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Josh Frydenberg is about to introduce tax cuts

Josh Frydenberg is about to introduce tax cuts

Josh Frydenberg has made it very clear that it is high time to introduce income tax cuts. This decision has been made by seeing the state of the Australian economy in the worst position since the time of World war 3.

The GDP of Australia has fallen by 7 percent for the quarter of June. This has become a matter of major concern for the department of tax return Melbourne. And this has happened due to the lockdown imposed on Australia because of COVID-19.

It is being expected that on October 6, Josh Frydenberg will introduce the budget and the plans about the upcoming versions of JobMaker will be introduced. Providing such information is very crucial as most of the works related to tax are done online by the department for online tax return Melbourne.

When a journalist asked Mr. Frydenberg about whether they are going to cut down the personal tax, he said, “We are on it as this issue has been under our consideration for a long time. Some modifications were made after the last election. Total changes in this field are not apparent as it will take place in three stages. If we somehow manage to put more money in the hands of people, they will spend more of it and eventually more jobs would be created.”

As you know the role of opposition in any working democracy, you can’t know about the whole scenario without listening to both sides. The person concerned with the treasury in the opposition had different viewpoints regarding Mr. Frydenberg. He said that Frydenberg is lacking on vision in all these steps. “Fridenberg started telling about the state of the Australian economy and then suddenly changed the topic to cutting the taxes in particular. It clearly shows that he had no more things to discuss the vision to get this economy in a better state. It’s definitely not the kind of leadership that we want for our economy, especially in this situation. More profound vision is needed in a time when the people of this country find it hard to pay the individual tax return.”

Based on the present situation, tax incentives in the field of infrastructure is very necessary so that business investments would be enhanced.

The situation of the economy will start changing once the effect of the virus reduces and the restrictions are lifted.

But it is very necessary to introduce a roadmap for the businessmen of this country because businessmen will start hiring more and more employees only after making sure that a good route has been decided for the recovery of the economy. Extra people with proper tax training will be needed to make more and more people aware of the financial aids that the government is providing for business owners. This will ultimately lead to enhanced growth of the business.

Conclusion:

In this vast age of the internet, there are various sources and people get confused about where to go for authentic information. But there is no need to worry when you have reached here. Accounts NextGen brings to you the most relevant information to make you aware of the situation around you.

Tax office to punish people engaged in fraudulent activities to save tax

In a recent press release, the taxation office of Australia said that it will punish the people doing super withdrawals to minimize the payable tax.

The taxation office said that there is a certain loophole that enables people to avoid the payment of personal income taxes. And the office is about to punish all such people who give false information to get benefits from this scheme.

As per the statement of ATO, the people of Australia are withdrawing money from their account using financial hardship measure tax-free and then top up their super account through salary sacrifice at a rate of 15 percent.

With the help of this scheme, $10,000 is free of tax for a person having a salary of $100,000 but if he sacrifices $10,000 into his super account, now only 15% tax is being imposed on this $10,000 of the account holder but the right amount of tax should be 37%.

The taxation office has been noticing the people who are managing their wages in such a way that can make them eligible for this scheme. This scheme called Super was introduced by the Federal Government to help the Australians who have lost their jobs or who are getting low wages.

ATO has said the following about this situation, “In earlier days of COVID-19, we saw some cases where people were doing such things to get benefits of this scheme which they did not deserve. In certain cases, we prevented them from applying and did not release the super money.”

ATO can easily fine all those who claim the early access of superannuation payments by manipulating information. This fine could reach up to $12,600.

Sally Tindall (the director of RateCity research) said it is completely certain that ATO will punish all those engaged in such activities. She also said “This particular initiative was taken to help the ones who needed this money the most. We intended to help those who can’t pay their bills or get meals, and the ATO is completely determined to find those who want to exploit this scheme.”

Karen Foat (Assistant Commissioner) has the same viewpoint about the people who are engaged in this type of fraud activity. When asked about this situation, she said the following:

“There is no need to rejoice after seeing that the graph for work from home like jobs is going up because there are a lot of things for which is graph has gone down. Industries like tours and travels and many such others have suffered very big losses. And what we are seeing day by day is that the activities like it to cheat the system is increasing day by day.

There is always a way to work out the simple mistakes that are unintentional but for those who are doing it on a purpose is very bad.”

The Australian Taxation Office said that all such people who are engaged in such activities will have to repay the tax and there is an additional penalty up to 75% of the money that they have not paid. People who have manipulated their documents to be eligible for this scheme will face criminal persecution.

