As we approach the end of the financial year, amidst a very unusual 2020, now is the time to think about getting your affairs in order and considering how you can maximise your return and ensure you get all moneys owed to you reclaimed. To that end, we’ve pulled together some considerations for a stress-free tax time:
Make sure your paperwork is in order
Before the last minute strikes, it would be a good idea to start gathering all the information you need to prepare for your tax return, for example all invoices and receipts for work-related expenses and bank and credit card statements that might contain additional items for which you don’t have the receipt or invoice. If you’re not sure what’s claimable, make a note of the items you’re unsure of to discuss with your tax agent.
Work out your deductions
Coronavirus has changed the way many of us work, and in turn, will change what we’re claiming for. For example, there are likely to be significantly lower claims for work-related travel, accommodation and clothing and professional development expenditure such as courses. On the other hand, working from home claims are very likely to increase as business owners and their employees self-isolate.
If you’re working from home, you may be able to claim a proportion of household costs, such as heating, cooling and lighting bills, the cost of cleaning your office area, depreciation of office equipment or furniture and repairs. Additionally, phone and internet expenses, printer ink and stationery can be included.
Understand how to make a claim
The ATO has introduced a shortcut of calculating running expenses for those working from home to claim a rate of 80 cents per work hour during the Coronavirus crisis. Currently, this period applies from 1st March 2020 until at least 30th June 2020, but may be extended depending on when work patterns return to normal.
You will need to keep a record of the amount of time worked from home as a result of COVID-19 to claim this. Bear in mind that if you use the shortcut method, you cannot make the additional claims listed above. Things like phone usage are included as part of the 80 cent rate.
Alternatively, you can use the existing flat rate allowance for working from home of 52 cents and also be able to make separate claims for work-related items such as phone usage, internet and other items described above.
A final alternative option is to claim the actual costs you’ve incurred, by working out a) the time spent working from home b) the floor area of your work space and c) the costs of your household expenses, then apply the actual percentage usage. You will need to keep all of the original bills.
We hope this information proves to be useful. If you’re considering how to improve your finances in the future, talk to our friendly team to consider how you can make the most of your financial situation.