James Hall* says people who’ve been working from home and are planning to use the ATO’s flat rate for their tax return, need to know a few thing in order to make the most of their return.
Tax time. It’s a monotonous annual chore but this year’s refund will be like no other for many Australians.
It seems easy to take shortcuts but experts are imploring workers to dig out all those receipts and bills to make sure you don’t miss out on collecting hundreds of dollars when submitting your tax return.
The Australian Taxation Office introduced a higher flat rate for the huge portion of those forced to turn their lounge rooms into offices during the coronavirus lockdown.
The claims process was simplified by lifting the standard hourly rate this financial year for the working from home masses from 52 cents per working hour to 80 cents.
But while this may sound like a windfall, tax experts are warning people to think carefully before opting for the flat rate rather than doing the extra work of calculating exactly how much they had spent.
National Tax and Accountants’ Association spokesperson Andrew Gardiner said the flat rate could result in hundreds of dollars being trimmed from what the taxpayer is owed.
“The concession (flat rate) covers off heating, cooling, electricity and then payments to do with your computer, printer, cartridges, and paper,” the senior tax manager told news.com.au.
“People need to be very careful with that concession because it is only 80 cents per hour and when you factor that in over a standard 40-hour week, we’re only talking $32.
“And if you factor that in over the period of COVID-19, it’s not a massive claim. People need to be careful they’re not simplifying their affairs by adopting this approach at the detriment of a much bigger claim.”
Opting for the flat rate means the taxpayer will forgo their right to claim the new desk, chair or computer they splashed cash on when the pandemic forced the majority of the workforce to abandon their office.
“Once you go down the path of adopting the ATO’s 80 cents per hour claim, you then forfeit your right to separately claim for home office expenses like electricity which extends to the internet and home phone.”
“It also then removes the right to claim depreciation on your desk, computer and consumables like print cartridges and paper.”
Travel
Coco Hou, CPA and managing director of Platinum Accounting and Platinum Professional Training said many have travelled less this year but travel can be necessary for some.
“If you needed to leave the home to travel somewhere to purchase items essential to your work, you may incur costs doing this,” Ms Hou said.
“If you travel by car or public transport costs are incurred. You may need to put petrol in your car.”
Easily overlooked items
Don’t forget to include expenses associated with car insurance or subscriptions for services that you may have needed to have accessed in the course of your work.
Confusion over what to claim
The unique working environment caused by the global pandemic has created confusion over what can and can’t be claimed.
“There has been suggestions that people can claim additional toilet paper which they can’t; or they can claim their food because now they’re working from home, which is not claimable as well,” Ms Hou said.
“The expenses that are available to people who are working from home are isolated to the cost directly related to their employment while they’re working from home.”
So what do I need?
The ATO will need to see the number of hours you worked from home and a diary of a four-week period showing the pattern of expenses, Mr Gardiner said.
Receipts will then need to be provided for each item you intend to claim.
“The taxpayers who are prepared to take the time to embrace the record keeping, the four week diary and the illustration of their use will find themselves hundreds and hundreds and hundreds of dollars better off,” he said.
*James Hall is a financial reporter at news.com.au. He can be contacted on twitter @James_P_Hall
This article first appeared at news.com.au