Bernie Dean (chief executive of Industry Super Australia) said “Those who are manipulating their information for getting this scheme are actually making it harder for the ones who are in desperate need of this scheme.”

ISA has also welcomed this decision by the ATO and they said that all those will be punished who are misusing this scheme.

ATO doesn’t consider the JobKeeper payments as a part of aggregated turnover

JobKeeper payments have been considered as assessable income. But there are certain concerns regarding the status of JobKeeper payments as whether they fall under ordinary income or statutory income.

For those who don’t know about it, under this scheme, the business which has been affected the most due to the outbreak of Corona COVID-19 will get money from the government (in the form of subsidy). This assistance is being given to all such businesses so that the employees of all such businesses will get the wages.

As per s328-120, if the JobKeeper payments would become a part of the aggregated turnover, it would decide whether some entity is eligible for different concessions and other measures, instant asset write-offs, base rate entity tax rate, and the refundable R&D tax offset.

Now ATO has made it very clear that the JobKeeper payments are ordinary income but are not derived in the ordinary course of business. So, they are not included in aggregated turnover.

There were certain confusions about whether the JobKeeper payments fall under the category of ordinary income or not in order to calculate the aggregated turnover as said by Tracey Dunn. When asked about this situation, she said the following, “After including the JobKeeper payments in aggregates turnover, there would be some major consequences. Things like CGT concessions of small businesses, the income tax concessions of small businesses, other R&D involvements can push many businesses to threshold after this decision.”

Here are some changes that have taken place in this scheme:

  1. The JobKeeper scheme has been extended until March 28, 2021.
  2. A detailed test of the turnover of the applicant’s firm will determine his eligibility.

Some of the factors that determine the eligibility for this scheme include:

  1. For the businesses having a turnover of at least $1 billion or more and the latest turnover has been reduced by no less than 50%.
  2. The businesses which have turnover less than $1 billion then their turnover of this period should be reduced by 30% or more.

To get the benefits of this scheme, the businesses should apply to the concerned department of the government along with the documents showing a downfall in the turnover. They also have to show the total number of employees working in their firm. But the name of the employees should be mentioned in the book of that business from March and that employee must be active in the same business at present.

It was known to the RSM and they asked about it to the experts. “The ATO has responded very quickly and they modified this information. So, it is clear that they consider JobKeeper payments as an ordinary one and assessable to the employer. But it can’t be included while calculating the aggregated turnover.”

Get quick tax refunds by understanding the right way to file your returns: ATO

ATO has announced a big refund on tax returns after the outbreak of global pandemic ‘Coronavirus.’ Resulting in, lots of Australians are anticipating more refunds than ever before. But if you don’t want to fall into the tax trap, which may prove costly to you, some crucial points become essential to note down in your diary before initiating any step.

Already, this year, plenty of people are requesting a claim than ever before. Ben Johnston, Willet Johnson’s partner (who belongs to a leading accounting firm in Sydney), mentions that many people are rushing for the claim and hence filing their return before July, which is wrong.

For instance- amid doing this, most of the people may leave their private health insurance and annual payment from employers unnoticed that is filled automatically in a tax return online. And it’s the most important thing you must markdown because it may take weeks to appear in your statements.

It merely conveys that working out excessively may create chaos for you as you may get less refund (far less than your expectations or otherwise you may have to repay the tax office). Hence, Mr. Johnston mentions that people must pay attention to everything and don’t decide in a hurry.

Relying entirely on a data machine isn’t always a better option. ATO always sneaks a look at banks, health funds, and large corporations before acting out on your file return. For this, ATO takes time, and doing things in a hurry may introduce risk to you. Like- it’s possible that you may be audited by ATO or may have to amend a tax return.

The year 2020 was challenging and unforgettable for sure, and in the wake of current situations, most people may show promptness for filing return earlier. But remember, in this way, you may forget to mention most of the important things too.

According to a spokeswoman, Aussies are no longer required to receive statements from employers; indeed, it’s now electronically possible. It states that your payment summary will appear in your Tax Return automatically. But it’s essential that you also check it in your statement before lodging, to ensure that you are “Tax Ready.”

However, if you still wish to file your return earlier, you may have to mention your statement’s income manually and will have to be double ensured about your ‘statement.’ Although online tax services are far better and you can expect a tax refund in less than two weeks.

