Tax Advice For Mechanics

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    This article is ideal for you if you are a mechanic and are interested in learning what kind of tax advice is available for people who work in your field. The fundamentals of Australian tax law that pertain to mechanics are outlined in the following.

    This blog article will address a variety of topics, including the following: how the Goods and Services Tax (GST) affects mechanics; when business expenses can be claimed against tax; what deductions are permitted in the eyes of the ATO; and more. You'll also discover links at the bottom of the page, which will allow you to educate yourself on anything else that may be pertinent to your circumstance!

    It is not always easy to figure out how to deal with your legal and financial responsibilities when you work as a mechanic in Australia. This is due to the fact that mechanics have various tax duties, depending on the kind of work they conduct and whether or not they also run their own firm. The following is some guidance for dealing your taxes in Australia if you are a mechanic.

    This post on the blog will provide you with some helpful hints regarding the types of income that need to be reported, the amounts of money that need to be paid on a quarterly basis, and the types of costs that are eligible for deductions from taxable income.

    You will also gain knowledge regarding additional methods by which mechanics might lessen their taxable income by making use of specific deductions that are only accessible to them. This all-encompassing Tax Guide for Australian Mechanics was written by our team so that we could assist a greater number of individuals with their financial obligations to the government.

    Advice On Taxes For Mechanics

    As a mechanic, your daily tasks likely include making diagnoses of mechanical issues with vehicles, providing estimates for work requested by customers, repairing and replacing components, maintaining vehicles, and doing preventative maintenance on automobiles.

    Putting the finishing touches on your tax return is probably the very last thing on your mind right now. However, if you are a mechanic, there are quite a few things that you are eligible to deduct from your income. In point of fact, the Australian Taxation Office (ATO) has issued specific decisions concerning the types of deductions that can and cannot be claimed by mechanics.

    Continue reading for our synopsis of what the ATO has to say; however, it is important to note that this is merely general information and that each person's circumstances are unique. If you are interested in receiving professional assistance on your taxes, we strongly suggest that you visit our office and speak with one of our agents or another certified Tax Agent in order to discuss your specific case.

    What Tax Deductions are Available to Mechanics?

    If you are a mechanic, you have most likely shelled out a considerable amount of money to acquire the various tools and supplies necessary for your line of work. The good news is that you can deduct some of these expenses from your taxable income when you file your tax return.

    Now, try not to get too enthusiastic about this; first and foremost, you need to keep in mind the three most important guidelines established by the ATO:

    • You must have spent the money yourself, as you were not provided with the money by your supervisor after it had been spent.
    • It needs to have some kind of bearing on how much money you make.
    • You are required to keep a record to demonstrate that you spent the money and what that money was used for.

    Following are some of the more frequent tax deductions that a mechanic might be able to claim, now that we've gotten the rules out of the way:

    • Workplace permits
    • ​Union Fees
    • Specialised periodicals or books
    • Driving costs for business trips
    • Stationery
    • In the event that you are required to work from home and you are employed in an office setting, you will not be permitted to work at your dining room table
    • Equipment and Depreciation: If you don't use it 100 percent for work, you need to figure out what percentage of its use is for work and what percentage is for personal use
    • Cell phone and/or access to the internet
    • Course/Study Expenses
    • Protective clothing & laundry – boots, heavy-duty shirts and trousers and overalls
    • Protective gear, such as safety gear, caps, and sunglasses

    You can’t claim

    • Clothing belonging to the individual, such as jeans, king gee shorts, and runners
    • Any tools or equipment that aren't currently being utilised for your work
    • The commute from your house to the office
    • Classes that will assist you in finding work

    Protective Clothing and Uniforms


    You are entitled to reimbursement for the money spent on buying, laundering, and repairing uniforms that have your employer's logo sewn or embroidered into them permanently.

    You might also be eligible to claim the following:

    • Overalls, shorts, and other types of heavy-duty pants
    • Steel-capped boots and
    • Protective Gear, including as sun caps and sunglasses, should be used while one is outside in the sunlight.

    You are allowed to deduct travel expenses associated with your job, such as going to a different garage or collecting supplies. The commute from home to the office is not tax deductible. Keep a journal in which you record your mileage travelled.

    If you are required to provide your own tools or equipment for employment, you might be allowed to deduct those costs from your income taxes.

