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ATO to extend 80 cents per hour work-from-home deduction method

ATO to extend 80 cents per hour work-from-home deduction method

As the intense impact of Covid-19 has spread across the globe, it has affected the economical growth of nations. Every segment is now suffering from pandemic effects, and as a result, a significant number of employees along with business owners have also started working from home and incurring extra running expenses as compared to their respective income activities. These additional running expenses include electricity costs along with maintenance costs. According to the Accounts NextGen, it is seen that there is a decline in the value and repair of the home office items such as furniture and fittings that are used for the area of work and the decline in the value of the computer, laptop, or other devices that you are working on.

The taxpayers who continue to work-from-home will now have to opt for the simplified work-from-home deduction method that is followed by a third extension which is legalized by the Australian Taxation Office. According to the financial sources ATO has rolled out the shortcut for the work-from-home deduction concept. And as a result, there is a new, simplified process to calculate home office expenses at an increased rate of 80 cents per hour which is done in a response to a change in national work pattern.

Dimensions linked with the shortcut method extension

It further explains that under this new arrangement, the taxpayers will be allowed to claim for 80 cents per hour to run all the expenses, rather than calculating the cost of limited expenses. It is important to acknowledge that the requirement to have a dedicated work-from-home area will be removed with people around in the household to claim for the new rates. The new method will cover the financial span of 1 March 2020 till 30 June 2020, and this is considered with ATO to extend the method depending on the working pattern to return back to normal.

The Tax agents must include the “Covid-hourly rate” note in the 2019-20 tax returns. Furthermore, the simplified method will cover up all the deductible expenses that include electricity bills along with those on the furniture and fittings. It is important to acknowledge that under the fixed-rate criteria, the running expenses were calculated at the rate of 53 cents per hour including the internet expenses and more.

Further links related to the story

Accounts NextGen explains that the new or fresh arrangements will require records of the hours that you have worked home and it can be in the tabular form or diary notes. Moreover, the ATO assistant commissioner explains that the news shortcut method will make the tax-paying time easier for those who were presently working from home. This initiative is for the first time in keeping view of an ongoing pandemic. The shortcut method will provide a rate of 80 cents per hour and will only require you to keep a record of the number of hours that you have worked from home.

 

It can be clearly understood that many of the taxpayers are working for the first time from their respective homes and makes deduction claims easier. If you are one of those choosing this shortcut then you need to keep a record of the number of hours you have been working from home for a piece of evidence to claim. This new shortcut method will be supplementary to the fixed-rate and the actual cost of the working method that are used to calculate expenses incurred. Here the taxpayers are able to choose an appropriate method to fit their circumstances. The claims before 1 march 2020 was seen to settle under two basic approaches. The 80 cents per hour shortcut method that was introduced in April 2020 will now be extended till 30 June 2021.

What’s the further take by the Australian Taxation Office on the plans?

This is the third time happening that the Tax Office has chosen to extend this shortcut method. Earlier this was called on-off as it expired at the end of the last financial year. After which this plan was again called off in September 2020 and at the end of December 2020. On the contrary, the ATO has come up with an updated Practical compliance guideline 2020/3. This no longer states whether any further consideration will be provided to extend the latest end date or not. Hence, the Accounts NextGen explains the new extension continues to suppress the outbreak of covid-19 infections that continues to spread at a fast pace across the globe.

Conclusive words:

The temporary shortcut method will work as a supplementary to 52 cents fixed rate method and an actual cost method will calculate the running expenses in the end. The taxpayers are now able to choose the appropriate method that correlates to their working circumstances and claim accordingly.

Work related deductions you can claim

When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.

Work-related expenses

To claim a work-related deduction:

  • you must have spent the money yourself and weren’t reimbursed
  • it must directly relate to earning your income
  • you must have a record to prove it.

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion. Work expenses reimbursed to you by your employer are not deductible.

We can seek information from your employer if we think you have claimed a deduction for an expense that you have already been reimbursed for.

You may be able to claim a deduction for expenses that directly relate to your work, including:

  • Vehicle and travel expenses
  • Clothing, laundry and dry-cleaning expenses
  • Home office expenses
  • Self-education expenses
  • Tools, equipment and other assets
  • Other work-related deductions

Employees (including casuals) can claim work-related expenses in the financial year they are incurred. This is the case even if you start employment in June but don’t receive income until the next financial year, you can claim deductions for work-related expenses incurred in June.

If you employ someone to assist you in your employment, you can’t claim a deduction for employing that person.

Other deductions

You may also be able to claim a deduction for:

  • ATO interest – calculating and reporting
  • Cost of managing tax affairs
  • Gifts and donations
  • Interest charged by the ATO
  • Interest, dividend and other investment income deductions
  • Personal super contributions
  • Undeducted purchase price of a foreign pension or annuity

Occupation and industry specific guides

To find out more about income, allowances and deductions you can claim for work-related expenses in your industry or occupation, see Occupation and industry specific guides.

 

*News Source (ATO) – https://bit.ly/2VVT1cx

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