You can lodge your tax return yourself online anytime until 31 October or May 2021 if you’re using a tax agent. But before you rush to lodge your tax return, make sure you’ve got everything you need to do it properly and you’re aware of all the COVID-related deductions you could be eligible for.
Whether you’ve been working from home, not working at all, working reduced hours or receiving government benefit payments, you could be eligible to claim some extra deductions this tax time.
You don’t need to lodge your tax return straight away, you’ve until May 2021 to submit your tax return if you’re using a tax agent. Make sure you’ve got your up-to-date income statement from your employer for the 2019-20 financial year before you lodge your return, as you might have paid more Tax throughout the year than you needed to.
It’s also a good idea to take a bit of time researching what extra deductions you could be eligible to claim this year and how to claim these correctly. It could result in a few hundred dollars extra in your tax return.
This year due to coronavirus, there are a few extra things you could be eligible to claim on your tax return.
Can you claim working-from-home expenses?
Have you been working from home a lot more this year because of coronavirus and widespread office shutdowns? In March, Australians were told to work from home if they could to help stop the spread of the virus. This means that hundreds of thousands of people were suddenly swapping the office for their living room (or, if you’re lucky, a home office).
The good news is that yes, you can claim your home office and running expenses in your tax return. Because of the huge increase in the number of people working from home, the ATO has introduced an easy, shortcut method to claim.
You can claim 80 cents for each hour worked at home from 1 March 2020 to 30 June 2020. This blanket rule includes all your home office running expenses like heating, cooling and home Internet costs, as well as your office furniture itself.
The ATO has relaxed the rules this year, so you’re not required to have a dedicated home office set-up, either. This means if you’re working on your couch from your laptop, you’re still eligible to claim. What you can’t claim is things like tea and coffee that your employer usually provides.
Unfortunately, you’re not able to claim expenses relating to your child’s learning and education as a tax deduction. If you’ve had to purchase additional equipment and online tools and resources while your child has been learning at home, these are classed as personal expenses by the ATO.
The primary reason for this is that tax deductions are reserved for expenses you’ve incurred that impact your ability to earn an income. This is why your learning expenses, such as attending seminars and completing additional courses, can be claimed as a deduction. These things are seen as helping you to remain employed or increase your employment prospects.
If you’ve purchased personal protective gear to help prevent you from contracting coronavirus, you may be able to claim the cost as a tax deduction. However, you can only claim these costs if you need the items to do your job effectively.
For example, medical staff such as nurses, ambulance drivers and general practitioners can claim the cost of buying their gloves, masks and hand sanitiser to use at work. However, if you’ve bought the same items for your personal use at home and when you’re out and about (like doing the groceries), you can’t claim these as they’re not directly related to your work.
Our guide to tax deductions has many more ideas for the deductions you could be eligible to claim on Tax.
Paying Tax on JobSeeker and JobKeeper payments
If you’ve received JobKeeper or JobSeeker payments in the 2019-29 financial year, you may have some extra steps to complete when lodging your tax return.
Yes, you do pay Tax on JobKeeper payments. These payments are taxed in the same way that your standard income is taxed. That is, they’ll be included in your overall taxable income for the financial year and taxed at your standard marginal tax rate.
You won’t need to do anything extra to declare these payments when lodging your tax return. Your employer will pay you like it normally would, and it’ll withhold the correct amount of Tax on your behalf.
While the JobKeeper payments do need to be assessed as part of your taxable income, if it turns out you paid too much tax throughout the year, you’ll get this back in your tax return. So if you’re on JobKeeper payments and you earn below the tax-free threshold for the financial year (below $18,200), you won’t need to pay any income tax.
JobSeeker payments, along with most government benefit payments, are also included in your overall assessable income at tax time. You’ll need to be prepared to pay any tax owing on this income when submitting your tax return unless you’ve specifically requested that Centrelink withhold a small amount of your payment each time for Tax.
Again, if your total income for the year, including your JobSeeker payments, is less than $18,200, you don’t need to pay income tax. If you’ve requested Centrelink withhold Tax from your JobSeeker payments throughout the year and you end up earning less than $18,200 for the year, you’ll get the Tax withheld back in your tax return.
Paying Tax on annual leave payouts and redundancies
Here’s what you need to do if you’ve received a lump-sum payment for your annual leave or a lump sum redundancy payment.
Redundancy payments are often tax-free and aren’t included in your assessable income for tax purposes. However, if your payout is significant, you might need to pay tax on a portion of it. Your redundancy payment size and the amount that’s tax-free will also depend on how long you’ve worked at the company.
The 2019/20 tax-free amount is $10,638, plus $5,320 multiplied by how many years you’ve worked at the company. Here’s an example:
Let’s say your redundancy payment was $20,000, and you’d worked at the company for two years full-time.
Tax-free limit: $10,638 + ($5,320 x 2) = $21,278.
This means that your entire redundancy payment would be tax-free and would not need to be included in your income statement when lodging your tax return.
If your redundancy payment were $30,000, this would be slightly different. In this case, the tax-free limit remains $21,278, but the amount over this would be subject toTaxx. A tax agent can help make sure you’re declaring your redundancy payment correctly and not paying any tax that you aren’t required to pay.
If you’re made redundant or voluntarily leave your full-time job, your employer is required to pay you your annual leave balance. So if you’ve got any annual leave saved up when you leave your job, you’ll get the value of this paid to you in a lump sum.
