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How Bookkeeping can be done for a Non-Profit Organisation?

The bookkeeping for the non-profit sectors constitutes the principles and customary accounting tasks that all business employees apply to record, analyse, and track the financial transactions. And for this, some vital aspects of bookkeeping are required that may be affected by the non-profit organisation.

The main allegiance of the non-profit organisation is its board members and board. After determining the non-profit organisation’s model of accounting and fiscal year, the tax-exempt status has some distinctive bookkeeping requirements.

The Non-profit Organisations

No doubt running a non-profit organisation is good. However, in the exchange of tax-exempt, the internal revenue services also need to qualify by such organisations.

 

Here, the organisations need to agree on some of the non-profit board members voting and also need to agree on the financial transparency of the organisation. However, the IRS code of tax within which these non-profit organisations have been exempted from the tax may be affected by the financial record keeping details.

For instance, these non-profits need to maintain the financial record as they are stated for the charitable purpose. 

The General Accounting Principle for the Non-profits 

The non-profit bookkeepers may need to have some accounting standards for the businesses set by the FASB (financial accounting standard board). 

 

The group needs to publish some general accounting principles that are specially implemented for the no-profits. For instance, the FASB 116 considers the reporting contribution revenues and records maintenance, including pledges and donor contributions.

 

Besides that, the FASB 117 also says to the non-profit organisations to use financial position statements, cash flow statements, and activities that deliver the statement of the functional expenses of non-profit business organisations.

Expenses and Revenues 

The non-profit business expenses and revenues are different from the profit business organisations. However, the non-profit organisation’s sources of revenues include the program fees, donation, sales incomes, investment income, membership dues, and also proceed from the fundraising events. On the other side, non-profit organisations’ expenses include salaries, rent, financial services, travel expenses, and fundraising expenses.

 

For this, the FASB or bookkeeping requires that these organisations cover the expenses under the general program, management, and fundraising development. However, in some cases, the financial expenses record involves the organisation’s ledger and some details of the charitable donation data.

The bookkeeping requires the non-profits to record the data as charitable contributions.

Net Assets 

Similar to profit organisations, the non-profits also need to keep a record of the net assets. Their directors need to know about how much assets a non-profit has collected and how much revenues do exceed despite its expenses.

The bookkeeper calculates all the things to have some clear idea about the net asset. This may also be known as the profit assets for the non-profit business. This involves the calculation of all the assets minus the expenses.

 

The assets may include the value of non-profit organisations such as investment, property, cash flow, salaries, accounts, vehicle expenses, travel expenses, and others. Some liabilities also include such as loan payments.

Tax Payments 

Non-profit organisations also make tax payments. However, they are exempted from the taxes as per the IRS section 501. Still, they pay some excise duty tax, and that too calculated by the bookkeeper while doing the bookkeeping.

Final Thoughts 

The non-profit organisations qualify under the same accounting principles as that of profit organisations. And by streamlining all the financial records, the non-profit organisations can account the bookkeeping. 

 

By following these accounting traits and principles, the bookkeeping will be easy. Make sure to fill the correct accounting details in the form of the federal government to consider yourself as a non-profit organisation.

How to handle your tax returns efficiently this year?

With the advent of the global pandemic, COVID-19’s impact, each country’s economy is going through loads of ups and downs. Each person is facing drawbacks of recession differently. Hence, this tax season, because of COVID-19, Australians are advised not to accept the increased Flat Rates.

Already, the Australian Tax Office (ATO) has simplified the claim process for mass forces due to lockdown. The step has been taken to encourage people to ‘work from home.’ Therefore, the standard hourly rate has been increased from 52 cents per hour to 80 cents per hour.

But Spokesperson Andrew Gardiner from the national Tax and Accountant’s association expresses it with a distinct viewpoint. According to him, it will be unfair with taxpayers who have already paid the tax.

Even though concession covers off electricity, cooling, heading, and incurred expenses on printers, cartridge, papers, and computers; but people still need to be very careful. For instance, the concession includes only 80 cents per hour, which is over a typical 40-hour-week if you factor it.

Similarly, it’s not a massive claim for sure. Hence, you must be acquainted, that by simplifying the affairs, you aren’t going to get more significant claims.

However, choosing the flat rate by the taxpayer will result in losing the right to claim for new computers, chairs, and desk they have already purchased. Because during the pandemic, no one was working in the office.

Adopting ATO 80 cents rate makes you eligible to forfeit your right; thus, you can claim expenses, like electricity, internet, and phone bills, while working from home.

Confusion! What to claim?

It’s a usual question the answer to which is essential to know. After all, the global pandemic has brought a unique working environment across each sector worldwide. But it’s necessary to know that not all expenses are claimable. Only those expenses incurred during working hours or a part of your work are claimable.

What can I do for the claim?

Just reveal the working hours, and pattern of expenses you have incurred during ‘work-from-home’ to the ATO. The taxpayers, who remain well-prepared with entire records, can reap the benefits of claim with ease. But don’t forget to keep receipts of each claim you obtain.

