vehicles used for business purposes, including fuel, servicing, and insurance. Consider the logbook method to track business use.
  • Protective Clothing: Items like high-vis gear, steel-capped boots, gloves, and safety goggles are deductible.
  • Training and Licensing: Costs for renewing licenses or completing work-related courses.

2. Tax Planning for Seasonal Income

Many trades businesses experience seasonal fluctuations in income. Planning ahead can help:

  • Use income averaging if your income varies significantly from year to year.
  • Set aside funds for tax obligations to avoid cash flow issues during quieter periods.

3. Understand GST and BAS Obligations

Trades businesses registered for GST must lodge regular Business Activity Statements (BAS).

  • Ensure all GST collected from clients is reported and paid.
  • Claim GST credits for eligible business expenses.
  • Use accounting software like Xero, MYOB, or Reckon to streamline BAS preparation.

4. Superannuation Contributions for Employees and Yourself

If you employ staff, you’re required to pay superannuation contributions (currently 11%) on their ordinary time earnings.

  • As a sole trader or company director, consider contributing to your own super to secure your financial future.
  • Take advantage of the small business tax offset for additional contributions.

5. Home Office and Storage Deductions

If you use part of your home for business, you may be able to claim deductions for:

  • A dedicated home office.
  • Storage of tools, equipment, or materials.
  • Proportional utility costs (electricity, internet, etc.).

6. Employing Family Members

If family members work in your business, you can pay them a salary, provided it reflects their duties. This can reduce taxable profits while adhering to fair work regulations.

7. Depreciation of Assets

Take advantage of the temporary full expensing measure, which allows businesses to immediately deduct the full cost of eligible assets. This applies to tools, vehicles, and other business equipment purchased before June 30, 2025.

8. Tax Tips for Subcontractors

If you work as a subcontractor:

  • Keep track of all invoices and payments to ensure accurate reporting.
  • Ensure you have an ABN and understand your GST obligations.
  • Claim expenses like travel, tools, and insurance premiums.

9. Stay Prepared for Tax Time

  • Keep organised records of income and expenses throughout the year.
  • Consider using cloud accounting software to simplify tracking and reporting.
  • Seek professional advice to ensure all deductions are claimed and your tax return is accurate.

Let Us Help You!

At Tax Accounting Adelaide, we specialise in helping trades businesses maximise their tax benefits and stay compliant. From managing GST to planning for seasonal income, we’ve got you covered.

Contact us today for a free consultation and take control of your trades business taxes.

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