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Trade Insurance

The federal budget released earlier this month has been touted as the budget for small business.

As a small business owner myself, it was great to hear Joe Hockey go on about the benefits of small business on the greater economy.

The budget has also been promoted as being a great thing for tradies.

Primarily this is thanks to the $20,000 instant tax deduction.

But what does this tax deduction actually mean, and how can it benefit you and your trade business?

$20k asset write off

Until now, only assets purchased for less than $1,000 could be claimed 100% straight away.

So if you bought an item for $900 you could claim the tax back on the full purchase price on your next tax return.

But if you bought an item for $1,100 you could only claim depredation on your next tax return. So basically you’d only be getting a tax deduction on part of that $1,100 upfront.

What this change means is that you can claim the full deduction now on assets worth all the way up to $20,000 rather than just $1,000.

Let’s say you went out and bought a ute for $20,000. On your next tax return you would be able to claim a tax deduction on the full amount.

With the small business tax rate reducing to 28.5% (previously 30%) that is the amount you’ll be able to claim back.

That’s $5,700 straight back into your pocket at tax time! Not bad at all.

Under the old rules you’d still be claiming the tax back, but it would be over a number of years via depreciation.

So should we be spending up?

The government (and many businesses) would love it if tradies got out there and started spending up big on new equipment and tools.

Tools

And when there is such attractive tax deductions available, why wouldn’t you?

Well a wise person once told me that you should never make a decision to do something based purely on the tax benefits.

Sure going out and spending $20,000 on a new piece of gear and getting a $5,700 deduction sounds great, but if you didn’t really need the gear, then it’s kind of $14,300 wasted…

So by all means take advantage of this deduction, but don’t waste money just to get some tax back, and make sure your cashflow can support the purchases.

And lastly, just to be clear, this change doesn’t necessarily put more money back in your pocket.

It simply puts the money there in the first year rather than spreading over a number of years via depreciation.

PS. If you’re looking for tax deductions, remember that public liability, tool insurance and income protection are all 100% tax deductible!

Advice warning

Trade Risk are not qualified to provide tax advice. This information in this article is general in nature and you should consult a qualified taxation professional (such as your accountant) before making any decisions.

Tradies Love Trade Risk

In 2020 Trade Risk was awarded the Platinum Trusted Service Award for the amazing service we offer to thousands of tradies from around Australia.

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    "good follow up service"
    Classic Contracting Pty Ltd | Trade Insurance - Renewal |
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    "Took weeks to get back to me. My insurance lapsed and as a result I was unlicensed for 4 days."
    Mikael Erik Amberntsson | Trade Insurance - Renewal |
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    "Jennifer from Trade Risk is always happy to help and very prompt in replying to queries and concerns. Trade Risk takes the hassle out of insurance and makes sure the cover I need is the cover I get."
    Luke | Trade Insurance - Renewal | Snowy Monaro NSW
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    "Excellent service. Keshia was very helpful and easy to deal with. I would continue dealing with Trade Risk again"
    Jawo Wollaston | Trade Insurance - Renewal | Pioneer
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    "Happy with the competitive price. Was an increase from last year but that's common."
    Samford Valley Plumbing Service Pty Ltd | Trade Insurance - Renewal |
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    "No comment"
    Reynolds Family Trust | Trade Insurance - Renewal |
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    "Would recommend them. Great service and prompt follow up to enquiries."
    Riddells Creek Roofing Pty Ltd | Trade Insurance - Renewal |
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    "When insurance comes up in conversation I always tell about who I am with and why."
    | Trade Insurance - Renewal |
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    "Timely and easy to organise."
    Anthony Walford Thyer | Trade Insurance - Renewal |
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    "It took nearly a month to have our renewal finalised. Our broker never responded to our emails or our phone calls, and there was no communication in regard to a required amendment to our renewal proposal. This resulted in a premium much higher than what we were originally paying. Considering the lack of communication and that it took a week for anyone to even action our request, and that our renewal was not finalised 2 days out from its due date, I sincerely doubt that our broker bothered or attempted to negotiate with the insurer or find us the best deal."
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    "Great service friendly easy renewal of my policy"
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    "This was a renewal for us and they helped us not only with reminders, but they send a questionnaire about our current policy needs and came up with a policy that suited our changing business."
    Airlie Aluminium Marine Pty Ltd | Trade Insurance - Renewal |
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    "Quick and efficient Attended my query and needs immediately"
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    "Great customer service agent"
    C.M Friend & P.J Friend | Trade Insurance - Renewal |
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    "We have been using Trade Risk for years. They make it easy and it is good value."
    P & J Building & Home Maintenance Services Pty Ltd | Trade Insurance - Renewal |
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    "Very easy to deal with 👍🏿"
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    "They provided prompt information and quotes and I found them very easy to deal with."
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    "Service was good, but not the premium"
    David Mathew Zemunik | Trade Insurance - Renewal |
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