What to think about before 30 June

Superannuation contributions

One of the usual things to consider this time of year, BDO tax partner Mark Molesworth said, is making contributions to super. Mr Molesworth said members will need to do this as soon as possible as the ATO only considers a contribution to have been made when it is received by the fund rather than when it leaves the bank account.

“It’s best to give the super fund at least a week so that they have time to sort out any administrative issues. Don’t leave it till the 30th of June to be making a contribution because there’s a risk that the fund won’t recognise it till next year, and based on the ATO’s current interpretation of the law, that would defer the deduction till the next year,” he explained.

COVID-19 early release of super

For individuals who feel they need to access an early release of super under the government’s COVID-19 measures, Mr Molesworth also recommended starting that process sooner rather than later.

“You only have one chance to withdraw $10,000 before 30 June and then another chance after 30 June, but once you’ve missed that first opportunity, it doesn’t come back, you can’t carry it forward,” said Mr Molesworth.

“So, if you are in that situation, then I would be moving earlier rather than later just to make sure it falls on the correct side of 30 June, so if you do find yourself in a situation where you have to make another withdrawal next financial year, then you have that ability.”

Repairs for investment properties

Mr Molesworth said if property investors are planning to make repairs to their property, they may want to do so in June so they get the deduction sooner.

“If you’re planning to make a repair as opposed to an improvement, so a repair to bring your property back up to the condition it was originally in, then you may want to think about engaging a trades person to do that before 30 June so they get the deduction on this side of June rather than the other side of June,” he said. 

Property investors may also want to look at what assets are on the depreciation schedule, he said.

“If you own a residential property and have depreciating assets such as curtains and carpets and stoves and washing machines or dryers potentially, then you may want to check your asset schedule, because its sometimes the case that those things stop working and we dispose of them and they’re dead in effect but they’re still sitting on our asset schedule,” Mr Molesworth explained.

“To the extent that they’re still sitting on our asset schedule, they still have a depreciative value. We can claim that entire depreciative value in the year that the asset is no longer useful to us, in the year that it dies.” 

What’s new for tax returns year?

While there hasn’t been any major changes with tax this year for PAYG employees, one noticeable change this year, Mr Molesworth said, is the significant increase in employees working from home.

In response to this, the Tax Office has introduced a new shortcut method for claiming working from home deductions, which is a flat claim rate of 80 cents per hour to cover all running expenses.

“It applies for the period from 1 March to 30 June this year, and it’s meant to cover basically everything, including your phone and internet costs, the depreciation of your equipment, heating or cooling and lighting of the environment where you do your work,” said Mr Molesworth.

“The only evidence that you need to keep in relation to that is evidence that you worked from home. So, if I can show that I was working from home, I can claim that 80 cents an hour deduction.”

There are still the other pre-existing methods for claiming working from home expenses, he said, but the record-keeping requirements are far more extensive.

“[One of these methods] is that you claim the work-related proportion of everything. This means you need to work out how much electricity you used to light, heat or cool the place where you’re working and calculate how much of your phone bill and your internet usage and so forth relates to work,” he explained.

“You’ll also need to work out the actual cost of all the equipment that you’re using to work from home, so perhaps you’ve bought yourself a desk, a new chair or a computer that your employer hasn’t provided to you and you claim the actual costs apportioned for the work-related use.”

Mr Molesworth said there is also a halfway house that the Tax Office has had for a while, which is the 52 cents per hour rate that covers heating, lighting, cooling and depreciation of furniture.

“[However], you still have to claim the depreciation of your electrical equipment and your phone and internet usage separately so you’ve still got to keep records of what your work-related costs are,” he said.

He also pointed out that while typically taxpayers cannot claim home-to-work travel, those who have been working from home but had to travel for client meetings, for example, may be able to claim travel costs for this.

“So, if you’re in the situation where you’re using you car to go and see a client and your office is open or perhaps you’ve had to travel for other work purposes, then you can claim deductions for those travel costs,” he clarified.