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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 2017 Trade Risk was awarded a Gold Trusted Service Award for the amazing service we offer to thousands of tradies from around Australia.

  • "The price was on point and the service was also great."
    | Tradesman Insurance |
  • "Excellent customer service and easy payment options"
    | Tradesman Insurance |
  • "The team always helpful."
    | Tradesman Insurance |
  • "They were pleasant to deal with when I first took the policy out and I am happy with their service."
    Gary Rodney Latcham | Tradesman Insurance |
  • "Easy to use, heaps of advance notice for when insurance is expiring. Great communication."
    Ricky Gan | Tradesman Insurance |
  • "Price is great Some emails and returning my calls were non existent even after asking a second time I rang for different premiums with increased excesses, spoke to someone, received no reply, rang again and left message but was not rung back"
    Richard WIlliam Morris | Tradesman Insurance |
  • "Pretty good .. jus t let us know the insurance is goin up if ur automatic do it"
    Ben Andrew Kerkham | Tradesman Insurance |
  • "Everyone I spoke to was helpful friendly and informative. But the computer system was down so I was not able to apply online myself or pay immediately over the phone. But I cannot fault the staff who did all in their power to help make insurance simple and easy as possible. Thankyou!"
    James Cameron | Tradesman Insurance |
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    Alister Andrew Campbell | Tradesman Insurance |
  • "Easy to renew insurance"
    | Tradesman Insurance |
  • "My renewal quote was significantly less expensive than other companies could offer. The renewal process was simple and efficient. I've (thankfully) never needed to make a claim on a policy so cannot comment of the procedure here. I hope I never have to."
    | Tradesman Insurance |
  • "Yes I would recommend them, very efficient and prompt."
    Alan Sharpe | Tradesman Insurance |
  • "Quick and easy....Good value."
    G.a Turner & T.l Turner | Tradesman Insurance |
  • "Great trade insurance A+"
    | Tradesman Insurance |
  • "Very helpful good value and friendly would recommend"
    | Tradesman Insurance |
  • "Good experience."
    KNR Services Pty Ltd | Tradesman Insurance |
  • "Excellent service and nothing was a problem and a pleasure to talk to"
    | Tradesman Insurance |
  • "Great service and knowledge by the team, perfect for tradies wanting to get insurance cover knowing that its specialised for tradesmen."
    James Mott | Tradesman Insurance | Sydney
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