Changes To Tax Refunds And Deductions By Australian Tax Office Because Of COVID-19

Before the end of the financial year on June 30, the ATO has decided to introduce several changes in the tax return rules. The changes have done intending to bring easiness in the filing of a tax return, especially for Australians who are confronting major issues just because of Coronavirus, said ATO Assistant Commissioner Karen Foat.

According to Foat, the ATO acknowledges that amid this tax period, loads of people (working from home) are likely going to seek claim deduction. Besides, they have also paid attention to protective items.

Shortcut For People – Working From Home

ATO has simplified the process of claiming. For instance, now workers can easily calculate work-from-home-expenses with the help of shortcut by ATO.

Moreover, this shortcut also comes under some rules and regulations. Accordingly, expenses between March 1, 2020, and June 20, 2020, have been covered here. However, all family members who work from the same home are eligible to use this shortcut.

Therefore, if you also work from your home, then simply add incurred expenses by you while working from home in the other expenses related to work. Now add the ‘COVID-19 hourly rate’ in the following numbers.

According to Foat– if you want to claim the deductions, keep the record of your working hours (while-working-from home) and use the shortcut method. On the other hand, you can’t claim for those expenses that aren’t the part of “working from home expenses”.

For claiming- “work from home expenses,” you can also use old methods.

Claim for Protective clothing

You can also claim for the deduction if during Coronavirus you have incurred expenditure on the purchasing of protective items. Such as, you can claim on your tax return if you have purchased protective equipment like masks, gloves, spray, antibacterial, and sanitizers.

Also, taxpayers who are operational during Coronavirus and require to maintain contact or proximity with clients can also claim a deduction for protective items.

Travel expenses and laundry expenses

Since workplaces were “off” amid pandemic, ATO expects a decline in the claims for “Travel and Laundry expenses.” For instance- no claim for travel expenses if there’s no travel history. No laundry expenses if uniforms have not been worn – said, Foat.

Even though, during the period of working from home, if you have to go to the office once in a week, then still you aren’t eligible to claim travel expenses because it will be considered a private trip.

Redundancy and stand down payments

It’s essential to include stand down payments in your income payments, as these payments are taxable. However, these payments also include sickness payments, protection payments, or accident payments. All these payments must be mentioned by the workers while filing the returns.

Early super access

Foat also mentioned that you don’t have a need to declare the amount withdrawn from super in your tax return. The withdrawn amount is tax-free under the program. Therefore, if you have already obtained the early access to super due to COVID-19, then undoubtedly it’s a point of relief for you.

Get ready! It’s the tax time.

Probably this year went through loads of difficult shifts; some unusual and unseen incidents have affected the economy worldwide. All of us did work from home, while most of us relied on the government’s assistance.

But, as the end of the financial year is nearer, the lines of worriment may be visible on your forehead. However, for Australians, it’s not a hectic situation, as they know how and why it’s essential for them.

Along with this, since loads of happening came into existence over time; hence most of you might be curious to know the latest updates on tax returns. Therefore, in light of that curiosity, below is some latest information for you.

If you don’t know when tax returns are due

Because the deadlines vary for tax seasons, you may have to face-off with difficulties. Hence you can take the help of agents who’ll guide on every milestone.

If you want to use an agent

In most instances, you should only seek professional tax agent help. For example- they are expert in filling the tax return and always keep you up-to-date with the latest policies.

If you receive Job Keeper payments

Job keeper payments are, however, taxed as a regular income. Hence beware, the payment is viewed as salary/wages/allowance/ by ATO.

If you receive Job Seeker payments

Like job keeper, jobseeker payments are also taxed, and ATO views it as ‘government payments and allowances.’

If you withdrew some of your superannuation early

According to ATO assistant commissioner, Karen Foat, any withdrawn amount from super are tax-free if you receive early access to your super due to COVID-19.

If you run a business

Taxpayers who don’t pay instalments for GST won’t be affected because the government has decided to suspend the indexation entirely due to coronavirus.

If you run a self-managed superannuation fund (SMSF)

You can take some advice from a charted accountant on behalf of SMSF.

Top 5 Mistakes That People Make On Tax Returns- You Should Avoid

The end of the financial year is on the way! Hence loads of questions might be thriving inside you. Especially, after COVID-19 restrictions, what changes have been made in tax, is undoubtedly a critical point to note.

Already, the Australian Tax Office has brought loads of changes to make things easier. But that doesn’t mean that people forget the essential rules that apply to each taxpayer. Often, people make these five silly mistakes while filing the tax return. So, what are these? Let’s have a look at the points stated below.

Unclear Income

Most of the time, people never declare their entire income. According to the Australian Tax Office, it’s the most common mistake that people make. ATO wants that a taxpayer must declare every income from a regular job to temporary job during tax return. Even cash-in-hand, money earned from Cryptocurrency like Bitcoin, capital gains, etc. should be mentioned.

Claiming a deduction for things while being ineligible

ATO has three golden rules and wants people to follow the same while claiming the deduction.

