The ATO’s focus on tax cheats and their continual evaluation of different industries each year is a warning to tradies to pay as much attention to their taxes as they do their power tools.
It is not uncommon to hear stories about mates of mates running some tax scam and receiving an abnormally large tax return. But what you don’t hear is when these bozos get busted by the ATO, have to pay back their ‘refunds’ – with interest – and receive a fine for tax evasion or tax fraud.
As tradies there are many expenses that can be claimed on your tax return such as safety equipment, power tools, business insurances, vehicle running costs professional services and administrative expenses. The challenge for a lot of tradies is keeping track of these expenses or finding a system that helps them stay organized. This extends beyond having their taxes in order and can include managing clients, quotes, invoices, project, tool tagging, power tool locations and sub-contractors.
Making sure your taxes are done right regarding compliance and refund maxmimsation should be a priority. In Australia according to the ATO website, power tools that are used in gaining or producing a taxable income are tax deductible and can be depreciated as they have limited effective life and can be expected to decrease in value over time.
This is good to know but if you don’t have a suitable system for scanning/storing your receipts, logging your purchase dates and purchase orders then you wont be receiving your maximised tax refunds.
Organised Tradies Get More
If you are not organized not only can you loose out by not claiming all of your power tools in the correct year, but if you try and make a claim for something that you know you have bought but cant produce a receipt its the same thing as fraud. No receipt = No proof. No proof = No refund. Simple.
An easy way to keep track of all your power tools and associated paperwork is to use an online tool logging service that allows you to upload scanned tax invoices, enter your purchase date and power tool purchase values.
This way you don’t have to remember where you have put all the receipts and can run simple reports to produce a list of power tools bought in the tax year to automatically send to your tax accountant.
The additional benefit of this tool-log is security and peace of mind. When logging your tool’s serial numbers – photographs can also be stored securely online, providing the necessary proof for police you will need if you tools get nicked from the back of you van or job site.