The end of the fiscal year is here, and before you file your tax return, make sure you have your t’s and your i’s crossed out to maximize your potential repayment.
There are a number of factors for which ordinary Australians can claim a tax deduction. And, with COVID-19 regulations seeing more people working from home than ever before, it’s crucial that you know exactly what and how much you can claim.
Let’s take a look at how to maximize your tax refund for this new fiscal year.
Australians who have had to work from home due to COVID-19 restrictions in the past fiscal year will remember they could claim more than they previously could for the privilege.
In fact, ABC News noted that in 2019-2020, around 8.5 million Australians claimed nearly $ 19.4 billion in work-related expenses. Spending on working from home increased by 40% during lockdowns related to COVID.
According to the ATO, these additional expenses include:
- “Electricity expenses associated with heating, cooling and lighting the area you work from and using the items you use for work
- Cleaning costs for a dedicated work area
- Telephone and internet charges
- Computer consumables (for example, printer paper and ink) and stationery
- Home office equipment including computers, printers, telephones, furniture and furnishings – you can request either the
- Total cost of items up to $ 300
- Decline in value (depreciation) for items over $ 300. “
Items you cannot claim include general household items like coffee, tea, or milk, child-rearing expenses, expenses your employer reimbursed you for, or any time you spent not working – like lunch breaks. or home schooling hours.
For the 2019-2020 income year, there were three main ways to calculate home office expenses: the shortcut method (80 cents per hour of work) on fixed rate method (52 cents per hour of work) and the actual cost method.
ABC News reports revealed that one million Australians used the shortcut method last year for their work-from-home expenses.
However, according to Ashley Debenham of ETax Accountants, if a person works from home three days a week, they can earn an average of $ 580 using the flat rate method, as they will need to have “a dedicated workspace or office at home” to claim it
Comparatively, the shortcut method may be suitable for those who work from home more occasionally. This is because this method requires less meticulous record keeping of house costs, as well as timesheets, lists or documents showing the hours you worked.
Work expenses also go beyond the new world of working from home that we have all had to get used to. Here are some of the common work-related expenses for which Australians may consider claiming a deduction:
- Vehicle and travel expenses – personal vehicle, carpooling, flights and public transport
- Clothing, laundry and dry cleaning costs – must belong to categories of clothing specific to the profession or protection, as well as non-compulsory, compulsory or registered uniforms.
- Self-education costs – Course and tuition fees, home office fees, etc.
- Tools, equipment and other assets – computers, software, hand tools, safety equipment, etc.
- Other expenses – Books, periodicals and digital information, telephone and Internet expenses, income protection, overtime meals and more.
There is a range of expenses that Australians may be eligible to deduct, so it’s worth doing your research and reviewing the complete list on the ATO website.
Great personal contributions
Another area where you can claim deductions is personal super contributions made before July 1, 2021.
Personal contributions are separate from those paid by your employer, including the mandatory super guarantee, wage sacrifice and super employer contributions to be declared. Instead, it refers to the personal contributions made to your super fund from your after-tax income.
Keep in mind that you must adhere to the age restrictions and that you must provide your super fund with a “notice of intention to claim or modify a deduction for personal contributions” (NAT 71121) then receive an acknowledgment of receipt from your fund. If you qualify, on your tax return you can claim a deduction for contribution shown on the notice of intention.
If you’ve never made great personal contributions, this is worth keeping in mind as it can offer some benefits:
- Boost your super With compound interest, any extra funds you add to your super balance outside of the standard super guarantee amount can make a big difference in your final retirement balance.
- Government premium – If you make after-tax contributions and your income is less than $ 54,837, you may be eligible for the government to make co-contributions of up to $ 500 per year. Keep in mind that you may not be eligible for co-contributions on any amount claimed as a tax deduction.
For more information, please read RateCity’s guide to after-tax pension contributions.