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Tax rules have undergone big changes because of the pandemic, so here's what you need to know, especially if you worked from home or own a small business.

 

Changing times

The last financial year was very different in terms of how we worked – many people worked from home, some received government assistance for the first time in their working lives, and most of us didn’t do any work travel (in particular, most didn’t physically attend work-related seminars, conferences or training courses).

These changes mean that the end of financial year reporting will be quite different this year.

Report card

Firstly, before June 30 rolls around, it’s a great idea to make sure all your record keeping is up to date, according to Stephanie Mellick, head consultant and strategist at Gold Coast-based consultancy, Iron Advisory.

Stephanie says that most taxation claims need accurate records, such as timesheets, receipts and documentation of how you calculated work vs private usage, if an item was used for both purposes.

Establishing good practices in the short term will make a huge difference when it comes to tax time, whether you are an employee who worked from home for most of last year or are running a small business. You can find out more about record keeping for individuals and businesses on the ATO website.

If you have been working from home, you may have spent a lot more on home office equipment and had increased costs for heating and cooling, phone and internet charges. These are all things you should be able to claim this year.

The Australian Tax Office (ATO) notes that there are different record-keeping requirements depending on which three methods you use to calculate your working from home expenses.

Stephanie suggests the simplest method is the temporary shortcut method, which only requires you to keep a record of when you worked from home in an electronic calendar or timesheet, documenting the hours or days you worked from home. “Technically you need to keep records for five years from the date you lodge your tax return and this is a simple way of doing it and backing up the information,” explains Stephanie.

The ATO’s temporary shortcut method allows you to claim a deduction of 80 cents for each hour you worked from home. This method covers all additional deductible running expenses. You can choose to use the shortcut method for the full financial year this tax time when calculating your working from home expenses!

Remember, the shortcut method is temporary. If you want to claim a deduction for the decline in value (depreciation) of an asset costing more than $300 that you will continue to use for work (such as a desk or computer) in future years, you need to keep your receipt.

Note that there are other ways of calculating working from home expenses, which may be better for your circumstances. Check out the ATO website, or talk to your accountant if you are unsure.

Computer and office items on desk

Home-based businesses

If you run your business at your home, or your business is based from home, you may be able to claim the business portion of some expenses, including mortgage interest repayments. Just keep in mind that if you do claim these deductions, you may have to pay capital gains tax (CGT) if you sell your home.

You may also be eligible for an immediate deduction or an accelerated rate of depreciation under one of the tax depreciation incentives – consider the depreciation incentive that’s right for you.

What you can claim

The ATO has some great information available on common deductions individuals can claim at tax time, including what work-related deductions you can claim for your specific occupation or industry. This includes information about dry cleaning occupation-specific clothing, vehicle and travel expenses. It’s important to note that any expenses should be work related – you won’t be able to claim anything regarding home schooling your kids, or food costs when working from home.

The ATO also has information on business tax deductions.

Wooden desk and chair in sunny window

JobKeeper

The temporary JobKeeper Payment wage subsidy scheme kept a lot of Australian businesses afloat in the last year.

If you’re an employee who has received JobKeeper payments, you won’t need to do anything different this year. Any JobKeeper payments you received will be included as salary or wages, or an allowance, in the regular income statement or payment summary you get from your employer.

If you’re a business that has received JobKeeper payments, it’s important to note that JobKeeper payments are taxable and need to be included in your tax return. Find out more about reporting JobKeeper payments

Need to know:

This is a general overview. Please check the ATO website and consult an accountant, because details between businesses and individuals can and do vary.

For everything individuals neeed to know to make lodging your return quick, secure and simple, visit ato.gov.au/taxessentials.

For everything small businesses need to know, visit ato.gov.au/Sbsupport.

Running a business?

Have a look at our guide to bookkeeping and invoicing apps.

 

Photo Credit: Getty Images

 

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Asbestos, lead-based paints and copper chromium arsenic (CCA) treated timber are health hazards you need to look out for when renovating older homes. These substances can easily be disturbed when renovating and exposure to them can cause a range of life-threatening diseases and conditions including cancer. For information on the dangers of asbestos, lead-based paint and CCA treated timber and tips for dealing with these materials contact your local council's Environmental Health Officer or visit our Health & Safety page.

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