Tax time: how COVID-19 could boost your tax return
With the end of financial year approaching fast, millions of Aussies are set to lodge tax returns in very different financial circumstances than before the COVID-19 crisis.
While coronavirus has caused a lot of disruption across the country, tax time is a chance to take advantage of extra measures aimed at helping taxpayers navigate the pandemic.
Here are some helpful tips to keep in mind when completing your tax return this year to make sure you maximise your refund during these tough times. As everyone’s tax circumstances are different please check with your tax advisor what is relevant to you.
Get your working from home expenses right
With thousands of Australian employees working from home during the crisis, there’s likely to be a surge in the number of taxpayers claiming working from home deductions.
In response to the expected pick up in this area, the ATO has rolled out a temporary method that allows taxpayers to claim 80 cents for each hour they work from home doing the job they normally carry out in an office, and have incurred additional expenses.
In a big win for taxpayers, it means, unlike before the pandemic, you don’t need to have a dedicated area of your home like a home office set aside to get a deduction.
Automatic offset to apply
Millions of Aussies are also set to benefit from between $255 and $1,080 in tax cuts for the 2018-19 financial year — a welcome boost in the wake of COVID-19.
Taxpayers earning over $126,000 are ineligible, but those earning under $37,000 will receive up to $225, while those on between $37,000 and $126,000 can get up to the full $1,080 in tax relief. The tax cut will be automatically applied when you lodge your tax return.
Don’t forget the instant asset write-off
EOFY is always a time when deals abound, but this year things are even better if you need to make a business purchase thanks to an expanded instant asset write-off program.
The program means firms can now claim accelerated depreciation on new assets worth up to $150,000 as part of the federal government’s response to COVID-19. The federal government has also extended the deadline for making claims from July 1 to December 31.
Deductions for protective clothing
This year is also set to see a pick-up in taxpayers claiming deductions for protective gear like face masks, gloves, gowns or sanitiser needed for work in customer- and client-facing roles.
Importantly, taxpayers in industries like healthcare, retail and hospitality can only claim these items if they paid for them and were not reimbursed.
Other deductions to keep in mind
COVID-19 aside, there are many deductions that can be easy to overlook at tax time. For instance, if you use your mobile phone to make work calls, text messages or use the data for work purposes, then you can claim it as a deduction.
Internet expenses also can be claimed. If you work from home and have your internet connection in your name, then it’s possible you could also claim that expense. In this case, you can estimate your monthly internet use as a percentage of the total household usage.
Similarly, when it comes to using your car or travel, you can make a claim for work related travel and vehicle expenses provided they meet the eligibility criteria set out by the ATO.
Other common, but sometimes overlooked deductions, include union fees, donations of $2 or more to an appropriate charitable organisation and rental property expenses like gardening and lawn mowing, pest control and bookkeeping fees.
But remember, whatever deduction you’re seeking to claim, you will need to have a record to support it and you should check with your tax advisor. Records, usually receipts, must be kept these for five years from when you lodge your tax return in case the ATO asks you to substantiate your claims.
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