Working from home during COVID-19

We understand that due to COVID-19 your working arrangements may have changed. If you have been working from home, you may have expenses you can claim a deduction for at tax time.

Tracking these expenses can be challenging, so from 1 March to 30 June 2020, we have introduced a temporary shortcut method. It’s a simple way to calculate these expenses with minimal record keeping requirements. We may extend this period, depending on when work patterns return to normal.

In most cases, if you are working from home as an employee, there will be no capital gains tax (CGT) implications for your home.

Claiming a deduction

To claim a deduction for working from home, all of the following must apply:

  • you must have spent the money
  • the expense must be directly related to earning your income
  • you must have a record to prove it.

This means you can’t claim a deduction for items provided by your employer, or if you have been reimbursed for the expense.

If you are not reimbursed by your employer, but receive an allowance from them to cover your expenses when you work from home, you:

  • must include this allowance as income in your tax return
  • can claim a deduction for the expenses you incur.

Expenses you can claim

If you work from home, you will be able to claim a deduction for the additional expenses you incur. These include:

  • electricity expenses associated with heating, cooling and lighting the area from which you are working and running items you are using for work
  • cleaning costs for a dedicated work area
  • phone and internet expenses
  • computer consumables (for example, printer paper and ink) and stationery
  • home office equipment, including computers, printers, phones, furniture and furnishings – you can claim either the
    • full cost of items up to $300
    • decline in value for items over $300.

Expenses you can’t claim

If you are working from home, you can’t claim:

  • the cost of coffee, tea, milk and other general household items your employer may otherwise have provided for you at work
  • costs related to children and their education, including setting them up for online learning, teaching them at home or buying equipment such as iPads and desks
  • items that you’re reimbursed for, paid directly by your employer or the decline in value of items provided by your employer – for example, a laptop or a phone
  • time spent not working, such as time spent home schooling your children or your lunch break.

Employees generally can’t claim occupancy expenses such as rent, mortgage interest, water and rates.

Calculating your expenses

There are three ways of calculating home office expenses depending on your circumstances. The methods are the:

  • Shortcut method (80 cents) – only available 1 March to 30 June 2020
  • Fixed rate method (52 cents)
  • Actual cost method

You don’t have to use the shortcut method. You can choose to use one of the existing methods to calculate your deduction. You can use the method or methods that will give you the best outcome, as long as you meet the criteria and record keeping requirements for each method..

Shortcut method

You can claim a deduction of 80 cents for each hour you work from home from 1 March to 30 June 2020 as long as you:

  • are working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls
  • have incurred additional running expenses as a result of working from home.

The shortcut method doesn’t require you to have a dedicated work area, such as a private study.

The shortcut method covers all additional deductible running expenses, including:

  • electricity for lighting, cooling or heating and running electronic items used for work (for example your computer), and gas heating expenses
  • the decline in value and repair of capital items, such as home office furniture and furnishings including capital items that cost less than $300
  • cleaning expenses
  • your phone costs, including the decline in value of the handset
  • your internet costs
  • computer consumables, such as printer ink and stationery
  • the decline in value of a computer, laptop or similar device.

You don’t have to incur all of these expenses to use the shortcut method, but you must have incurred additional running expenses in some of these categories when working from home.

If you use this method, you can’t claim any other expenses for working from home for that period.

When you are calculating the number of hours you worked from home, you need to exclude any time you took a break from working, for example the time you spent to stop and eat your lunch or to assist your children with home schooling.

You can calculate your deduction for additional running expenses using the shortcut method, with this formula:

  • Total number of hours worked from home between 1 March and 30 June 2020 × 80 cents.

If you use the shortcut method to claim a deduction in your 2019–20 tax return, include the amount at the other work-related expenses question in your tax return and include ‘COVID-hourly rate’ as the description. Remember, you can only use this method from 1 March to 30 June 2020.

For information on how to calculate your working from home expenses prior to 1 March, or if you also choose to use one of the existing home office expenses methods to calculate your deduction.

