While planning of any kind has been challenging over the past 12 months, tax time remains a certainty for all businesses and individuals who are working from despite the easing of Covid-19 restrictions.
Tax planning should be a key element of your business and Individual tax affairs.
Over the past year, many businesses have had to review the way they operate. For many, this has resulted in better, more profitable and streamlined businesses overall. If you aren’t already taking advantage of tax planning, this is another key strategy that can help you make the most of the ATO’s provisions to mitigate tax impacts while making the most of other business opportunities.
Falling behind in your tax obligations is one of the major causes of failure for Australian businesses. In an increasingly complex tax environment, keeping up to date with taxation regulations is an absolute must for businesses of any size or industry. Our team of accountants will work with you, share their knowledge and expertise to help provide transparency when it comes to all things tax.
The time to act is now, as some strategies take time to implement, and your options will be limited once the calendar ticks over to 30 June. Your commitments will be set, and you’ll have little choice but to pay whatever tax is necessary to meet your obligations.
Preparing Your Income Tax Returns for EOFY – June 30, 2021
Now is a great time to review tax planning opportunities and consider where you might stand to benefit.
Tax Planning for Individuals
We have produced a comprehensive Tax Planning Guide for Individuals to assist you prepare for the EOFY. You can download a copy of the guide here:
In addition to the guide, we have also produced a series of Occupation Guides, which sets out deductions that you may be able to claim depending on your occupation. There are 35 occupation guides which you can access here:
ATO Guidelines – Working from Home 2020-2021
The ATO also warned that employees generally can’t claim rent, mortgage interest, property insurance, or other land taxes and rates. The Tax Office said that working from home does not make a taxpayer’s home a place of business for tax purposes.
The ATO warns that claiming occupancy expenses could expose some taxpayers to capital gains tax implications when they leave/sell their homes. The temporary shortcut method, introduced January 2021 was extended to 30 June this year, allowing taxpayers to claim a fixed rate of 80 cents an hour for all running expenses.
These must be incurred as a result of working from home, as opposed to calculating costs for specific expenses.
How to calculate working from home expenses
The method’s introduction did, however, spell the end of a measure which required taxpayers to have a dedicated work-from-home area, factoring in multi-person households, where each working taxpayer would now be able to claim.
The method covers a range of running expenses including electricity for lighting, cooling, heating, and the running of other electronic items; phone and internet costs; and the depreciation of various items spanning computers, laptops, home office furniture, and other household fixtures that see wear as a result of a taxpayer’s working arrangements.
The shortcut is all-inclusive, and can’t be supplemented by additional, individual expense claims, e.g. on items like phone and internet costs and other depreciation claims on items like furniture and laptops. Keeping track of each individual expense and calculating the work-related use of each one can be fiddly, so be organised.
The ATO’s reminder follows a separate call from Moore Australia earlier this week for taxpayers to keep a diligent log of the hours they work from home this year as tax time looms. “To claim home office deductions using the shortcut method, individuals need to keep a record of actual hours worked at home,” said David Tomasi, chairman of Moore Australia. “The shortcut method is not compulsory, and individuals can still claim based on actual expenses incurred.
“However, they would then have to comply with the necessary, and more complex, record-keeping requirements.” Tax agents and self-lodgers interested in using the method will need to include a note that reads “COVID-hour rate” in their tax returns, Moore Australia warned.
We encourage all our clients and readers of The Pulse, to prepare your receipts and expense documentation as soon as you can and call our office to book in for your tax return discussion and preparation.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Chan & Naylor, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.