Get the Most out of your Tax Refund

That’s right – it’s June again, which means it’s nearly time to hang your tax-stockings by the chimney and gather the family around to decorate the tax-tree with lights and receipts.

Okay, this time of year might not be as exciting as some. But, completing your tax returns can often end up being just as rewarding in a financial sense.

With that in mind, we’ve pulled together our top 10 tax deduction tips for tradies and property investors (with a bit of extra information as well) to help you get the most out of your tax return for 2021-22.

Typically, the most valuable tax deductions tradies can claim are to do with work-related expenses. What counts as “work-related” can sometimes seem like a grey area, but it may include more than you think.

Here are ten of the more common tax deductions tradies can claim.

1.      Clothing which has a ‘logo’, or protective items like hi-vis, boots and safety glasses.

2.      Tools and equipment which you’ve purchased, repaired or leased.

3.      Laundry or cleaning of work-related clothes that have your employer’s logo or text on them.

4.      Sunscreen and sunglasses if you work outside.

5.      Work-related tech like tablets and computers, as well as mobile phone expenses.

6.      Home office expenses.

7.      Training courses, licences and certifications (provided these are directly related to your current working role).

8.      Deductible car expenses including parking, tolls, running expenses, fuel, kilometres driven, and so on.

9.      Travel and accommodation expenses when you’re working away from home.

Union fees – that’s right, they’re tax deductible too.

Just like with tradie tax deductions, knowing what can be deducted in relation to your rental property or properties can sometimes be vague.

Generally, here’s our top 10 list of the most common deductions investors like you might claim.

1.      Repairs to your property.

2.      Management and maintenance costs for the upkeep of your property.

3.      Depreciating assets

4.      Interest repayments on your mortgage

5.      Body corporate fees

6.      Property management fees

7.      Council rates

8.      Cleaning expenses

9.      Advertising fees

10.    Land taxes

If you’ve been holding a property portfolio for a while, you’ll already know that what you can claim is quite specifically defined.

The list we’ve given above is a good starting point in a general sense, but you’ll want to make sure you know what you’re claiming for, and that each claim is in line with tax requirements.

Repairs or Maintenance?

As an example, according to the Australian Taxation Office (ATO) investors can claim a tax deduction for expenses relating to repairs and maintenance. However, it’s very important that you understand the differences between the two before you make any claims.

Improvements?

Property investors may also be able to make claims on improvements made to the property, which are separate from ‘repairs’ or ‘maintenance’.

According to the ATO, ‘improvements’ are anything that “makes an aspect of the property better, more valuable or desirable, or changes the character of the item on which works are being carried out”.

This can include work that furthers the “income-producing ability or expected life of the property” or that “goes beyond just restoring the efficient functioning of the property”. Improvements can either be classified as capital works or capital allowances. 

Capital Works or Capital Allowances?

‘Capital works’ refers to work  that constitutes a structural improvement. The rate of deduction is typically 2.5% each year for 40 years after construction.

‘Capital allowances’ refers to when the item is a depreciating asset that isn’t likely to be permanent, isn’t part of structure and is separately identifiable.