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Tax hacks you need to know to get a massive return this year
Given the current lockdowns and social distancing imposed by state and federal governments under the COVID-19 pandemic, many employees have been requested to work from home. As a result, there could be deductions that you are entitled to that you have never been able to claim in the past. With the end of the financial year approaching, now is the time to plan your finances and maximise your tax refund.
Tax hacks you need to know to get a massive return this year
Given the current lockdowns and social distancing imposed by state and federal governments under the COVID-19 pandemic, many employees have been requested to work from home. As a result, there could be deductions that you are entitled to that you have never been able to claim in the past. With the end of the financial year approaching, now is the time to plan your finances and maximise your tax refund.
First and foremost, to claim a deduction, you must have spent the money and not have been reimbursed, the expenses must be directly related to earning your income and you must have records to prove it. In this data-matching age, documentation is critical.
Working from home
If you are one of the many requested to work from home during this pandemic, you may be able to claim a deduction for the additional running expenses you incur.
As noted by the Australian Taxation Office, deductible expenses could include:
- Telephone and mobile phone charges
- Internet data and plan charges
- Electricity and gas expenses for running items used for work and for heating, cooling and lighting your dedicated work area
- Cleaning costs for your dedicated work area or home office
- Computer consumables and stationery such as printing cartridges and paper
- Home office equipment, including computers, screens, tablets, printers, phones, scanners, cables, furniture and furnishings – you can claim either the
- full cost of items up to $300
- decline in value (depreciation) for items costing more than $300.
How to work out your claim
The ATO has provided three ways you can choose to calculate your deductible home office expenses while you are in lockdown for COVID-19:
- The shortcut method – Claim a rate of 80 cents per work hour for all home office and running expenses. If you use the shortcut method, you only need to keep a record of the hours you worked at home. For example, timesheets, roster or diary notes. This method is only available from 1 March to 30 June 2020 and can be used by multiple people from the same house.
- The fixed rate method –
- If you have a dedicated work area, you can claim a deduction of 52 cents for each hour you work from home for heating, cooling, lighting, and the decline in value of office furniture.
- You may also separately claim a deduction for:
- the work-related portion of your actual costs of phone and internet expenses, computer consumables, stationery, plus;
- the work-related portion of the decline in value of a computer, laptop or similar device.
3. The actual cost method – If you have a dedicated work area, you can claim the actual work-related portion of all your running and home office expenses, which you need to calculate on a reasonable basis with reference to a log book and other records. For the fixed rate and actual cost method, you must also keep a record of the number of hours you worked from home along with records of your expenses.
Get your records together
Do your homework now and ensure that you are documenting the hours that are being worked from home. Obtain a copy of your bank and credit card statements, phone, internet and utility bill that you have for the financial year. Review these line by line to identify expenses related to work and business. Once you have taken the time to identify your expenses, determine which methods referred to above is going to give you the best deduction. As tax law can be complicated, if in doubt, seek advice from a registered tax agent. After all, the fee paid to them is also tax deductible.
Brett Kelly is an author and the CEO of Kelly+Partners Chartered Accountants.
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