Records you must keep

You must keep a record of the number of hours you have worked from home. This could be a: expenses bills

  • timesheet
  • roster
  • diary, or
  • similar document that sets out the hours you worked.

If you use the other methods, you must also keep a record of the number of hours you worked from home along with records of your expenses.

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

Ph 13 75 77 75

Visit link for more information on Tax returns 2020

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

Claiming Work-Related Car Expenses

If you use your own car in performing your work-related duties (including a car you lease or hire under a hire-purchase agreement), you may be able to claim a deduction for car expenses using either the cents per kilometre or logbook method.

If your travel was partly private, you can claim only the work-related portion.

This information relates to car expenses only. A car is defined as a motor vehicle (excluding motorcycles and similar vehicles) designed to carry a load less than one tonne and less than nine passengers. Many four-wheel drive vehicles are included in this definition.

When you can claim

You can claim a deduction for work-related car expenses if you use your own car in the course of performing your work duties as an employee. – for example, to:

  • attend work-related conferences or meetings away from your normal workplace
  • deliver items or collect supplies
  • travel directly between two separate places of employment, if neither one of the places is your home (for example, when you have a second job)
  • travel from your normal workplace to an alternative workplace (that isn’t a regular workplace) and back to your normal workplace or directly home
  • travel from your normal workplace or your home to an alternative workplace that is not a regular workplace (for example, a client’s premises)
  • perform itinerant work – meaning you had shifting places of employment (for example, you regularly work at more than one site each day before returning home).

In limited circumstances you can claim the cost of trips between home and work, where:

  • your home was a base of employment (that is, you were required to start your work at home and then travel to a workplace to continue your work for the same employer)
  • you were required to carry bulky tools or equipment for work and all of the following conditions were met:
    • The tools and equipment were essential for you to perform your employment duties and you didn’t carry them merely as a matter of choice.
    • The tools or equipment were bulky meaning that because of their size and weight they are awkward to transport and could only be transported by motor vehicle.
    • There was no secure storage for the items at the workplace.

If you receive an allowance from your employer for car expenses, it is assessable income and the allowance must be included on your tax return. The amount of the allowance is usually shown on your income statement or payment summary.

Using someone else’s car or other vehicle

If you use someone else’s car or other vehicle (that is not defined as a car) for work purposes, you may be able to claim the actual expenses (such as fuel) as a work-related travel expense in your tax return.

A vehicle is not considered a car if it is a motorcycle or vehicle with a carrying capacity of

  • one tonne or more, such as a utility truck or van
  • nine passengers or more, such as a minivan.

Cars owned or leased by someone else may include a spouse, family member or employer. However, if you can show there is a family or private arrangement that made you the owner or lessee (even if you are not the registered owner) you can calculate your car expenses using either the logbook or cents per kilometre method.

We recommend keeping a logbook for these vehicles as an easy way to show how you calculated your work-related use of the vehicle.

When working out your claim, you need to use the actual costs of your motor vehicle expenses. You need to keep receipts for the actual costs you incur (such as fuel and oil). You can use the myDeductions tool to help keep your records.

When you can’t claim

Generally, you can’t claim the cost of travel between home and work under any of the methods, even if you live a long way from your usual workplace or work outside normal business hours. This is private travel.

You also can’t claim a deduction for car expenses that have been salary sacrificed or where you have been reimbursed for these expenses.

Calculating your deductions

You can choose one of the following two methods to calculate your deduction for car expenses:

  • cents per kilometre method
  • logbook method.

If you claim a work-related car expense using the cents per kilometre or logbook method, you can’t claim any further deductions in the same tax return for the same car.

If you are claiming car expenses for more than one car, you can use different methods for different cars. You can also switch between the two methods for different income years for the same car.

The myDeductions tool in the ATO app can help you keep records of your car use for both of the calculation methods. There are three options for recording your car trips in myDeductions, including:

  • a point to point trip
  • a GPS trip
  • an odometer trip.

If you’re using the logbook method, you can create a valid digital logbook record using the myDeductions tool.

