Hi everyone, I receive plenty of private messages with very similar tax questions so I thought I would compile a list of basic tax tips that may help some of you with your 2020 tax returns.
I have posted plenty of tax posts over the years so feel free to have a look at them as there were hundreds of questions asked.
Most of you would have worked from home due to Covid and will be looking at claiming working from home deductions. There are various ways to claim working from home deductions.
For those that didn’t purchase many assets, the easiest way is to claim a flat rate per hour worked from home. From 1 July 2019 to 28 February the flat rate is 52 cents per hour. Due to Covid, the ATO has introduced a temporary rate of 80 cents per hour from 1 March 2020. You can estimate the hours worked from home and claim accordingly.
For those that purchased assets and have a home office set up in a dedicated area, using a more detailed method will get you the biggest deduction. The ATO requires a 4 week diary to be kept to use this method. You may want to go back and create a 20 day diary while your recollection is fresh. You will be able to claim expenses such as electricity, phone and internet expenses, computer consumables and most importantly, home office equipment such as a laptop/computer, furniture etc. I strongly suggest seeing your accountant with regards to claiming working from home deductions.
Other Tips
Income statements (previously PAYG Payment Summaries/Group Certificates) are no longer given to you by your employer. Most employers will be using Single touch Payroll (STP) and are due to have your income statement finalised by today 14th July or by 31st July if they employ 19 or fewer employees. Once finalised you will receive a message in your MyGov to let you know that it has been finalised. Only lodge your tax return when all of your employers have finalised your income statements.
Piggybacking on prior point, try and wait for all the information to be available. Don’t lodge early because you want that refund so bad. Not all dividends will be prefilled by the ATO so check all of your holdings if you are going to lodge early. Trust distribution tax statements won’t come out for another month at least, so just be patient. It sucks having to amend a return or worse, the ATO initiating an amendment because new information comes to light later on.
The ATO is getting more and more information with regards to crypto so if you have cashed out crypto investments, please try and figure out your gains and discuss with your accountant if you are unsure of capital gain rules (50% discount for example). Even if you are selling one crypto to buy a diff crypto and you don’t physically cash out the money, it is still considered a capital gain event that you have to include in your tax return.
To claim travel expenses, such as transport fees, tolls, expenses incurred in overnight stay, you must not have been reimbursed by your employer. Usually as an employee, your employer is reimbursing you for most travel. Important to remember that ordinary travel from work to home and home to work is not deductible.
To claim motor vehicle expenses you must own the car and travel between two different places of work, either travel with bulky items to work or travel to conferences and other work related functions away from your place of work. There are two methods, the easiest being a deduction of 68 cents per work related kilometre travelled. The other method will usually give you a greater deduction but it means keeping a 12 week log book of all travel in the vehicle. If you want to claim motor vehicle expenses using the log book method, you should be asking your accountant about what information they will need from you.
Be diligent with claiming rental expenses on your rental property. Remember that not all repairs are immediately deductible. Be aware of tainted loans and apportioning interest deductions. If your property is brand new, get a depreciation schedule.
Your prior year accountant fees are deductible. This includes stationary and printing tax documents and travel to go and see your accountant.
Only donations to deductible gift recipients are deductible. Grab the ABN from your receipt and search it on ABN lookup to check the DGR status.
If you have a spouse, be sure to include their income in your return (especially if you included them in past years). This will assist the ATO in calculating the Medicare levy/surcharge and other rebates.
Question, although I have already submitted my tax return!
I have equipment on a depreciation schedule still going from prior years through the work expenses section. I read that the 80c method means you can't claim any equipment whatsoever as it should be covered under the 80c. So I backed out all of this years equipment, but was I ok to leave in the previous equipment from prior years? (I didn't - not that I am losing sleep over it because it was a tiny amount but still!)