WORK RELATED SELF EDUCATION EXPENSES
Tax Return:
Hello, everyone, we are approaching the EOFY 2020, which has been an eventful year and with all the changes that came in this year due to COVID, you must be thinking how would this affect your tax this year.
We would like to inform; the contents of the below article are only the highlights of the actual legislation and hence the application of the tax law will be subject to change based on interpretation as well as personal circumstances. Some contents of this article are technical and by no means any financial advice is provided, given or suggested. You should consult a qualified advisor before using this information to prepare your tax returns for the Financial Year 2020.
Many of you may have been working from home this year due to the restrictions and hence would like to know, what you can and cannot claim. So then let us start with, what can you claim for working from home?
Generally, working from home deduction could include costs associated with
- Heating,
- Cooling
- Power
- Cleaning costs for the dedicated work area.
- Furniture
- Phone & Internet
- Computers
- Printer, toner, stationary etc.
- Software Purchases
- And any other expenses that may enable you to work from home.
There are 3 methods this year to claim working from home expenses and you can choose either one. Please note: appropriate records and substantiation will be required to claim for these expenses on the tax return.
- The Actual Method – You need receipts and records of actual expenses incurred.
- The Fixed hourly rate Method – up to 1st March 2020 – 52 cents an hour.
- The hourly rate – Shortcut method (optional) – after restrictions were announced
which applies from the 1st March 2020 to 30th June 2020. – 80 cents an hour.
As part of the working from home deduction, you cannot claim for:
- The costs of tea, coffee & milk that your employer usually provided.
- Costs associated with home schooling of children including any purchases associated with this.
- Items that you are reimbursed for by your employer.
- Employees cannot claim for rent, mortgage interest, water and rates.
So, then what method is better?
The 80 cents per hour method includes everything. If you choose this method, then you would not be eligible to claim for any furniture purchases, computer or consumables, phone & internet, power and so on. You may be better off on the 52 cents per hour method or even the actual expenses method if you are looking to receive a bigger deduction. The 52 cents and the actual expenses method require you to retain more records than the 80 cents an hour deduction.
Now, some of you may have withdrawn super due to facing hardships and may be wondering if you need to pay tax on such a withdrawal? The good news is, due to special legislation being enacted to release super, this income is tax free and hence does not need to be reported on your tax returns this year.
Many of you may have received payments from Centrelink and may not be sure of what is taxable and what is not. Let me clarify by telling you the $750 COVID support is a non-taxable payment, however the job seeker income is taxable. Hence, you would be required to include income from job-seeker or unemployment benefits into your tax return at EOFY.
If you are on JobKeeper and have been paid a minimum of gross fortnightly payment of $1500 by your employer. This income is taxable and needs to be declared on the tax return.
If you are a sole trader and you received a payment towards business participation as part of the JobKeeper scheme this income is taxable too.
People who work in client facing roles, such as customer service or food handling could be eligible to claim for hand-gloves, masks and sanitizers too.
I have briefly described some of the changes that affect your tax returns this year. You would also be required to consider the change in circumstances to reduce some of the other claims. For example, if you had been working from home, you would not be needing to travel and hence you would not need a uniform too. No uniform means there would not be a need to launder or wash a uniform and hence these expenses would ideally reduce in comparison to the previous year.
Please keep in mind, for you to become eligible to claim an expense as a deduction, the expense must be incurred by you and should be related to you being able to earn an assessable income, it should not be reimbursed by your employer and accurate record keeping is a must to substantiate your claims. Electronic record keeping is acceptable too meaning you do not need to retain physical copies of invoices. You could also use an app to store receipts in an electronic form.
Now, many of you may have had an investment property in the last financial year and per the new rules, deductions on vacant land are unavailable from the 1st of July 2019. Some minor exceptions do apply in this space. However, if you have been maintaining land as an investment property then this would not be a deductible expense from this financial year. It may hence be the right time to start building.
There has also been a change to the law regarding Personal Super contribution deductions caps. Unused value of prior year superannuation caps can be now carried forward to future years. This can be done for up to 5 previous years starting from the FY 2018-19, with the first year of contribution deduction being the financial year 2019-20. There are specific rules with regards to super contribution caps and you should consult an advisor.
Please note: Our aim is to only bring to your attention the change in legislation and not suggest an investment. Superannuation investments are part of financial advice and hence you should consult an appropriately qualified advisor.
So then, what else can you claim?
All your standard expenses which you have been claiming on a regular basis remain unchanged and you should be eligible to claim for these given you meet the rules. I shall not go into the details of these within this video but some of those are as under:
Work related travel & car
Work-related Education
Donations
Memberships, Licenses & Subscriptions
Uniform & Laundry
Tax Agents Fees
Union Fee
Income Protection
And any other occupation specific deductions.
I would like to draw your attention to our services. We are available to help answer your questions, provide obligation free tax estimates as well as complete your tax returns over the phone, online or in person at any of our offices. Feel free to contact us.
Visit the link below to submit an online tax return request and one of our consultants shall get in touch with you.
https://www.a1accountants.com.au/online-services/online-tax-returns/
Related posts