  1. The things you want a claim on must be a part of the income generation process.
  2. Similarly, it should not be reimbursed instead of bought by the worker.
  3. A well-maintained record of the things on which you’re aspiring claim deduction

It’s essential to clear because most of the people also include the personal cost that isn’t a part of operational cost. In short, if traveling in your own car during working hours is a part of your job, then you can claim the deduction. Besides, most of the people also include laundry expenses for deduction without knowing the policy behind it.

Forgetting to keep receipts

It’s one of the essential things that every taxpayer must bear in mind. For instance,-most of the time, people either throw the receipts elsewhere or forget to take. Hence, the best practice that you must employ is getting both soft copy and hard copy for the receipt. For instance- you can ask authorities to send an email receipt and printed receipt for better assurance. However, you can also take the help of ATO’s My deduction app.

Claiming for non-paid deductions

If you haven’t paid money for work-related expenses from your own, then you can’t claim for deduction. Therefore, if it is reimbursed, then you aren’t eligible for claiming.

Rental properties

If you don’t want a red flag from the tax office to raise in your record, never put additional effort to claim for non-rented property expenses. Moreover, you can only claim the deduction if, during the pandemic, your property was genuinely available for rent or rented.

For every taxpayer, it’s essential to follow the guidelines. Otherwise breaking the rules of ATO is undoubtedly going to put you into big trouble.

Easing down the Taxation for SMEs and Sole Traders for EOFY 2020

There was a hard-hitting time for people across the world due to the Covid-19 destruction, which has impacted the business owners more significantly. Similarly, amid this, the majority of the taxpayers are a bit stressed for their tax.

As we all know, the financial year’s end is on the way, so now it’s time to be attentive. Moreover, to reduce the burden, and keeping the current situations in mind, ATO (Australian Tax Office) has been trying to bring easiness in tax returns.

The Australian Taxation Office (ATO) has already done huge preparations in this taxation month. For which they are introducing additional options to give relaxations to small and big firm owners so that it can help them to file tax returns on time.

Hence, major changes have been made by ATO (mentioned by assistant Commissioner Karen Foat, from ATO). So what’re the things you should remember are mentioned below.

Claims for working from home with the ‘Shortcut’ method

Due to COVID-19, the ATO is expecting to see a considerable hike across business owners filing for claims deductions during the lockdown as they are working from home.

Taking into consideration, work from home, ATO has introduced a ‘shortcut’ which enables taxpayers to claim almost 80 cents for each hour until they are working from home.

This method will help workers a lot. For instance, if while working from home, they incurred expenses, then they are eligible to claim for that. However, in this claim, traveling expenses and laundry expenses aren’t included.

Change in income during COVID-19

A sole trader who receives job keeper payments will have to be a bit considerate. Because, for your business, you’ll have to include job keeper payments as assessable income. However, this rule doesn’t apply to employees.

David Mckeller (the Allied Business Accountant) says that businesses must ensure that they respect to obligations made for claim deduction on salary payments.

Avoid spending splurge at the EOFY

At the end of the financial year, businesses might already have a huge shopping list. Similarly, it implies that there’s no shortage of items, so there’re loads of deals rolling around. Hence, you might be wondering about spending extra at the time of EOFY.

But remember, cash flow is a king, hence make sure that you spend wisely. If purchasing goods at present costs you more in the upcoming time, then it’s surely going to become a significant obstruction in your business.

For instance,- if you purchase anything on loan right now, don’t forget the interests you’ll have to pay on it. Due to the coronavirus outbreak, each country’s economy is going through a recession.

Hence spending extra can put you into big trouble. Moreover, you can seek help from a financial adviser to avoid any problem in the future.

Must Remember! Super contribution

According to the McKeller, a superannuation cap is an effective tax strategy that businesses should not forget. Almost all businesses had to face-off with depressed income due to the COVID-19 outbreak. Hence carrying forward, concessional Superannuation can be the best decision.

For instance, apart from super, if your contribution to the marginal tax rate is higher than 15%, then you must employ a Super contribution strategy for tax. Moreover, you’re also able to carry forward unused cap for the duration of 5 years if your income isn’t high because of COVID-19.

Getting the Tax Payment Early

Here in these prevalent situations, we’ll have to stay thoughtful for filing tax return so that it may not impact us with huge problems. Example- from expenses, working from home deductions to charitable donations, you’ll have to pay special attention to each point. After all, plenty of things have changed over time.

Moreover, play smart if you want to be proactive and stay top of the line. If you don’t want to confront tax affairs problems, the sooner you file your tax return, the better it will be for you. It’s the time to get most refunds out of your tax returns. Hence, you should book a meet with your tax agents as early as possible without any delay.

Individual Tax Returns: Tax Tips FY20

If you also work in Melbourne, Australia, then each year, lodging a tax return in Melbourne is also requisite for you. According to ATO (Australian Tax Office), your tax return reveals the income you have generated from your business throughout the financial year.

However, this is mainly done to figure out the correct tax amount that you have paid. Moreover, if any refund for tax is entitled to you, then your money is returned back even if you have already submitted your annual tax return.

