With Financial Year End just around the corner, it’s a good time to start preparing for tax time. If you worked from home during the COVID-19 pandemic, there are some tax deductible expenses you may be able to claim. Tax concessions for small businesses have also changed so it’s important you understand these. Here are 5 handy tips to help you prepare for tax time.
Deductions You Can Claim For Home Office Expenses
Employees working from home are entitled to claim a deduction for expenses incurred relating to work. Operating expenses like electricity, phone and internet, as well as depreciation of office equipment and furniture may be tax deductible.
In light of COVID-19 and more people having to work from home during the lockdown period, ATO has introduced a shortcut method of calculating your working from home tax deduction.
This is a temporary method only available for the period 1 March to 30 June 2020, and if you worked from home during this period, you can use this method to calculate your tax deduction.
The method allows you to claim 80 cents per each hour worked from home during this period to cover phone and internet expenses, electricity and gas, as well as the decline in value of equipment and furniture used to work from home.
You can find all of the details of this and other calculation methods on the ATO website.
Small Business Tax Concessions
From 12 March 2020 until 30 June 2020, the instant asset write-off threshold amount and eligibility criteria for depreciation write-offs have been expanded.
Furthermore, the Backing business investment measure allows eligible businesses to accelerate their depreciation deductions on the purchase of certain new depreciating assets.
These changes and others can be found on the ATO website.
Get Ready For Tax Time
- 1. Collate your paperwork – check that you have copies of all receipts and tax-related paperwork that you need to submit for your tax return. That includes records of donations, educational expenses, receipts from any investment property expenditure, and any outgoings and incomings relating to work.
- 2. Take note of the days worked from home and the hours worked each day. Know how much you can claim – Using the ATO website, working out how much you’re entitled to for home office expenses.
- 3. Make extra payments – you can further reduce your taxable income by making voluntary contributions to superannuation or to HECS debt. Consider making extra payments for work-related expenses that are tax deductible in this financial year.
- 4. Know the rules and deadlines – Use the ATO website to guide you when you lodge your tax return, and remember you can lodge up to 31 October for the previous financial year which runs from 1 July to 30 June.
- 5. Seek professional advice – if in doubt, talk to a registered tax agent or accountant about what you’re entitled to claim on your tax return. These costs are also tax deductible and invaluable.
Contact Mortgage Express today if you’re considering investing in property and would like to know your options for finance. Our team of brokers can help find a mortgage that best fits your individual financial situation.
While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.
Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.