Don’t file your tax return too early, how to claim work-from-home expenses, and other advice from the ATO

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As the new financial year sees more than 14 million taxpayers file their returns, the Australian Taxation Office (ATO) is asking taxpayers to hold off lodging too early.

Assistant commissioner Tim Loh has also reminded taxpayers to make sure they declare pandemic support payments income such as JobKeeper, as well as other employer payments made to staff stood down during COVID.

Mr Loh said each year the agency had to adjust more than 230,000 returns, in many cases because people had either given incorrect bank details or lodged too early and left out income from employers, banks, private health insurers and other government agencies.

He said on July 1 alone, more than 172,000 individuals lodged tax returns.

The ATO received more than 14.2 million individual lodgements last financial year.

More than 10.9 million individual 2020 refunds were issued, totalling more than $30.9 billion with an average refund of $2,829.

“We understand the rush to get a refund as fast as possible but racing to lodge your return can often lead to easily avoidable mistakes,” Mr Loh said in a statement, noting that four out of five people get refunds at tax time.

“While we usually get these out in under two weeks, it may take longer if we need to address any mistakes and potentially adjust your return.”

Some employers impacted by COVID-19 have until the end of July to lodge workers’ payment summaries.

“It’s important to remember that people have until the end of October to either lodge their return themselves or get on the books of a registered tax agent,” Mr Loh said.

Tax treatment of payments such as JobKeeper received as an employee would be included in income statements as either salary and wages or as an allowance.

Payments made during pandemic lockdowns may be taxable

Since the JobKeeper wage subsidy was introduced a year ago in response to the COVID-19 pandemic, almost 3.8 million employees, employed by more than 1 million businesses, have received more than $89 billion in payments.

“If you’ve received JobKeeper payments from your employer, you don’t need to do anything different — we will automatically include this information from your income statement in your online tax return for you,” Mr Loh said.

Sole traders who had received a JobKeeper payment on behalf of their business will need to include the payment as assessable income for the business.

Mr Loh said those who got a one-off or regular payment from their employer after being temporarily stood down due to COVID-19 needed to remember “these payments are taxable”.

Work-from-home claims expected to rise

About 8.5 million Australians claimed nearly $19.4 billion in work-related expenses in their 2020 tax returns.

This is down from $20.7 billion claimed by 8.9 million people in 2018-19.

But the ATO expects that work-expense claims could fall, while work-from-home claims rise as more people have been working from home during pandemic lockdowns.

Mr Loh said an employee who had been working from home due to COVID-19 but needed to travel to their regular office occasionally could not claim the cost of travel from home to work as these are still private expenses.

“If you are working at home, we would not expect to see claims for travelling between worksites, laundering uniforms or business trips,” Mr Loh said.

“We will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses.”

Mr Loh also reminded taxpayers not to “copy and paste previous year’s claims without evidence”.

Some workers can claim face masks, gloves and hand sanitisers

More Australians have been attempting to claim the cost of furnishing their home office, as well as equipment to protect against COVID-19 including face masks and hand sanitiser.

Mr Loh said such claims were legitimate, particularly where the taxpayer is in a role that involves close contact with others.

He said people working in industries including healthcare, cleaning, aviation, hair and beauty, retail and hospitality that require gear such as face masks and gloves could claim them as deductions.

“If your specific duties require physical contact or close proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser, or anti-bacterial spray,” Mr Loh said.

“You’ll need to have purchased the item for use at work, paid for it yourself, and not been reimbursed. You also need a record to support your claim – a receipt is best.”

Those who wish to can make claims using the ATO 80 cents shortcut method.

This shortcut allows claims to be made at the rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.

But tax agents have previously warned using the shortcut may result in lower deductions.

The shortcut is also a temporary measure introduced during the pandemic as the agency braces for higher work-from-home claims.

Mr Loh reminded taxpayers who want to claim expenses using the traditional method instead of the tax shortcut to keep receipts.

Under the traditional 52 cents method, taxpayers will need to apportion their use between what is personal and what is work-related, and they must do so on “a reasonable basis”.

By business reporter Nassim Khadem (Original ABC Article)