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How to make the most out of the end of financial year

  • May 26 2020
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Earn

How to make the most out of the end of financial year

By Cameron Micallef
May 26 2020

As more Australians work from home, a leading tax specialist has advised taxpayers to get their affairs sorted early as this year will be different to most.

make the most out of the end of financial year

How to make the most out of the end of financial year

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  • May 26 2020
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As more Australians work from home, a leading tax specialist has advised taxpayers to get their affairs sorted early as this year will be different to most.

make the most out of the end of financial year

According to HLB Mann Judd’s tax partner, Peter Bembrick, Australians being forced to work from home will have new tax implications. 

“One of the basic rules of tax planning is to lodge a tax return early if a refund is expected – and many people may find themselves in a position of getting a refund this financial year,” he said.

“Lodging the return early means that any refund is received more quickly, and also reduces any ongoing quarterly tax instalment payments. In the current economic environment, people may well need every bit of help they can get.”

Mr Bembrick said a big change for many people this financial year will be the ability to claim a tax deduction on some expenses as a result of working from home.

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“Any expenses that have been incurred because people are working from home following the lockdown can potentially be claimed as a tax deduction. 

“This will be very useful as many workers will notice a big increase in expenses such as their electricity and gas bills, or they may have had to buy a desk or printer in order to work from home.”

Mr Bembrick said the ATO has introduced a new “shortcut method”, where people can claim expenses at a rate of 80 cents for each hour worked from home as a result of the lockdown. The shortcut will apply from 1 March 2020 to 30 June 2020.

To use the shortcut method, people will need to keep a record of hours worked, such as timesheets or rosters. 

He added that people can also use the pre-existing methods to deduct working-from-home expenses, but they may find these more time-consuming.

“The ‘actual time’ method involves keeping a diary to record the work portion of household running expenses, while the ‘fixed rate’ method allows 52 cents per hour worked to be claimed; however, the actual work-related portion of phone and internet costs must be calculated, as well as the depreciation of equipment.”

The financial implications of COVID-19 might see taxpayers needing their refund as soon as possible.

“One of the basic rules of tax planning is to lodge a tax return early if a refund is expected – and many people may find themselves in a position of getting a refund this financial year,” Mr Bembrick said.

“Lodging the return early means that any refund is received more quickly, and also reduces any ongoing quarterly tax instalment payments. In the current economic environment, people may well need every bit of help they can get.”

Deductible running expenses include:

  • Utilities such as heating and lighting
  • Cleaning costs for the work area
  • Mobile or landline phone expenses for work calls
  • Internet connection
  • Stationery and computer accessories such as print cartridges
  • Repair costs for home office equipment and furniture
  • Depreciation of home office equipment, computers, furniture and fittings
  • Small capital items such as a computer (purchased for the purpose of working from home) can be claimed if they cost under $300. If the cost exceeds $300, the decline in value can be deducted.
How to make the most out of the end of financial year
make the most out of the end of financial year
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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