Preparing your annual tax return can be full of worry and stress, so being proactive and prepared certainly helps. Handing this task over to a professional can bring enormous relief. Here are a few tips for you to think about and apply to make this time of year more palatable.
Working from home expenses (important during the COVID restrictions).
With so many Australians impacted by lockdown restrictions, the ATO is allowing you to claim 80 cents for each hour you spent working from home between 1 July 2020 and 30 June 2021. This “catch-up deduction” may cover all your working from home expenses.
Tips for claiming travel expenses (what’s allowed and how it may be impacted by COVID}.
While you cannot claim a tax deduction for your normal travel between home and your place of work, travel between workplaces can be claimed. This is helpful for Australians who need to travel between two jobs or those have to attend work meetings or conferences. If you use your car to undertake this travel, you can claim a portion of your car-related expenses. The usage includes:
- Loading or unloading tools or equipment required to complete your work.
- Picking up or delivering items on behalf of your employer.
- Travelling between workplaces (eg: between a full-time and part-time job).
- When you need to travel between locations to perform itinerant work.
- Travelling to business meetings, conferences, and other events required by your employer.
- Travelling to an alternate workplace to and from your main workplace.
You can track your travel costs by using a logbook or a cents-per-kilometres. If you keep a logbook that may allow for greater claims. These include using your car as a ride-sharing service or as an employee travelling for work.
This is one area where the COVID restrictions have changed how much you can claim for this deduction. Speak to your accountant to find out what adjustments you need to make while working from home during lockdown.
How to claim on your mortgage if you run a business from home.
If you run a home-based business and have a space in your home that is completely dedicated as your workspace, (eg: an office with a desk, chair, printer, bookshelf of work-related books and resources, stationery, and storage), you might be eligible to claim a number of deductions for your work activities. To determine what percentage you can apply to a number of costs including your mortgage, work out the total size of your home and the footprint taken up by the home-office.
You can then claim the same percentage of your mortgage interest or rent, council rates, energy bills etc as a deduction. This can amount to several thousand dollars at tax time, so it’s worth discussing this with your accountant.
Tax tips for freelancers.
If you are a freelance worker,
By tax planning & budgeting you can have greater control and save yourself from the fright and discomfort of not having enough funds when your tax bill arrives.
Work closely with your trusted accountant to determine what deductions you can claim and ensure that you have a record of all your receipts for your work purchases. Discuss which online programs and systems you can use to record everything on an ongoing basis rather than having to find proof of purchase all at once when tax time comes around.
Claiming tax deductions for an investment property.
If you invest in properties, your costs to own and maintain your investment properties are tax deductible. This includes things such as the cost of repairs and home loan fees and interest. You can also claim for the depreciation of building & assets. The ATO has generous tax deductions for property investors, so make sure you know how you can achieve the greatest benefit from yourself. Discuss with your accountant the investment expenses you can claim as a tax deduction.
Claiming on your insurance.
Many Australians already pay less tax each year due to a rebate via their private health insurance. To determine if you are eligible to a partial refund on your premiums, the government essentially perform an income test when you lodge your tax return.
If you pay income protection insurance, your premiums can be tax deductable if you pay it from your own money. If payments are made for life policies held within your Super fund, these often cannot be claimed under your personal tax return. Check with your accountant which of these scenarios apply to your circumstances.
Claiming the cost of doing your tax.
As lodging your tax return in ultimately a work-related activity, you can claim the cost of doing the taxes as a deduction. This makes using an accountant or tax agent to undertake lodgment for you more value. You not only save yourself the time and worry of preparing and lodging your return, the cost of placing preparation into experienced hands is a valid deduction.
Check with your trusted accounting firm Melbourne how you can make tax time easier and how they can assist you by taking on the workload for you.