Although, it’s understandable that with lodging a tax return in Melbourne, loads of burden hits you strongly. Hence you’re likely looking for some tips in the financial year 2020, so you could pay less tax. Therefore, we have narrowed down some fantastic tips to do this for you.

Keep good Tax Records.

Every year, a vast number of people overlook deductions from tax, which they could easily claim. Resulting in, most of the people among you might be unaware that in this way, ATO holds millions of dollars. Simultaneously, people miss the opportunity of tax refunds. Therefore, if you also want to claim your tax deduction, then keep a track record of every deduction. Point out everything that you can claim, and ask for deduction from ATO.

Charitable donation for a Tax deduction

If you also want to save yourself from the tax return in Melbourne, then no wonder, a charitable donation has always been the best option. The amount you donate can claim at the time of tax return. In short, it’s a kind of win-win situation. Don’t forget to take a receipt after donation and keep it with you. At the time for tax, show the receipt to the tax office, and you’ll get the tax deduction.

Claim work-related expenses

You can even claim your work-related expenses during your tax return in Melbourne. However, this step can also put you in danger if you aren’t eligible to claim. There’re several expenses that you can claim in your tax return, such as tools, work-specific clothing, laptops, mobile phones, safety items, and many more.

Get tax agent advice.

In Australia, the maximum percentage of people takes the help of agents to lodge a tax return in Melbourne. Hence, if you also want to save money on tax-return, then don’t forget to take the assistance of tax agents or accountants. They can provide you an instant way for ‘how to improve tax refund.’

Claim tax deduction for working at home

You can also claim a tax deduction if your business is operational at home or work from home. For instance, if you are running a business, you’re surely using your phones, computer, and electric devices, and hence, they are also deriving your business expenses. Similarly, in this way, you become eligible to claim the tax deduction. Under your expenses, it must be included anyone from- cleaning cost, office furniture, repair or purchase cost, phone bills, electricity bill, home internet bill, etc.

 Bottom line

If you also want some relief from Melbourne‘s tax return. These were some of the best tips you must bear in mind for the financial year 2020. To some extent, these tips may prove to be an elixir for you, which can provide you claim or bring deductible tax amount in your portion.

Home office expenses

Source: https://www.ato.gov.au/

If you’re an employee who works from home, you may be able to claim a deduction for expenses you incur relating to that work. These can be additional running expenses such as electricity, the decline in value of equipment or furniture and phone and internet expenses.

If your home is your principal place of business, you should refer to running your business from home.

In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.

Expenses you can’t claim

There are some expenses you can’t claim a deduction for as an employee. Employees who work at home can’t claim costs:

  • for coffee, tea, milk, and other general household items your employer may otherwise have provided you with at work
  • related to children and their education including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks
  • that you’re reimbursed for, paid directly by your employer or the decline in value of items provided by your employer – for example, a laptop or a phone.

Employees generally can’t claim occupancy expenses such as rent, mortgage interest, water and rates.

Calculation methods

There are three ways of calculating home office expenses depending on your circumstances. The methods are the:

You must meet the record-keeping requirements and working criteria to use each method.

Use our Home office expenses calculators to help work out your deduction.

Shortcut method

We have introduced a shortcut method to simplify how you calculate your deduction for working from home. This method is temporary and only available for the period 1 March to 30 June 2020. All employees working from home in this period can use this method.

Using this method, you can claim 80 cents per hour for each hour you work from home during the period 1 March to 30 June 2020.

You can choose to use this rate if you:

  • are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls
  • have incurred additional running expenses as a result of working from home.

The shortcut method covers all of your work from home expenses, such as:

  • phone expenses
  • internet expenses
  • the decline in value of equipment and furniture
  • electricity and gas for heating, cooling and lighting.

If you use this method, you can’t claim any other expenses for working from home.

You don’t need to have a dedicated work area to use this method. However, you must keep a record of the number of hours you have worked from home. This could be a timesheet, roster, a diary or documents that set out the hours you worked from home.

You don’t have to use the shortcut method, you can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome as long as you meet the working criteria and record-keeping requirements for each method.

If you had a work from home arrangement before 1 March 2020, you will need to use one of the existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020.

The shortcut method includes a decline in the value of all items. If you choose to use this method there is no requirement to separately calculate the decline in value of equipment or depreciating assets. However, as you may combine methods or use a different method in later years it’s important to keep the:

  • purchase receipts for depreciating assets or equipment you use when working from home
  • records of how you calculated your work-related use of the asset
  • your decline in value calculations.

For more information about the shortcut method, see employees working from home during COVID-19.

Fixed rate method

You can claim a deduction of 52 cents for each hour you work from home for the work-related expenses you incur for additional running expenses. The fixed-rate covers all expenses you incur for:

  • the decline in value of home office furniture and furnishings – for example, a desk
  • electricity and gas for heating, cooling and lighting
  • the cost of repairs to your home office equipment, furniture and furnishings.

To claim using this method, you must keep records of either:

  • your actual hours spent working at home for the year
  • a diary for a representative four-week period to show your usual pattern of working at home.

You can apply the four-week representative period across the remainder of the year to determine your full deduction amount. However, if your work pattern changes you will need to create a new record.