Cents per kilometre method

Under the cents per kilometre method, you:

  • can claim a single rated of 68 cents per kilometre from 1 July 2018 (72 cents per kilometre from 1 July 2020)
  • can claim a maximum of 5,000 work-related kilometres per car
  • may need to provide written evidence to show how you worked out your work-related kilometres (for example, by producing diary records of work-related trips)
  • need evidence that you own the car.

Where you and another joint owner use the car for separate income-producing purposes, you can each claim up to a maximum of 5,000 business kilometres.

The cents per kilometre rate covers decline in value, registration, insurance, maintenance, repairs and fuel costs. You can’t add these expenses on top of the rate when calculating your deduction.

Use our Work-related car expenses calculator to help you calculate your claim for work-related car expenses for eligible vehicles.

Logbook method

Under the logbook method, your:

  • claim is based on the work-related percentage of the expenses for the car
  • expenses include running costs and decline in value but not capital costs, such as the purchase price of your car, the principal on any money borrowed to buy it and any improvement costs (for example, adding paint protection and tinted windows)
  • need to provide written evidence to show how you worked out your work-related use, you need a logbook and the odometer readings for the logbook period.
  • claim for fuel and oil costs are based on either your
    • actual receipts
    • estimate of the expenses based on odometer records that show readings from the start and the end of the period you had the car during the year.

You need written evidence for all other expenses for the car including evidence that you own the car and the odometer reading at the start and end of the period you used the car during the year.

Your logbook must cover at a minimum 12 continuous weeks. Your 12 week logbook is valid for five years.

If you started using your car for work-related purposes less than 12 weeks before the end of the income year, you can extend the 12 week period into the next financial year.

If your circumstances change (for example, you change jobs or move house) and the logbook is no longer representative of your car expenses, you will need to complete a new 12-week logbook.

Calculating your work-related use

Using your logbook record of 12 continuous weeks of car use, follow the steps below to work out your deduction for car expenses using the logbook method.

  1. Calculate the total number of kilometres travelled during the logbook period.
  2. Calculate the number of kilometres you travelled for allowable work-related trips during the logbook period.
  3. Calculate the work-related use by dividing the amount at (b) by the amount at (a) then multiply this figure by 100 – this is your work-related percentage.
  4. Multiply your work-related percentage by your car expenses to calculate your claim.

Damage to a third-party motor vehicle

If you use your own motor vehicle in the course of your employment and you are involved in an accident that causes damage to another vehicle, you may be able to claim a deduction for the costs you incurred.

If you are liable for the damages or compensation for the damage to the other vehicle, you may be able to claim a deduction for the costs you incurred.

If an accident occurs in the course of your employment, the expenses relating to your liability to pay for the damage to the other vehicle in the accident are incidental and relevant to you earning your assessable income. They are not capital, private or domestic.

Contact us

To contact our tax consultant to claim your deductions and advice at click on

Book Your Appointment

https://taxbook.com.au/

Ph 13 75 77 75

Disclaimer

This reading material was extracted from Australian Tax Office (ATO) website on 24 June 2020. This post and the information therein is for general information only and does not constitute legal, financial or taxation advice from PTB. Other requirements under tax law may apply and may change. If you wish to act on any of the material in this video, you should contact PTB for professional advice that takes into account your own specific circumstances.

EOFY Super Contributions

Don’t leave your contributions to the last minute

This is particularly important if you plan to claim a tax deduction for any of your contributions. Contributions are included in a financial year if they are received in your fund’s bank account by 30 June. With 30 June falling on a Sunday this year, it would be prudent to make your contributions by Wednesday 26 June to ensure they are received by your fund prior to the end of the financial year.
Please also remember retail and industry funds can take extra time to process contributions, so we suggest that you make contributions as soon as possible.

Further, please check the payment methodology required by your particular fund as they typically have specific BPAY codes or electronic funds transfer instructions for different types of contributions and it is problematic to have the contributions reallocated after year end if you use the wrong code or EFT account.

