Self-employed tradies are being warned to watch out for common, costly mistakes when lodging their tax later this month.
Tradies, I’ve got good news and bad news.
The good news: On October 31st, thousands of subbies can finally wave goodbye to tax time trauma as they hit the deadline for sole traders to lodge in their returns with the ATO.
The bad news: The countdown is now on for those of you who have left tackling admin to the last minute.
Now, I don’t blame you for putting off the paperwork, but ATO Assistant Commissioner Rob Thomson has been plastering the media this week to remind the 1.5 million Aussie sole traders that now is the time to get your butt into gear.
“If you’re lodging your own tax return, the due date to lodge is 31 October 2024. If you’re using a tax agent, you need to be on their books before then,” he said in a statement on Monday.
“You need to ensure they are a registered tax agent which you can check by searching the Tax Practitioners Board’s Public Register at tpb.gov.au.
“If you’re procrastinating to avoid a tax bill, it’s important to know that the due date to pay most tax bills is the same regardless of when you lodge.
“That means 21 November 2024 if you lodge your own tax return, however your due date may be later if you are using a registered tax agent.”
But before you log in to your Mygov account and try to claim that weekend camping trip in the work ute, digital accounting service Hrny is warning subbies to watch out for these five most common mistakes they saw in returns last year.
Not knowing your dates
It seems obvious, but the number one mistake tradies made was missing important milestones for lodging their returns, confusing deadlines and crossing which financial year their income and expenses fall into.
Here are the important dates to keep in mind:
- 1 July 2023 – 30 June 2024: The 2023/24 financial year which the upcoming tax return covers. Any deductible business expenses must be from within this period.
- 1 July 2024: Beginning of the new 2024/25 financial year. Any expenses incurred after this will have to be lodged in next year’s tax return.
- 31 October 2024: Tax return due if you’re lodging by yourself.
- 15 of May 2025: Tax return due if you’re lodging through a tax agent/accountant.
Miscalculating the numbers
If you’re like most subbies and you have multiple coming at you from all directions, it can be tricky business trying to figure out exactly how much tax to set aside.
If you get it wrong, tradies can be looking at forking out for an unexpected tax bill come November, so be sure to use tax calculators designed specifically for sole traders to help you get it right.
Missing out on deductions
Now deductions are the one thing you don’t want to get wrong. It’s simple, the more claims you miss on your return, the less money you and your business have in your pocket come next financial year.
According to research from Hnry, the average sole trader missed out on over $5,500 in unclaimed expenses last year, with 33 per cent saying it’s because they’re not sure what they can and can’t claim.
Before you lodge, be sure to familiarise yourself with eligible deductions—such as home office costs, travel, and professional development—to maximise your refund.
Just be careful not to claim anything you don’t have a receipt or logbook for, otherwise you could be left coughing up extra cash to the ATO, warned Hnry Managing Director Karan Anand.
“It’s one thing to claim it but if you haven’t got an attributable receipt to back it up, particularly if it’s a large purchase, that can sting,” he told Build-it back in July.
“You’ve got to make sure that the expense relates to the specific streams of income that you’re earning it though. You can’t switch those things around because that will create issues in the system around your claim, which doesn’t make the ATO happy, or the tradies either.”
Commissioner Thomson also reminded subbies not to just copy and paste their deduction from last year, as different circumstances and jobs will alter what you can and can’t claim.
“We see a lot of people changing jobs but not their claims. Remember, the job that you do affects the deductions you can claim, that’s why we have a series of 40 occupation and industry-specific guides which can assist you,” he said.
“We want people to get their deductions right on the first go and claim what they are entitled to – nothing more, nothing less.”
Forgetting your Super
If you are one of the diligent subbies who make concessional contributions to your super every year, you could claim these as a tax deduction to reduce the amount of tax you pay in your return.
Not claiming all your vehicle expenses
If you’ve travelled less than 5,000km on the job, you could claim a fixed amount per kilometre back on your tax.
But this doesn’t mean you can claim any joyride you make in the work Hiilux. It only applies to vehicles under one ton that hold fewer than nine passengers and requires you to prove your logged driving hours, so do your research to see if you’re eligible.