To use this method, you need to have a dedicated work area, such as a home office when you work from home.

This method doesn’t include the following, so you will need to separately calculate your work-related use for:

  • phone expenses
  • internet expenses
  • computer consumables and stationery – such as ink
  • decline in value of equipment – such as phones, computers and laptops.

To claim the work-related portion of these expenses you must have records such as:

  • receipts or other written evidence that shows the amount spent on expenses and depreciating assets you purchased
  • phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a representative period
  • a diary that shows
    • a representative four-week period of your usual pattern of working at home
    • any small expenses ($10 or less) that you can’t get a receipt for totalling no more than $200
    • your work-related internet use
    • the percentage of the year you used depreciating assets exclusively for work.

Actual cost method

Under the actual expenses method, you can claim the additional running costs you directly incur as a result of working from home. This may include the following expenses:

  • electricity and gas for cooling, heating and lighting
  • the decline in value of home office furniture (desk, chair) and furnishings,
  • the decline in value of phones, computers, laptops or similar devices
  • phone expenses
  • internet expenses
  • cleaning (if you use a dedicated area for working)
  • computer consumables and stationery – such as ink

If you don’t have a dedicated work area, such as a home office, you will generally only incur minimal additional running expenses. For example, if the area you use for work is a common area of the home such as a lounge room and that area is being used by other members of your household for another purpose (such as, family members watching television) at the same time you’re working, you won’t be incurring any additional costs for lighting, heating or cooling as a result of working in that room.

To calculate the work-related portion of your actual expenses you must have records. You can:

  • keep a record of the number of actual hours you work from home during the income year
  • keep a diary for a representative four-week period to show your usual pattern of working at home
  • work out the decline in value of depreciating assets and
    • keep receipts showing the amount you spent on the assets
    • show the percentage of the year you used those depreciating assets exclusively for work – you can claim for the portion of the decline in value that reflects your work-related use of the depreciating assets
  • work out the cost of your cleaning expenses (if you have a dedicated work area) – for example, a room set up as a home office, by adding together your receipts and multiplying it by the floor area of your dedicated work area (floor area of the dedicated work area divided by the whole area of the house as a percentage) – your claim should be apportioned for any
    • private use of your home office
    • use of the home office by other family members
  • work out the cost of your heating, cooling and lighting by working out the following
    • the cost per unit of power used – refer to your utility bill for this information
    • the average units used per hour – this is the power consumption per kilowatt hour for each appliance, equipment or light used
    • the total annual hours used for work-related purposes – refer to your record of hours worked or your diary for this information.
  • work out the cost of your phone or internet plan expenses – where you receive an itemised bill, you need to determine your percentage of work use over a four-week representative period. See, Claiming mobile phone, internet and home phone expenses.
  • work out the cost of computer consumables and stationery by keeping receipts for the items purchased.

You must take into account other members of your household when you work out your expenses. If a member of your household is using the same area of the house or the same service when you’re working, you must apportion your expenses accordingly.

To claim a deduction for an asset that cost $300 or more, you need to calculate the decline in value for both the period you:

  • owned the assets during the income year
  • used the assets for work-related purposes.

You can use the depreciation and capital allowances tool to calculate your deduction for the decline in value of equipment, furniture and furnishings that cost more than $300, use the depreciation and capital allowances tool to work this out.

You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. It’s a fast, easy way to capture information on the go by taking and uploading photos of receipts.

Examples – comparing methods

Example 1: work out the method that gives the best outcome using a comparison of the deduction available for each method

Linus is employed as an engineer. Linus has an agreement with his employer to work from home one day per week and occasionally before or after a site visit. Linus’s employer provides him with a laptop and mobile phone, his employer also pays for the monthly mobile plan.

When Linus works from home he uses his own internet and has an office he uses as a dedicated work area. His monthly internet plan costs $69 per month.

Due to the COVID-19 situation Linus increases his work from home to five days per week starting on 17 March. Linus also continues to do site visits.

As Linus is working from home more, on 19 March he decides to buy an ergonomic chair for $249 to use. The rest of his office furniture is over 10 years old.

When completing his tax return, Linus usually claims his home office expenses using the fixed rate method. He keeps the required records to show how he calculates his claim. Linus uses his home office including the desk and chair for both work and private purposes. He works out that his private use is 10%.

Linus is aware of the increased fixed rate using the shortcut method for the period 1 March to 30 June 2020. As Linus’s work from home arrangement changed as a result of COVID-19, he can choose to use the method that works best for him so, he decides to do a comparison between the methods.

Calculating the time spent working from home

Linus looks at records he has kept for the year (these include a diary for a representative period of four weeks and his timesheets).

He works out that from 1 July 2019 to 29 February 2020, he worked from home for 12 hours per week on average. Except for the three weeks he had off over Christmas.

Linus calculates the hours he spent working from home for the period from 1 July 2019 to 29 February 2020 as:

(35 weeks − 3 weeks leave) × 12 hours per week = 384 hours

He determines his work-related internet usage was 10% for the period up until 16 March and 30% for the period from 17 March to 30 June 2020, taking into account his family’s use and his private use.