    If the expense is less than $300, you are allowed to claim it in its entirety. If the expense is going to be more than $300, you will need to divide it up and pay it off over a few years.

    Don't worry about it; we'll take care of all the arithmetic for you. All we need from you is the date that you purchased the item, the amount that you paid for it, and the type of instrument that it is.

    In addition to that, you might be able to deduct the following costs:

    • Workplace permits
    • Union Fees
    • Specialised periodicals or books
    • Stationery

    Travel Charges

    Expenses for daily travel connected to work that can be reimbursed

    The cost of regular commutes between your home and place of employment is considered a personal expense, thus you are not eligible to deduct it from your taxable income. On the other hand, as an employee mechanic, there are some instances in which you might be eligible to claim deductions for travel expenses between your house and your place of employment.

    Lugging around heavy tools and equipment

    If both of the following apply to you, then you are eligible to make a tax claim for the cost of using your automobile to commute between your home and your place of employment:

    • You are required to transport heavy tools and equipment to your place of employment
    • Your place of employment does not provide a safe location for storing items.

    Example 1

    Ariel is a diesel mechanic. At his place of employment, his employer provides a safe spot for him to store his equipment. Despite this, Ariel always brings his own tools to work with him and takes them home afterwards.

    Since Ariel decides not to make use of the safe space provided for the storage of tools at his place of employment, he is unable to deduct the costs associated with transporting those tools from his home to his place of employment.

    Altering Employment

    If you frequently work at different locations throughout the course of a single day before heading back to your house, you may be eligible to get reimbursement for the money spent travelling to and from your place of residence and your place of employment.

    Example 2

    Olive is responsible for upkeep duties. She is required to visit multiple job sites on a daily basis in order to fulfil her duties. Since Olive travels between numerous different workplaces throughout the course of a single workday, she is entitled to a deduction for the cost of her commute between her home and her workplace.

    Traveling to and from Different Workplaces

    Car and travel expenses used for business purposes also include the following costs:

    • directly between two distinct places of employment - for instance, when you have a first job and a second job.
    • from your regular place of employment to an alternative job while you are still on the clock, and then either back to your regular place of employment or straight home.
    • from your home to an alternative workplace, and then back to your normal workplace or back home straight - for instance, if you travel to the premises of a client to work there for the day.

    Imagine that you have to commute both to and from a place of education since you are taking a class that is linked to your line of employment. If this is the case, you should investigate whether or not you are eligible to deduct the cost of travel on your tax return under the category of "self-education."

    Daily Travel Expenses for Work You Cannot Reimburse

    In general, the cost of routine excursions between your home and your place of employment is considered a private expense, and as such, you are unable to claim a deduction for them. This is the case even if you are eligible to deduct work-related daily travel expenses.

    • You are travelling outside of standard office hours
    • You are to be reached
    • On your route to work or home, you complete errands of lesser importance, such as buying an auto part
    • You reside somewhat far away from where you actually toil
    • There is no access to the public transportation system.

    You are not eligible to take a deduction for any fines that you have been assessed, such as those for speeding or parking violations.

    How to Get Credit for the Daily Expenses You Bear Due to Your Work

    Identifying the Type of Vehicle You Drive

    If your vehicle has any of the following characteristics, then it is not regarded to be a car:

    • a utility vehicle, panel van, or truck that has a carrying capacity of one tonne or more and is not classified as a passenger vehicle
    • a motor vehicle that can accommodate at least nine people regardless of its seating configuration
    • a motorbike or a bike.

    There have been some modifications made to the formula that is used to determine the amount of the deduction that you are eligible to get for your automobile costs that are work-related.

    Before July 1, 2015, there were four different approaches.

    There are four distinct ways to claim work-related car expenditures, regardless of whether you use your own car, one that you leased, or one that you hired under a hire-purchase arrangement. These methods are available for tax years 2014–15 and earlier.

    The following are the four methods:

    • Cents per kilometre method
    • 12% of original value method
    • One-third of the actual expenses method
    • Logbook method.

    Beginning on July 1, 2015, there will be two options.

    The government has made it easier to deduct automotive expenses for tax purposes beginning with the 2015–2016 tax year and continuing into future tax years. Both the approach of deducting 12% of the original value and the method of deducting one-third of the actual expenses were done away with as of July 1, 2015.

