At tax time, it’s important to make sure you have included all of your eligible tax deductions in your tax return – they all add up and can make a big difference.
This year, it is expected many people will claim Working from Home Expenses and Personal Protective Equipment expenses and the Australian Taxation Office (ATO) has announced special arrangements to help make it easier for people to claim deductions for working from home, as a result of COVID-19.
Crescent Wealth Islamic Super breaks provides a few tips for preparing your 2020 tax return.
Working from Home Expenses
The ATO has introduced a short cut method which will allow people to claim a rate of 80 cents per hour for all their running expenses, rather than needing to calculate costs for individual expenses. This shortcut would only require a person to keep a record of the hours worked from home, rather than all the different invoices.
Multiple people living in the same apartment or home are able to each individually claim 82 cents per hour worked. This is available irrespective of whether there is a dedicated work area for each person in the property, a requirement which has been removed under this short-cut.
This short-cut method should make it easier for people working from home for the first time to prepare their tax returns, but can only be applied for the period 1 March – 30 June 2020. Working from home expenses prior to 1 March will need to use the pre-existing methods.
Noah is an employee who works as an architect. Noah starts working from home on 21 March as a result of COVID-19 and replaces his face-to-face meetings with online video conferencing.
Noah has just bought a new laptop, desk, chair and stationery. He also wants to claim some additional gas, electricity, phone and internet costs due to working from home.
Under the shortcut method, Noah can now claim all his expenses under a rate of 80 cents per hour. All he needs is his timesheets.
For those not wanting to use this method, the ATO has outlined other available methods on their New working from home shortcut page.
Personal Protective Equipment Expenses
If you have been working in a job during the COVID-19 period that required physical contact or proximity with customers or clients, then you are likely to be able to claim a deduction for items such as gloves, face masks, sanitiser or anti-bacterial spray if you have paid for the items and haven’t been reimbursed by your employer.
Make Sure you Claim all Standard Deductions
You can claim deductions for expenses that directly relate to your work, have been paid by yourself (and you haven’t been reimbursed) and you have a receipt to prove it. These expenses include:
- Vehicle and travel expenses
- Clothing, laundry and dry-cleaning expenses
- Home office expenses
- Self-education expenses
- Tools, equipment and other assets
- Other work-related deductions
Lodging your 2020 Tax Return
The ATO’s platform for lodging tax returns is myTax. In order to lodge your own tax return, you will need a myGov account which has been linked to the ATO.
For individuals lodging your own tax return using myTax, the cut off date 31 October. For those using a registered tax agent, it may be possible to lodge after this date.
Each year, preparing tax returns seems to get easier and easier. The Government pre-filling in a lot of the information it has from employers, health funds, government agencies and third parties and allows for easy uploading of deductions via an excel form.
To lodge your tax return online, click here.
Usually tax refunds are received in the nominated bank account within 2 weeks of lodgment which makes it worthwhile getting your tax done as promptly as possible.
The ATO will begin processing tax returns on 5 July 2020 and expects to start paying refunds from the 16 July 2020.
Make sure you keep all your records of expenses. The ATO may ask you to provide evidence to support any claims you make and if you need any further clarification, ask your accountant or visit the ATO website.