In the period 1 March to 16 March 2020, Linus continues to work from home for an average of 12 hours per week. The total hours worked from home during the two week period is:

12 hours per week × 2 weeks = 24 hours

From 17 March to 30 June 2020, Linus works out that he worked:

  • on site visits for a total of 75 hours
  • at home for 555 hours.

Linus can’t use any of the methods to claim for the cost of his work-related phone calls or the decline in value of his laptop and phone handset. This is because his laptop and phone are provided by his employer and his calls are paid for by his employer.

Based on his calculations (detailed in the examples below), Linus works out he would be able to claim:

  • $625.62 using the fixed rate method (52 cents) – see Example 2
  • $708.48 using a combination of the fixed rate (52 cents) and shortcut method (80 cents) – see Example 3
  • $613.77 using the actual cost method – see Example 4.

Linus decides to use the fixed rate method for the period 1 July 2019 until 29 February 2020 and the shortcut method from 1 March 2020 to 30 June 2020 as that gives him the best result.

Example 2: Linus’s deduction using the fixed rate method (52 cents)

Using the fixed rate method for the entire year, Linus calculates his deduction as:

(384 hours + 24 hours + 555 hours) × 0.52 (hourly rate) = $500.76

Linus also calculates his internet expenses as these are not covered by the fixed rate. Linus calculates his internet use for the period:

  • 1 July 2019 to 16 March 2020

8.5 months × $69 per month = $586.50

$586.50 × 10% = $58.65

  • 17 March to 30 June 2020

3.5 months × $69 per month = $241.50

$241.50 × 30% = $72.45

The 52 cents per hour rate covers the decline in value of office furniture, therefore Linus cannot claim a separate deduction for the decline in value of his chair.

Total deduction:

$500.76 + $58.65 + $72.45 = $631.86

Example 3: Linus’s deduction using the Fixed rate and Shortcut method

Using the fixed rate method for the period 1 July 2019 to 29 February 2020 and using the shortcut method for the period 1 March to 30 June 2020, Linus calculates his deduction as below.

Period from 1 July 2019 to 29 February 2020:

  • Fixed hourly rate

384 hours × 0.52 = $199.68

  • Internet expenses

8 months × $69 per month = $552

$552 × 10% = $55.20

Total claim amount is:

$199.68 + $55.20 = $254.88

Period from 1 March to 30 June 2020:

  • Shortcut rate:

(24 hours + 555 hours) × 0.80 = $463.20

Total deduction:

$254.88 (fixed rate) + $463.20 (shortcut rate) = $718.08

Linus doesn’t include the cost of the chair as the decline in value is included in both of the rates. He also doesn’t include his internet usage in the period from 1 March to 30 June as the internet usage is included in the shortcut rate.

Example 4: Linus’s deduction using the Actual costs method

Using this method, Linus will claim directly for any deductible expenses he incurs. He will need to have records for all of his expenses. For his running expenses he can claim his additional costs.

Internet expenses:

8.5 months × $69 per month = $586.50

$586.50 × 10% = $58.65

3.5 months × $69 per month = $241.50

$241.50 × 30% = $72.45

Deduction amount:

$58.65 + $72.45 = $131.10

Decline in value of office chair:

As the cost of the office chair was less than $300, Linus can claim the full cost in the year it was purchased. However, it must be apportioned to account for his private use.

Decline in value calculation:

$249 × 90% (work use percentage) = $224.10

Electricity

Linus uses electricity for his computer and to light, cool and heat his home office while he is working at home. Based on his records he:

  • used his air conditioning for 50% of the time he spent working from home – the air conditioner uses 2kW for cooling and heating per hour.
  • used two 12 watt LED lights in the office whenever he is working.
  • used his laptop whenever he is working from home – the laptop uses 50 watts per hour.
  • pays 25 cents per kW hour for electricity.

Lighting

12 watts ÷ 1000 = 0.012 kW

0.012kW × (2 × 25 cents) = 0.6 cents

0.006 cents × 963 hours = $5.78

Air conditioner

2kW × 25 cents = 50 cents

0.50 cents × (963 × 50%) = $240.75

Laptop

50 watts ÷ 1000 = 0.05kW

0.05 × 25 cents = 1.25 cents

0.0125 cents × 963 hours = $12.04

Total claim:

$131.10 + $224.10 + $5.78 + $240.75 + $12.04 = $613.77

Records for change in circumstances

Regardless of the method you choose to use to calculate your expenses for working from home, you will need to have records.

If your circumstances change part way through the income year – for example, your usual pattern of work from home changes – you will need to keep separate records to show this change.

If you use the four-week representative period to calculate your usage over the income year, you will need to either:

  • complete a new four-week representative period to show your usage in your new circumstances
  • keep separate records for the period your circumstances changed.

For example, if you usually work from home one day a week and due to an emergency situation such as COVID-19 or bush fires you’re required to work from home for a period, you will need to keep separate records for both situations. This includes:

  • the actual hours you’ve worked from home due to the emergency situation
  • your usual working from home arrangements.