    The following are the two options that have been offered since July 1, 2015:

    • cents per kilometre method (with some changes)
    • logbook method (with no change to its rules).
    • Cents per kilometre method

    When calculating your deduction based on the cents-per-kilometer approach, you will do the following:

    • do not require receipts or any other written evidence, but it is possible that we will ask you how you estimated the number of miles driven for business purposes. Take, for instance, by
    • utilising a trip journal for purposes relating to employment
    • calculating your expenses based on a typical routine of travel
    • can only submit a claim for the first 5,000 kilometres travelled for business purposes.

    Logbook Method

    The logbook approach gives a means of determining the proportion of the time spent in your car that is spent on work-related activities. After that, you are able to submit a claim for a deduction equal to this percentage of each automotive expense you have incurred.

    When utilising the logbook approach, you are required to keep all of the following with you at all times:

    • a logbook
    • odometer records
    • documented documentation for all of your car expenses, with the exception of the costs of your fuel and oil; for these, you are permitted to make a reasonable estimate based on the records of your odometer.

    You are required to record the following information in your logbook:

    • when the period covered by the logbook begins and finishes
    • the readings on the vehicle's odometer at the beginning and closing of the logbook period
    • the sum of all the kilometres that were driven in the vehicle during the time period covered by the logbook
    • the total amount of kilometres that you travelled to and from each work location in your car travel experience related to - If you made two or more journeys in a sequence on the same day, you can register them as a single journey. This applies even if the day was split up into multiple journeys
    • the amount of time during the time period covered by the logbook that was spent driving for business purposes
    • you utilise the logbook approach to record the readings from the odometer at the beginning and conclusion of each year.

    Your logbook should cover a period of at least 12 consecutive weeks, and it should be kept for a total of five years. If you utilise a logbook from a previous year to determine what proportion of the time you spent in your automobile was spent on work-related activities, you need to keep both of the following:

    On your income tax return, you can deduct your car expenditures.

    Claiming Expenses For Non-Car Vehicles

    If you are qualified to deduct the costs associated with your vehicle and your vehicle has a carrying capacity of one tonne or more, such as a van or a ute, then you are only allowed to deduct the actual costs associated with your vehicle.

    Your actual costs include the prices of the following items:

    • oil and fuel
    • maintenance and repairs
    • loan interest for an automobile
    • leasing fees
    • insurance
    • registration.

    If you use your vehicle for both work and personal reasons, you can keep a diary to track the proportion of your costs that are attributable to each use. Always make sure to save the receipts for any money that you really spend.

    You can deduct these costs from your taxable income on the tax return that you file.

    Claim for Tools and Equipment Costs


    What you may assert

    You are allowed to make a claim for a deduction equal to the total purchase price of each instrument or item of equipment:

    • you employ for labour
    • it is $300 or less in price.

    You are not allowed to take a deduction for the full purchase price of the instrument or piece of equipment if it costs more than $300. On the other hand, you are able to make a deduction for the fall in its value (depreciation). Your claim for depreciation applies to the total amount, not simply the additional amount that is more than $300.

    If you use the item or piece of equipment for work purposes the majority of the time but also use it for personal reasons, the amount you can claim will be proportional to the amount of time you spend using it for work. For instance, if you own a power tool and use it equally for business and for personal reasons, you are only eligible to claim half of the depreciation in value that the item has experienced.

    You are also entitled to deduct any work-related expenses, such as the cost of maintaining, repairing, and insuring your tools and equipment, as well as any interest costs you incur on money you borrowed to buy these things.

    Note that if you are a new apprentice and your employer helped you obtain government-funded tools, you cannot claim a deduction for the expenses of those items or the reduction in their value.

    Example 3

    On September 5th, Rod spent $1,500 on a tool set that he purchased. Rod never utilises the tools for anything other than work-related activities. Rod navigates to our website in order to review our decision regarding the useful life of depreciable assets. According to the judgement, the useful life of hand tools, also known as manually operated tools, is ten years. Using the prime cost method, Rod arrives at the following calculation for the deduction that accounts for the decrease in value of his tool set:

    Asset's cost X Days held365 X 100% effective life
    $1500 X 299365 X 100%10 years

    Therefore, Rod submits a claim in the amount of $123 for the loss in value that his toolkit experienced in the first year.

    Maintaining Accurate Records of Your Investments in Tools and Equipment

    The following are examples of the kinds of records you need to keep:

    • receipts or other written evidence of your expenses, including receipts for any items that have been purchased but will depreciate in value
    • you keep a journal in which you record expenses that are either very low-cost (less than ten dollars) and do not exceed two hundred dollars in total, or you record expenses for which you are unable to acquire any form of documentation, regardless of the quantity.

