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Don’t Copy/Paste Your Tax Return From Last Year

Due to the impacts of COVID-19, how Australians claim work-related expenses on their tax returns every other year is sure to be different this year. The ATO is warning Australians that they will be watching what is claimed and how the impacts of COVID-19 are reflected in tax returns.

During the 2020 tax return season, up to 8.5 million Australians claimed nearly $19.4 billion in work-related expenses, with new trends and figures of claims reflected in their returns.

Expenses in the 2021 tax return season are expected to reflect the changing nature of how Australians work, given the ongoing impact of COVID-19 is still being felt by workers.

In 2020, the value of car and travel-related expenses decreased by nearly 5.5% (as a result of lockdowns, office closures and the pandemic). There was a slight increase of up to 2.6% in terms of clothing expenses (in part a result of frontline workers’ first time needs for items such as hand sanitiser and face masks so that they could continue doing their jobs.

As an example, though working from home claims are expected to rise in this year’s tax returns, the ATO would not expect to see a marked increase in claims for travelling between worksites, laundering uniforms or business trips in those same returns for someone who was predominantly based at home, and not working out and about.

Though some work-related expenses may still be the same this year, the ATO is warning against simply copy-pasting tax returns from previous years, as without significant evidence or record of the claim, you may find yourself in legal difficulties.

So how can you ensure that you’re doing the right thing when making claims on your tax return? Knowing exactly how COVID-19 may have affected what exactly you can claim on your tax return is a good starting point.

As a result of COVID-19, the ATO introduced the temporary shortcut method to quickly calculate the expenses of working from home at an all-inclusive rate of 80 cents per hour for every hour that you work from home. All you need to do is multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster, or diary entry showing the hours you worked.

Personal protective equipment that you may have purchased for use at work, paid for by you and not reimbursed by your work, can be claimed as a work-related expense on your tax return. These items could include gloves, face masks, sanitiser or anti-bacterial spray but must be linked back to use at your workplace. You must have a record to support the claim, but this can be done simply with a purchase receipt.

Similarly, with the marked decrease in the value of work-related expenses for cars, travel, non-PPE clothing, and self-education due to the introduction of travel restrictions and limits on the number of people who could gather in groups, tax returns are expected to reflect your claims regarding these amounts. If you are working from home due to COVID-19 but need to travel to the regular office sometimes, you will not be allowed to claim the cost of travel from home to work in this instance as these are private expenses.

If you are unsure about any of the expenses that you are looking to claim on your tax return this year or are concerned about claiming for the wrong expenses, you can come and speak with us for clarification on what you can and cannot claim on your tax return this year.

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No More Shortcuts: The Methods You Can Use To Claim WFH Expenses

Posted on March 25, 2024 by admin

Ensure you’re up to date on how to claim your working-from-home expenses!

As the business landscape shifts back and forth between office, hybrid and home-based work opportunities, it’s important to remember what methods are available to you when it comes to claiming. If part of your role allows you to work from home, you may be able to claim certain expenses on your tax return this year using one of the following methods.

The Revised Fixed Rate Method:

Under the revised fixed rate method, individuals can claim 67 cents per hour worked from home during the relevant income year. This rate includes additional running expenses, such as home and mobile internet or data, phone usage, and electricity and gas for heating, cooling, and lighting. Importantly, using this method, you cannot claim separate deductions for these expenses.

To use this method, taxpayers must maintain records of the total number of hours worked from home and the expenses incurred while working at home. Additionally, they must keep records of expenses not covered by the fixed rate per work hour, demonstrating the work-related portion of those expenses.

What Records Do You Need?

Previously, taxpayers required a dedicated workspace at home. From 1st March 2023 onwards, the record-keeping requirement has shifted again, necessitating the recording of all hours worked from home as they occur.

How Does The Fixed Rate Method Work?

To utilise the revised fixed rate method:

The Actual Cost Method:

Alternatively, taxpayers can opt for the actual cost method, where deductions are calculated based on actual additional expenses incurred while working from home. This includes expenses for depreciating assets, energy expenses, phone and internet, stationery, computer consumables, and cleaning dedicated home offices.

What Records Do You Need?

To claim work-from-home expenses using actual costs, you must maintain records showing:

How Does The Actual Cost Method Work?

To claim actual expenses:

Australians need to understand their entitlements and tax deductions while working remotely.

Consulting with a tax advisor can provide valuable insights into available concessions, deductions, and offsets for your tax return.

By staying informed and adhering to ATO guidelines, taxpayers can ensure compliance and make the most of available deductions in the evolving landscape of remote work. Why not start a conversation with us today?

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