Superannuation Contribution Limits

The *concessional and non-concessional contribution limits are as follows:

Financial Year Concessional Cap Non Concessional Cap
2018/19 $25,000 $100,000

1. If you intend on claiming an income tax deduction for your personal contributions, you must complete a notice of intent to claim deduction in the approved form and submit it to your super fund when making the contribution.
2. If your Total Super Balance at 30 June 2018 is greater than $1.6M you are ineligible to make a Non-Concessional Contribution in the 2018/19 financial year. (Your Total Super Balance is the combined total of all balances in super funds of which you are a member.)
3. If you were age 64 or under on 1 July 2018, you may have the ability to ‘bring forward’ the non-concessional contribution limit for the following two years. The amount of the bring forward that can be triggered in a particular year will be driven by the gap between your total super balance and $1.6m. If the gap is less than $100,000, you cannot trigger a bring forward in that year. Rather, you will be limited to the annual limit of $100,000. If your total super balance is less than $1.4m at 30 June 2018 you may be eligible to trigger the bring forward and utilise the whole limit of $300,000.

Work Test

If you are aged 65 to 74 years, you must satisfy a work test in order to be eligible to contribute to super. To satisfy the work test, you must have worked at least 40 hours in a consecutive 30-day period in the financial year before the super fund is eligible to accept your contribution. If you are aged 75 or over, your super fund is only able to accept mandated employer contributions (i.e. superannuation guarantee amounts) on your behalf.

Drawing super pensions

If you are in pension phase, you need to ensure the minimum pension has been paid to you for this financial year. Where these requirements have not been met your fund will be subject to 15% tax on your pension investment earnings, rather than being tax free. For our SMSF clients, please contact us if you are not sure of your minimum pension requirement for 2018/19.

Super tip for employers

Employers only receive a tax deduction for making their employee SG contributions in the same financial year in which the SG contributions are received by the super fund. Therefore, please ensure you make your payments as soon as possible if you want to claim a deduction for them in the current financial year.
Otherwise, please ensure the June 2019 quarter contributions are paid by 28 July 2019. Missed payments may attract the super guarantee charge (SGC), which is not tax-deductible.

*Concessional and Non-concessional Contribution Definitions

Concessional Contributions
These are tax deductible contributions that include:
• employer contributions, such as
o compulsory employer contributions paid by your employer (E.g. 9.5% super)
o additional pre-tax super contributions your employer makes
o salary sacrifice payments of your choice
o other amounts paid by your employer from your pre-tax income to your super fund such as insurance premiums paid on your behalf.
• contributions that you claim personally as an income tax deduction, either to offset investment income or as a self employed person or as an individual topping up your employer contributions to the $25k Cap.
• notional taxed contributions if you are a member of a defined benefit fund.
• life insurance premiums paid into a superannuation life policy.
Non Concessional Contributions
These are after tax contributions from a personal source that are not taxed upon receipt in the super fund.

How can we help?

If you have any questions or would like advice to ensure you and your fund are well prepared for the end of the financial year and beyond, please contact our team of Super advisors at info@taxbook.com.au or use the below button.
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Instant Asset Write Off

Instant Asset Write Off changes announced in Budget 2019 are now law

The measure announced in the 2019 Federal Budget to give medium-sized businesses (turnover greater than $10M but less than $50M) the ability to immediately deduct the cost of assets costing less than $30,000 is now law. The new Act also increases the current threshold for the instant asset write off for small businesses (turnover less than $10M) from $25,000 to $30,000.

There have been a couple of changes to the instant asset write off this financial year so here is a quick snapshot of the changes that have occurred:

Date assets purchased Business Turnover Instant Asset Write Off
1/7/2018 – 28/1/2019 Less than $10M Less than $20,000
29/1/2019 – 1/4/2019 Less than $10M Less than $25,000
2/4/2019 – 30/6/2020 Less than $50M Less than $30,000

 

It is important to note that it is the date the asset is installed and ready for use in your business that determines the date that the instant asset write off applies. Also, the cost of the asset includes all costs involved in getting the asset ready for use, such as installation and delivery costs.

For assets that exceed the thresholds outlined above and cannot be instantly written off:

Small businesses (turnover less than $10M) can use the small business pool and claim a 15% deduction in the first year and 30% each year after;

Medium businesses (turnover greater than $10M but less than $50M) must use the general depreciation rules.

