Plenty of Aussies have been WFH (working from home) this financial year, so the 2021 tax season is going to look a little different! Especially since 2020 brought with it changes in income and government support, new home office expenses, and lower commuting costs.
The Australian Tax Office (ATO) has adjusted what you can now claim1. Here are some of the things you might be interested in, if you were bound to a snazzy laptop in your lounge room:
- Cleaning expenses for your home study
- Computer consumables and stationery like printer paper and ink
- Electricity expenses incurred while running items used for work
- Phone and internet expenses
- Technology or furnishings
- Utility expenses like heating, cooling and lighting the area from which you’re working
For those of us running their own business from home, it might be tricky to work out exactly what percentage of your overall household bill you can claim as work-related. Especially if you’ve been back at the office for some of the financial year.
Related Post: Home loan lending solutions if you’re self-employed
Also, you’ll be happy to know that you have until 31 October 2021 to lodge a return2, or to contact a tax agent to lodge on your behalf (they can take advantage of later lodgement dates).
The tax brackets4 have changed a year sooner than expected too.
Who doesn’t love a shortcut?
Luckily, the ATO’s helpful new WFH calculations have been extended to include the 2020-21 Financial Year3.
They call this new option the shortcut method and it allows employees who have been fulfilling their proper employment duties at home to claim 80c for every work hour spent in your own four walls.
Instead of having to work every expense out manually, the shortcut method covers all the above items, plus any additional decline in value of household items from unexpected use. The ATO say it was designed to make the overall calculation easier – and less likely tax auditors will need to work overtime chasing poor calculations.
You can choose which method to use based on which will give you the best financial outcome – just so long as you have kept a record of everything. For more detailed information, please see the information on the ATO website.
We can’t have everything
The ATO is unfortunately still not yet sympathetic to the workforce’s caffeine addictions. You can’t claim your coffee or tea – even if they’re things your employer used to provide. Even if they’re the only reason you’re awake and reading this!
Some other things you also can’t claim1:
- Anything your employer has already reimbursed you for
- Equipment used to set your children up for online learning, including iPads or laptops
- General household items, like toilet paper or milk
- Incidental expenses, like time spent on lunch breaks
- Your rent or mortgage.
If you’re unsure, seek advice
No one likes an audit, or a missed opportunity. Rumour has it5 that the ATO will be keeping a keen eye out for rogue work-related expenses and accurate rental deductions this year, so make sure you understand the new rules.
If you’ve got an accountant, they’re likely to be well-versed. But if you’re doing your tax yourself, do some research or seek some advice to make sure you’re doing things correctly.
Whatever you choose, remember that keeping a written record of all expenses and income is imperative – every financial year, not just this one.
Hot tip
If you’re not great at storing receipts, take a photo so you have it on your phone. Or check out the ATO’s handy app to keep your records in one place.
We’ve also put together a list of handy apps that are worth checking out.
Another option is to pay for all of your claimable work expenses on your card so that your statement can act as a record for you. Otherwise, keep your receipts like they’re love letters, and log your hours like they’re precious gold.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. By providing this information LJ Hooker Home Loans does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.