What Can A Builder Claim On Tax?

As a builder or contractor, handling the tax season can be a daunting task. However, there’s good news – there are numerous tax deductions available that can significantly lighten your financial load. In this blog, we’ll check out crucial tax deduction tips specifically tailored for builders and contractors. By the end of this guide, you’ll have a comprehensive understanding of how to leverage these deductions to minimise your tax burden. So let’s begin!

Understanding Tax Deductions

A tax deduction is to reduce your taxable income for the respective year. These deductions typically stem from your business-related expenses, such as tools, travel, uniforms, and more. It’s crucial to distinguish between tax deductions and tax credits, as they serve different purposes in reducing your overall tax liability.

What Potential Deductions Can Builders Claim On Tax?

Tools and Work Equipment

One of the most advantageous tax deductions for builders involves tools and work equipment. Almost every tool you own can be written off your tax bill, with items under $300 usually receiving a 100% tax deduction. Keep meticulous records of all tool purchases, regardless of the amount, as these seemingly small expenses can accumulate significantly over the fiscal year. Additionally, don’t forget that repair and maintenance costs are also deductible.

Transportation and Travel Expenses

Builders often find themselves on the move, travelling to client locations or even undertaking work-related trips across the country or abroad. Fortunately, these travel expenses are tax-deductible, provided they are directly related to your work. Keep detailed records of travel receipts, categorising them by work and non-work purposes to streamline the deduction process. It’s essential to note that daily commuting between home and work does not qualify for tax deductions.

Tax Deductions for Work Uniforms and Clothing

Expenses related to work uniforms, including rental or purchase costs, are deductible. This extends to laundry and repair fees, but be sure your business or work logo is visible on the uniform to facilitate the deduction process. Moreover, the costs of protective clothing and footwear, such as work boots, safety goggles, and sunscreen, are also eligible for tax deductions.

Trade Union and Association Fees

Membership fees or annual union subscriptions directly related to your work are tax deductible, provided the organisation is government-approved. Ensure your organisation meets the necessary criteria, as fees paid by your employer or those associated with unrecognised organisations are not eligible for deductions. Consult your organisation’s guidelines to optimise your membership fee deductions.

Home Office Expenses

If you use a portion of your home for work purposes, you may be eligible for tax deductions on associated expenses. This includes home office equipment, phone bills for work-related calls, electrical bills for heating and lighting, and costs related to home office furniture maintenance. Keep proper documentation, such as using time-tracking software or registering your home address as your work office, to substantiate your claims.

Conclusion

As a builder, it is crucial to understand and strategically utilise tax deductions. At the same time, it is crucial to remember that tax deductions may vary by country. For more personalised guidance tailored to your specific circumstances, consulting with a tax professional is something you must consider. And for this, you can consult the tax agents at KPG Taxation who can help implement tax deduction strategies to save you money and ensure you’re maximising your financial well-being in the long run.