    You are required to maintain any written documentation of work-related costs for a period of five years beginning on the date that you are required to file your tax return. If you file your return after the deadline, the five-year period will begin on the day that your return was actually filed.

    You are required to preserve records for an additional five years beginning on the date of your most recent claim for a decrease in value for any assets that are declining in value.

    How to Recoup Computer Costs

    You are able to take a deduction for the amount that the worth of your computers and software has decreased due to the amount of time that you have spent using them for work-related activities. For instance, if you only used a computer for professional reasons 20% of the time while used it for personal purposes 80% of the time, you are only eligible to claim 20% of the drop in value. This also applies to any deductions you take for the money you spent fixing your computer or the interest you paid on money you borrowed to pay for it.

    Putting in a Claim for Telephone Expenses

    It is possible to deduct the cost of any calls linked to work that you make, including calls made from mobile phones. You may also be eligible for a deduction for the cost of renting a phone if you can demonstrate that, while you were away from your regular place of employment, you were required to be on call for your employer or clients or that you were required to make regular calls to either group.

    However, if you also used your phone for personal reasons, the only portion of your phone rental charges and calls that you can deduct is the portion that corresponds to the time you spent using the phone for work-related purposes (see Example 4).

    It is not possible to take a tax deduction for a portion of your phone costs if you are given money to cover all or part of those costs.

    Keeping Track Of One's Phone Bills And Expenses

    Depending on how your itemised telephone bill is set up, you might be able to distinguish between personal and professional calls. Nevertheless, let's say you don't get itemised bills and statements. In that instance, you will be able to generate a realistic estimate of the expenses associated with your calls by combining the records from your diary that you have kept for a period of four weeks with the information from your relevant telephone accounts.

    Example 4

    Phil makes business calls on his cell phone from time to time. He is on a fixed plan that costs $49 per month and very infrequently goes over the plan limit. Each month, Phil's phone provider sends him an itemised bill through email, which includes information on each of his individual calls.

    At the very least once a year, Phil prints out his account and underlines the calls that were linked to his professional responsibilities. In addition, throughout the first month of his employment, he keeps a log on his account detailing the people he communicates with for work, such as his supervisor and his customers.

    He calculates that 10% of the individual call charges that are invoiced to him are for work, and he applies that proportion to the monthly cap amount of $49 that he has set for himself. These findings are borne out by Phil's examination of the prior two months as well.

    Phil was only employed for 46 weeks of the year, which is 10.6 months, thus he figures his deduction for work-related cell phone expenses as follows:

    10.6 months x $49 x 0.10 = $52

    On your income tax return, you can deduct the money you spent on your tools and equipment, as well as your computer and phone bills.

    Various Expenses

    The following are some of the costs that you might be eligible to deduct from your taxes, depending on the specifics of your situation.

    • Laundry and protective clothes, which includes uniforms, are also included here. On your federal income tax return, you can deduct the costs associated with work-related apparel, laundry, and dry cleaning.
    • Sunglasses and other eye protection are included in this category of protective equipment. You will need to include this information in your tax return.
    • Costs associated with self-education, such as those associated with fees, travel, books, and equipment, are considered to be part of self-education if there is a direct connection between self-education and the activities in which you are now engaged in which make you revenue. You will need to include this information in your tax return.

    Even if the item wasn't on the previous list, you should nonetheless save the receipts for any and all purchases made for work-related purposes. In this way, we will be able to determine, while we are preparing your tax return, whether or not you are permitted to claim a tax deduction for them.

    You can claim a deduction for the full purchase price of each tool or piece of equipment: you use for your work that costs you $300 or less. If the tool or piece of equipment costs more than $300, you cannot claim a deduction for the full purchase price.

    Deductions self-employed mechanics can take
    • Advertising and marketing costs.
    • Bank fees.
    • Business-related insurance premiums.
    • Certain taxes, but not federal income tax.
    • Legal and accounting fees.
    • Rent on your shop.
    • Repairs and maintenance.
    • Safety supplies and equipment.

    Yes, you can claim the entire amount of the tools if they were purchased for a job you held when you purchased them. The tools are considered a job related expense and are subject to the 2% rule (What is the 2% rule? ).

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