So, you’ve been working hard as a Contractor and now it is tax time and you want to claim as many tax deductions as you can to reduce any tax bills. As with anything to do with tax this can be confusing and knowing what you can and can’t claim can send you crazy. Read on as we attempt to clear this tax minefield for you.
As with working as an employee, tax deductions for contractors vary by industry and the job that you are actually being paid to do. Therefore, instead of listing all of the possible tax deductions, lets first look at what makes an expense tax deductible.
In order to claim an expense, it has to be directly related to the income you are declaring on your tax return. In other words, you spent money on something to help you earn your taxable income. If it was something that is used for work as well as personally then the cost will need to be apportioned. And probably most important of all you need to have kept the receipt or record of the expense.
Now, some of the expenses you may be able to claim, again these will depend on what it is you are doing to earn a crust;
Car expenses – 2 options logbook and cents/km methods
Protective work clothes & boots
Tools & equipment
Home office – keep a logbook of the hours worked at home
Training – must be related to your current work
Phone/internet – keep a track of cost and work use %
Super contributions – make sure you fill in the intent to claim form with your superfund
Remember this list is not exhaustive and there may be other deductions for your particular circumstances. When you use our easy to follow e-tax return system which includes a contractor specific section, we will walk you through and claim everything you are entitled to.
Most importantly remember to keep your receipts and records so you can claim as much as you can and give them as little tax as possible.