Your four-week representative period will no longer be valid in these circumstances.

Accessing your income statement or payment summary

Source: https://www.ato.gov.au/

How you get your end of financial year information from your employer showing your earnings for the year (also known as an income statement or payment summary) depends on how your employer reports your income, tax and super information to us. You will be provided with either:

  • an income statement – if your employer reports your income, tax and super information to us through Single Touch Payroll (STP) they are no longer required to give you a payment summary, this information will be made available to you through ATO online services via myGov and finalised by 31 July
  • a payment summary – if your employer is not yet reporting through STP they will continue to provide you with a payment summary by 14 July (as they do now).

Your employer should let you know if you will receive an income statement or payment summary but you should talk to them if you are unsure.

If you have more than one employer, you may receive both an income statement and a payment summary. You will need to check that income from your payment summaries is included in your return. This information may be pre-filled for you or you might need to enter it manually.

To access a summary factsheet of the changes to accessing your payment summary, see Single Touch Payroll for employees.

Accessing your end of financial year information

You can access your end of financial year information through:

Your tax agent

Your tax agent will be able to access your income statement or payment summary information through their software or Online services for agents.

If your employer is reporting through STP, your agent will need to wait until the income statement has been marked as ‘Tax ready’ to prepare and lodge your return. Most employers have until 14 July 2020 to finalize their data. However, some employers have until 31 July to do this.

We will send a notification to your myGov inbox when all of your income statements are ‘Tax ready’.

Through ATO online services via myGov

If your employer has started reporting through STP, they are no longer required to give you a payment summary. You will instead receive an income statement. You will be able to access this information through your ATO online services via myGov.

Your income statement will show your year-to-date salary and wages, the tax that has been withheld and the reported amounts of your employer super.

Any income statements will be ready to use in your tax return when your employer marks it as ‘Tax ready’. They have until 31 July to do this but will often do it earlier. It is important that you don’t use any information that is not marked ‘Tax ready’ as your employer may finalise your income statement with different amounts which means you may have to amend your tax return.

We will send a notification to your myGov inbox when all of your income statements are ‘Tax ready’.

If after 31 July your income statement is not marked as ‘Tax ready’ in ATO online services, you will need to speak to your employer to find out when they will finalise your statement.

How to access your income statement

If your myGov account is set up and linked to ATO online services, you need to:

  • Log in to myGov using your email address or mobile phone number.
  • Select ATO online services.
  • Select Employment and then view my Income statement.

On the screen, you will see the income you have earned from your employer or employers for the financial year, and the tax that has been withheld.

If you can’t access your information via myGov, you can contact us for a copy of your income statement.

When your income statement is not tax ready

If your income statement information isn’t marked as ‘Tax ready’ by your employer, you will see a red box in ATO online services saying ‘Not tax ready’. You will need to speak to your employer to find out when they will finalise your statement.

If you choose to lodge your tax return before your income statement is finalised by your employer, you will need to review any information that has pre-filled and confirm it is correct and if you wish to use it before you submit your tax return.

If you choose to use information from your income statement before it is finalised to lodge your tax return, you will need to acknowledge that:

  • your employer may finalise your income statement with different amounts
  • you may need to amend your tax return and additional tax may be payable.

Claiming mobile phone, internet and home phone expenses

Source: https://www.ato.gov.au/

If you use your own phone or internet for work purposes, you may be able to claim a deduction if all of the following conditions apply:

  • you spent the money yourself
  • the expense is directly related to earning your income
  • you must have a record to prove it.

You can’t claim a deduction where you haven’t incurred any expenses, or you’re reimbursed for any costs by your employer.

For employees working from home as a result of COVID-19, we have specific information available about claiming home office expenses, including phone and internet expenses.

If you use your phone or internet for both work and private use, you will need to work out the percentage that reasonably relates to your work use.

Substantiating your claims

To claim a deduction of more than $50, you need to keep records for a four-week representative period in each income year. These records may include diary entries, including electronic records, and bills. Evidence that your employer expects you to work at home or make some work-related calls from home will also help you show that you are entitled to a deduction.

When you can’t claim a deduction for your phone

Employer-provided phone

If your employer provides you with a phone for work use and they are billed for the usage (phone calls, text messages, data) then you can’t claim a deduction. Similarly, if you pay for your usage and are then reimbursed by your employer, you can’t claim a deduction.

Costs you incur before work commences

If you use your phone to seek employment you can’t claim a deduction as you are not yet generating income from the use of the phone.

Similarly, if you are a casual employee and an employer calls you to ask you to work, or you call them to check on work availability, you can’t claim a deduction. The cost is not considered to be one that directly relates to your income-producing activities. Instead, it’s an activity that is putting you in a position to earn that income.

You can only claim a deduction for the portion of your phone use when you’re earning assessable income and your employer requires you to use your phone directly in earning that income.

For more information on costs that are usually considered private or capital in nature and are disallowed or which require apportionments, such as installation costs, line rental, and joint usage expenses, see the Employees guide for work expenses.

