With Australians preparing for the end of the financial year with money and cost of living dominating headlines, many will be looking to maximise what our returns can deliver to us.
While over the past two years workers have used a shortcut to calculate work-from-home expenses during the pandemic, this system is now set to be scrapped.
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Australian Taxation Office (ATO) assistant commissioner Tim Loh spoke with The Morning Show to explain what these and other changes mean as well as share some valuable tips when it comes to making a claim.
“A couple of things have changed this year, the one thing that you can claim this year that you haven’t been able to in previous years is COVID-19 tests for work purposes,” he said.
“There are three things you need to satisfy (the ATO): one is that you spent the money yourself and not be reimbursed by your employer.
“Second, it must be for work-related purposes, so you can’t claim a deduction if you bought a RAT to work out if you could go on a holiday with your mates.
“And finally, you need good records, so a digital invoice or receipt is best to substantiate your claim.”
Loh said the ATO is inundated with inquiries regarding the date when a refund will be processed. and explained how to avoid any potential delays.
“At the ATO it normally takes about 14 days to process your refund, and the reason people ring up (chasing their refund) is normally they don’t get that refund within the 14 days,” he said.
“The reason for that is they haven’t included all their income, so it’s really important that you include (that information) this tax time.”
Loh revealed there are four key areas that the ATO will be cracking down on as the EOFY looms, and ticking these boxes will ensure your claim is processed quickly.
“At the ATO we want records to be kept and it’s really important that you have them to substantiate your claims. The second area is work-related expenses including working from home expenses … the third area is income and deductions from rental properties and finally, capital gains from shares, crypto (currency) and property,” Loh said.
When it comes to making claims for Australians who have been working from home, Loh explained how different systems can be used to ensure a healthy tax return.
“It really depends on the method that you choose. If you use the 80 cents per hour shortcut method it’s an all-inclusive method so you can’t claim anything extra on top of that,” he said.
“But if you use the 52 cents per hour method, or the actual costs method, it really depends on whether you’re using it for work purposes. So if you’re trying to claim a laptop that you’ve been using for work-related purposes or internet and telephone expenses you can claim a deduction for that but you’ve got to use it for work-related purposes. If you’re using it to stream Netflix and watch Stranger Things for example then you’re not going to be able to claim a full deduction for internet expenses.”
Loh also shared his key tips for Australian taxpayers to help them ensure that their future returns achieve the best possible refund.
“We’re trying to make things as easy and simple for people to get their return done right the first time. And so for next year, my best tip is to make sure you … start a financial year resolution, so make sure you’ve got good records and the best thing to do is download the ATO app, you can document all your expenses on that app.
“In terms of the mistakes people make, people typically try to claim their private expenses, things like the PJs and the ugg boots when they’ve been working from home, that’s considered to be conventional clothing and you can’t claim that as a tax deduction so that’s a big one.
“Sometimes people also try to claim their childcare expenses (and) that’s not directly related to work (as) you are earning an income so you can’t claim that as a tax deduction,” he said.