Life can be complicated. Lodging your tax return for the 2020–21 income year doesn’t need to be.
The ATO will be focusing on work-related expenses this tax time to help taxpayers get their returns right. So, what else is there to do but go straight to the source to find out what you can and can’t claim at tax time?
We spoke to the Australian Taxation Office to get their top tips on making your tax return a breeze this EOFY.
1- Follow the three golden rules
There are three golden rules for claiming a work-related deduction:
- you must have spent the money yourself and weren’t reimbursed
- the expense must directly relate to earning your income
- you must have a record to prove it (usually a receipt).
2 – The temporary shortcut method for claiming working from home expenses is available for the full income year
The temporary shortcut method was created at the height of the pandemic last year to respond to the sudden influx of makeshift home workspaces. Australian Taxation Office, Assistant Commissioner Tim Loh said that “even with people shifting back to the office, we know many Australians have opted to continue working from home at least one day a week.”
The working from home temporary shortcut method allows claims at the all-inclusive rate of 80 cents per work hour, rather than needing to do complex calculations for specific items.
“The shortcut method is straight forward; just multiply the hours worked at home by 80 cents,” Mr Loh said.
“The only proof you need is a record of the number of hours you’ve worked from home, such as a timesheet.”
The temporary shortcut method can be claimed by multiple people living under the same roof and, unlike other methods, does not require a dedicated work area.
The shortcut method is all-inclusive. If you use this method, you can’t then claim for individual expenses such as telephone and internet costs and the decline in value of new office furniture or a laptop.
3 – Don’t claim a standard deduction
Before lodging your tax return, it’s important to know what you’re eligible to claim and make sure you don’t claim more than you’re entitled to. For example, some taxpayers think they can claim a standard deduction of $300 without having spent the money. While you don’t need receipts for claims up to $300, you must have spent the money yourself, it must directly relate to earning your income and you must be able to show how you worked out your deduction if asked.
4 – Read the occupation guides from the ATO
Claiming your work-related expenses is easier than ever with the ATO’s occupation guides! You’ll also find a great poster you can print and share with your colleagues. There are a range of other occupation guides available, covering everyone from teachers to truck drivers, see ato.gov.au/occupations
5 – Don’t rush
The ATO see lots of mistakes in early July as people rush to get their tax return done. If you lodge online the ATO has made it easier for you by prefilling sections of your tax return with information from third parties, such as employers, banks and government agencies.
Most information is sent to the ATO by late July, but many organisations send their information much earlier. If you usually do your own tax return, the ATO will send you a message through myGov when that information is available. They recommend lodging when all your information is ready. Just remember to review your information and add any missing or incorrect details.
Don’t forget, it is important to make sure your income statement is marked as ‘tax ready’ before you lodge.
It’s easier to lodge if you wait a few weeks.
6 – Get prepared for next year
If you spend countless hours trying to find your receipts, or if these receipts are now faded and unreadable, the ATO app’s myDeductions tool can help. The myDeductions tool makes it easier and more convenient to keep your expense records in one place and get prepared for tax time. You can record expenses, vehicle trips and take photos of your invoices and receipts. Come tax time you can email your data to your tax agent or upload your data to prefill your tax return. Simply download the ATO app to your smart device and select the myDeductions icon.
Refer to the ATO’s tax time essentials webpage for everything you need to know to make lodging your return quick, secure and simple this tax time, see ato.gov.au/taxessentials
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