How can you file a return online?

Since there’re many benefits of filing online, so millions of Aussies are now accepting it as the best method. It speeds up the information gathering process as lots of data is pre-filled. The risk of overlooked data and frauds are incredibly minimal. No wonder, it is a much safer option. If you register with an agent, then you get other benefits too.

For filing return, if you don’t have enough information about your statements to fill online, then you can take the help of your registered mobile number or urge to an agent for advice. Filing online tax speeds the process and encourages you to submit your return devoid of any confusion. Once you are clear with entire statements, you can expect a refund faster.

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.

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.

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.

Tax tips: How the coronavirus can help you get a larger refund

Source: https://thenewdaily.com.au/

The coronavirus pandemic has shifted the way we conduct our personal finances, and with June creeping up, tax time is no exception.

Strict social distancing measures have forced millions of Australians to work from home for the first time, throwing up a raft of new deductions.

Mozo.com.au consumer advocate Tom Godfrey told The New Daily sifting through records of expenses can help workers uncover surprising work-related costs to boost their tax refund.

So how has the coronavirus changed the way we conduct our taxes?

The New Daily tackles some key questions.

My employer asked me to work from home. What can I claim?

The ATO has two methods to claim working from home expenses, but choosing the right option depends on how much bookkeeping has been done during the lockdown.

For workers who are unable to apportion their expenses between work-related and private use, or haven’t kept records to substantiate claims, the ATO has introduced a ‘shortcut’ method to make things easier.

That method amounts to 80 cents per hour, and taxpayers should ensure the amount of hours logged matches hours agreed with their employer.

However, those who permanently work from home, or kept paperwork of internet and mobile usage and receipts for stationery and new office equipment, can calculate their actual expenses.

H&R Block’s director of tax communications Mark Chapman said this normally produces a larger tax refund, but workers can run into problems if their records are not up to scratch.

“Sitting down and working out the proportion of your electricity bills and other home expenses that are specifically work-related can be difficult and time-consuming,” Mr. Chapman told The New Daily.

My hours changed because of coronavirus. Can I claim tax back from the ATO?

Workers who lost jobs or had hours slashed by their employer may be eligible for a larger tax refund.

Prior to the outbreak, employers applied tax to their employees’ pay assuming they would be employed in the same capacity over the 2019-20 financial year.

If the number of hours dropped during the lockdown through reduced hours or joblessness, workers could be entitled to a larger refund.

“If your salary’s reduced, chances are your PAYG statement will show you have moved into another tax bracket, if the income lost is substantial enough,” finder.com.au managing editor Kate Browne told The New Daily. 

I’ve been receiving JobKeeper or JobSeeker. Does this affect my tax return?

Both the $1500-a-fortnight JobKeeper wage subsidy and fortnightly $1100 JobSeeker payments are part of a person’s taxable income and need to be reported to the ATO.

For Australians on JobKeeper, their employer should have already noted those payments on their PAYG summary.

And Australians on JobSeeker should receive an income statement from Centrelink outlining how much they have received, which needs to be lodged when filling out their tax return.

I own property but my rental income’s fallen. How am I affected?

Last year, the Australian Taxation Office singled out property investors for overzealous rent deductions, with roughly 90 percent of rent reduction claims containing an error.

And with the pandemic pushing down rents and driving up vacancy rates, the ATO told The New Daily it will be particularly vigilant this year.

Mr Chapman said landlords who retain tenants (regardless of the amount they pay) can claim expenses on loan interest and management fees, even if they incur a net rental loss.

According to the ATO, those property owners may claim the full amount of their expenses “against your rental and other income – such as salary, wages or business income.”

However, Mr Chapman sounded the alarm for property owners who now live in their rental properties.

“If you made your home your base in lockdown, you would not be able to claim deductions for that period, as it’s become a property for your own personal use,” Mr Chapman said.

What else can I do to maximise my refund?

Investors who sold non-performing shares or managed funds may be able to use a capital loss from those sales to reduce the amount of tax paid on capital gains.

And superannuation accounts can also help lower an overall tax bill.

“If you’re receiving a regular paycheck, making additional personal super contributions can allow [you] to claim tax deductions,” Mr. Godfrey said.

Australians can also make claims on:

  • Gifts or donations that have ‘deductible gift recipient’ status
  • Work-related expenses (such as courses, travel, and equipment) that were not covered by their employer
  • The cost of preparing their tax return.

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