Unlike a redundancy payment, your entire annual leave payout is subject toTaxx at your standard tax rate. Your employer will withhold tax on the money before you receive it. This means you don’t need to do anything extra to declare it, as the lump sum should be automatically included in your tax return under your assessable income.
The first half of 2020 has been a busy one for superannuation because of the government’s early access to the super scheme. As of June 2020, more than 1.5 million Australians were approved to dip into their super early. If you withdrew some of your super this financial year, don’t worry, you don’t need to declare this when lodging your tax return.
Your super would already have been taxed at the special superannuation tax rate of 15% when it was originally contributed to your fund by your employer. This means you don’t need to declare this money as part of your assessable income for Tax. It’s not considered income that you earned throughout the financial year, and it has already hadTaxx paid on it.
If you’re considering withdrawing money from your super in round two of the scheme (between 1 July and 30 September 2020), this is in the new financial year, and there are no implications for your 2019-20 tax return.
How can I maximise my tax refund?
Here are tips to help you file your tax return and (hopefully) get the best possible refund.
Be serious and get started.
This is your money we’re talking about. It is “stolen” away from you, and it is up to you to claim it back. So, get all your paperwork together, put your head down and focus.
You wouldn’t have to look through the same receipt for the next five times and still get confused if you have seen it before. Log into the ATO website, print out the relevant forms and start filling them up.
The faster you start, the easier it seems to be. The mindset of putting it off for another day will only build unnecessary stress.
You’ll never be able to complete your tax return form in one day fully. Moreover, it is better not to finish it in one day. Instead, spread it apart over a few days to make the experience more enjoyable rather than something dreadful that you want to get done with immediately.
Create a schedule and organise documents of proof into their separate categories. You’ll be surprised how easy things are when they are organised.
Defer income where possible
Deferring income is a common practice to paying less Tax. Find out where the money is flowing in and explore ways that you can delay that payment to the next fiscal year.
Thus, this saves you money from paying less Tax. That few dollars can go a long way. It’s not about how hard you save money; it’s about how smart you do it.
Use your car
There are requirements for a car to be considered an asset in a business. One of the requirements is that the allowable deductions come from the usage of the car for business purposes.
There are many ways to calculate the allowable deductions for a car, but the best one would be the logbook method to take into account every time you use the car.
This method gives the most deductions back, but it takes the most effort because you have to record it throughout the financial year manually.
Choose what suits you best.
There are two main ways to complete your tax returns. One of the ways is by yourself and the other by seeking an accountant to help. This is entirely up to you.
Would you rather more work or fewer returns? Some people prefer having more control over their business and life rather than depending on an accountant.
Whichever the decision, making up your mind fast is important because accountants will begin to be swamped by massive work soon.
Help for people earning <$50 000
Alternatively, you can seek advice from tax officers for free. The Tax Help Program sets up accredited volunteers to assists people earning less than $50 000 a year with fairly straightforward tax affairs.
Volunteers operate from 1 July to 31 October. There are requirements before being eligible for this service.
Find out all tax-deductible expenses.
There’s an extensive list of allowable tax deductions that are set up. The chances are that you are eligible for some of them. You’ll be able to claim $300 work-related expenses without showing documentation.
However, claiming more than $300, you’ll have to provide proper documentation for everything above and included in $300. An example is our full tax-deductible SavvySME’s Business Plan.
Expenses that cannot be claimed
The ATO is focused on helping taxpayers get their deductions right, but they’re also on the lookout for red flags that identify people who are doing the wrong thing.
Payment summaries or income statements – Outlines the income you have received from your employer, super fund or government payment like Centrelink and the Department of Veterans Affairs.
Bank statements – Details any interest you have earned during the period and fees you have paid. Your bank may have summarised these for you, either online or at the bottom of your bank statement.
Shares, unit trusts or managed funds statements – Information on dividends or distributions you’ve received. Dividends that you’ve elected to reinvest must be declared as income.
Buy and sell investment statements – Needed to calculate capital gains and losses. If you bought or sold any shares, you can access the details on your online broking account, or you can get them from your investment adviser or stockbroker.
Records from your rental property – If you use a property manager, you will probably get an annual tax statement that details income and expenses. Otherwise, you will need to gather details of income received and expenses paid, including any capital gains or capital losses if you have sold the property.
Foreign income – Details of foreign pensions or other foreign income.
Private health insurance statement – Information needed to complete the private health insurance section of your tax return. This year, health insurers are no longer required to send you a statement unless you request it. Instead, the information will be pre-filled into your tax return through myGov by 20 July.
The ATO’s platform for lodging tax returns is myTaxx. To lodge your tax return, you will need a myGov account linked to the ATO.
For individuals lodging their tax return using myTaxx, the cut-off date 31 October. For those using a registered tax agent, it may be possible to lodge after this date.
Each year, preparing tax returns seems to get easier and easier. The Government pre-filling in a lot of the information it has from employers, health funds, government agencies and third parties and allows for easy uploading of deductions via an excel form.
Usually, tax refunds are received in the nominated bank account within two weeks of lodgment, which makes it worthwhile getting your tax done as promptly as possible.
Make sure you keep all your records of expenses. The ATO may ask you to provide evidence to support any claims you make, and if you need any further clarification, ask your accountant or visit the ATO website.
Guest post by : team Form -
Like this? Share it...