Now the 2019/20 financial year has ended, it is time to get your tax returns finalised and lodged. If you are self-employed, you also need to ensure your business financials are up to date and finalised.
The COVID-19 pandemic may have affected your financial situation or working arrangements, and therefore lodging your tax returns may be a little different this year.
We recommend that you consult a professional accountant when preparing your year-end financials. Here’s our list of things to think about when preparing your information to complete your financials and tax return:
1. Have You Been Working from Home?
If you’ve been working from home, you might be able to claim several home-office expenses as tax deductions. Usually, these include:
- Phone and internet usage
- Home office equipment including computers and printers
- Consumables required for work (printer, paper, ink, stationery)
It is advisable to ensure that you always keep receipts of your expenses when claiming as a tax deduction. Only usage that relates to performing your work at home is deductible. If you also used your computer and phone for study and personal use, you may only be able to claim a portion.
Alternatively, the ATO has announced a temporary ‘Short Cut Method’ which applies from 1 March 2020 to 30 June 2020. You can claim 80c for each hour you work from home, which covers all deductible running expenses. This is instead of claiming receipts as noted above. This claim should be included the ‘Other Work-Related Expenses’ section in your tax return with the description ‘COVID Hourly Rate’.
2. Did You Purchase Protective Clothing for Work?
If you paid for protective items required to work in physical contact or close proximity with clients and have not been reimbursed, you may also be able to claim them as tax deductible expenses.
Protective items include:
- Face Masks
- Sanitiser, or
- Anti-Bacterial Spray
As always, any expenses must be used for work and not personal use in order to be tax-deductible.
3. Did You Receive JobKeeper or JobSeeker Payments?
If you received JobKeeper payments, the information will be preloaded in your tax return via MyGov. Otherwise, your accountant will already have access to this information. If you received JobSeeker, the ATO will load this information into your tax return in the ‘Government Payments and Allowances’ section.
4. Forward-Planning Your Business
If you are self-employed, in addition to ensuring your financials are prepared and finalised by an accountant, we recommend you prepare a budget and projected cashflow for the next 12 months. It’s always an advantage to plan for the next financial year and ensure you stay on track with your business plan.
Lenders require current financial information, and by having this information prepared as early as possible, you are well placed to apply for finance and reduce any delays in obtaining approvals.
Learn more about what you can and can’t claim this tax time for employers, individuals and not-for-profit organisations via the ATO website and always check with your accountant.