How to apportion work use of your phone

As there are many different types of plans available, you will need to determine your work use using a reasonable basis.

Incidental use

If your work use is incidental and you are not claiming a deduction of more than $50 in total, you may make a claim based on the following, without having to analyze your bills:

  • $0.25 for work calls made from your landline
  • $0.75 for work calls made from your mobile
  • $0.10 for text messages sent from your mobile.

Usage is itemized on your bills

If you have a phone plan with an itemized bill, you need to work out your percentage of work use over a four-week representative period, which you can then apply to the full year.

You need to work out the percentage using a reasonable basis. This could include the:

  • number of work calls made as a percentage of total calls
  • amount of time spent on work calls as a percentage of your total calls
  • amount of data downloaded for work purposes as a percentage of your total downloads.

Example: Phone calls are itemized on your bill

Julie has an $80 per month mobile phone plan, which includes $500 worth of calls and 1.5GB of data. She receives a bill that itemizes her phone calls and provides her with her monthly data use.

Over a four-week representative period, Julie identifies that 20% of her calls are work-related. She worked for 11 months during the income year, having had one month of leave. Julie can claim a deduction of $176 in her tax return (20% × $80 × 11 months).

Usage is not itemized on your bills

If you have a phone plan where you don’t receive an itemised bill, you determine your work use by keeping a record of all your calls over a four-week representative period and then calculate your claim using a reasonable basis.

Example: Non-itemised account

Ahmed has a prepaid mobile phone plan that costs him $50 per month. Ahmed does not receive a monthly bill so he keeps a record of his calls for a four-week representative period. During this four-week period, Ahmed makes 25 work calls and 75 private calls. Ahmed worked for 11 months during the income year, having had one month of leave.

Ahmed calculates his work use as 25% (25 work calls ÷ 100 total calls). He claims a deduction of $138 in his tax return (25% × $50 × 11 months).

Bundled phone and internet plans

Phone and internet services are often bundled. If you are claiming deductions for work-related use of one or more services, you need to apportion your costs based on your work use for each service.

If other members in your household also use the services, you need to take into account their use in your calculation.

If you have a bundled plan, you need to identify your work use for each service over a four-week representative period during the income year. This will allow you to determine your pattern of work use, which you can then apply to the full year.

A reasonable basis to work out your work-related use could include:

  • Internet
    • the amount of data downloaded for work as a percentage of the total data downloaded by all members of your household
    • any additional costs incurred as a result of your work-related use, for example, if your work-related use results in you exceeding your monthly cap.
  • Phone
    • the number of work calls made as a percentage of total calls
    • the amount of time spent on work calls as a percentage of your total calls
    • any additional costs incurred as a result of your work-related calls, for example, if your work-related use results in you exceeding your monthly cap.

Example: Apportioning bundled services

Sujita has a $100 per month home phone and internet bundle. The bill identifies that the monthly cost of Sujita’s phone service in her bundle is $40, and her internet service is $60. Sujita brings in her mobile phone plan of $90 per month and receives a $10 per month discount. Her total costs for all services are $180 per month.

Sujita worked for 11 months during the income year, having had one month of leave.

Based on her itemised accounts, Sujita determines that the work-related use of her mobile phone is 20%. Sujita also uses her home internet for work purposes and based on her use she determines that 10% of her use is for work. Sujita does not use her home phone for work calls.

As the components are part of a bundle Sujita can calculate her work-related use as follows:

Step 1 – work out the value of each bundled component

  • Mobile phone: $90 per month minus the $10 per month discount = $80 per month
  • Internet: $60 per month
  • Home phone: Sujita does not need to determine the home phone costs as she does not use this service for work purposes.

Step 2 – apportion work-related use

  • Mobile phone use: 20% work-related use × $80 per month × 11 months = $176
  • Home internet use: 10% work-related use × $60 per month × 11 months = $66

In her tax return, Sujita claims a deduction of $242 for the financial year ($176 mobile phone use + $66 home internet use).

Example: Apportioning bundled services

Des has a $90 per month home phone and internet bundle, and unlimited internet use as part of his plan. There is no clear breakdown for the cost of each service. By keeping a record of the calls he makes over a four-week representative period, Des determines that 25% of his calls are for work purposes. Des also keeps a record for four weeks of the data downloaded and determines that 30% of the total amount used was for work.

Des worked for 11 months during the income year, having had one month of leave.

As there is no clear breakdown of the cost of each service (calls and downloads), it is reasonable for Des to allocate 50% of the total monthly cost to each service.

Step 1 – work out the value of each bundled component

  • Internet: $45 per month ($90 ÷ two services)
  • Home phone: $45 per month ($90 ÷ two services)

Step 2 – apportion work-related use

  • Internet: 30% work-related use × $45 per month × 11 months = $149
  • Home phone: 25% work related use × $45 per month × 11 months = $124

In his tax return, Des claims a deduction of $273 ($149 + $124) for the year.

Purchasing a smartphone, tablet or other electronic devices

If you bought a smartphone, tablet or other electronic device and you use it for work you can claim a deduction for a percentage of its cost.

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