For more information on Instant Asset Write Off, visit Australian Taxation Office. 

Single Touch Payroll

Single Touch Payroll: What you need to know

From 1 July 2019, all employers will need to start complying with Single Touch Payroll, which has been introduced by the ATO to streamline payroll reporting.
STP commenced for employers of 20 or more employees as at 1 July 2018.

What is Single Touch Payroll?

When you complete your payroll, you will be reporting the payments made, tax withheld, allowances, deductions and super information for each employee directly to the ATO via your Single Touch Payroll-enabled solution. You do not need to change your payroll cycle to comply with this change and can continue to pay weekly, fortnightly or monthly.

What are the benefits?

Single Touch Payroll will eliminate manual payroll tasks including:
• Providing annual / part-year payment summaries, or for termination payments (provided the employer complies with STP reporting requirements for the full financial year)
• Providing payment summary annual report and copy of employees’ payment summaries to the ATO
• Providing TFN declarations to the ATO
• Filling out paper based TFN and Super Choice forms
Employees will be able to access their year to date tax and superannuation information through their myGov account, linked to the ATO, as well as their payment summary (called an ‘income statement’ in myGov). Whilst it is not mandatory to have a myGov account, employees will not be able to access this information without one, but can instead request a copy of their payment information from the ATO.

Are there any exemptions / concessions?

The Commissioner of Taxation, Chris Jordan, has provided a personal guarantee that the ATO are taking a flexible, reasonable and pragmatic approach, with number of concessions available for employers, as below:
• Micro employers (1 to 4 employees): offered help to transition to STP and a number of alternative options – such as allowing those who rely on a registered tax or BAS agent to report quarterly for the first two years, rather than each time payroll is run.
• Small employers (19 or less employees):
• can start reporting any time from the 1 July start date to 30 September 2019.
• deferrals will be granted to any small employer who requests additional time to start STP reporting.
• will not be forced to purchase payroll software if they don’t currently use it.
• Exemptions from STP reporting will be provided for:
• employers experiencing hardship, or in areas with intermittent or no internet connection.
• closely held payees for the 2019-20 financial year, with STP reporting commencing from 1 July 2020.
• There will be no penalties for mistakes, missed or late reports for the first transition year.
Please contact your Allan Hall advisor should you wish to discuss submitting a deferral application, or for further information regarding closely held payees.

How do I comply with Single Touch Payroll?

There are a number of ways to report, as follows:
• Through your Single Touch Payroll enabled payroll software;
• Through a third party, such as a bookkeeper or accountant; or
• Through a low-cost solution, such as a simple payroll solution, mobile phone app, or portal. These will best suit micro employers, and will cost less than $10 per month. A number are available now and can be found at No-cost and low-cost STP solutions.
If you are on a desktop software package it is unlikely that it will support Single Touch Payroll and you will need to consider updating to a cloud–based accounting software package.
We suggest you contact your software or payroll provider to enquire whether they are Single Touch Payroll ready, or contact us and we can do this for you. Our team of experienced bookkeepers can also assist with transition from desktop to cloud based.
Some payroll software providers have been granted deferrals by the ATO, if they are not Single Touch Payroll ready, and this will also apply to existing customers of the specific software.

Does this change BAS Reporting?

Yes, the W1 and W2 on your activity statement will be pre-filled with amounts that have been reported through Single Touch Payroll. Employers will still have the ability to adjust or correct information in their activity statement.

How do I find out more?

The ATO have created a helpful STP get ready checklist for employers. For more information on Single Touch Payroll, visit Australian Taxation Office.
In the meantime, if you would like to discuss the implications Single Touch Payroll may have on your business, please feel free to contact Bookkeeping team. Our team of expert Consultants can support you with all your people needs and is currently offering a FREE HR Health Check to identify possible risks and provide you with comfort that you are meeting your compliance obligations. Please use the button below to register
REGISTER FOR A FREE HR HEALTH CHECK

Family tax benefit payments

Reminder: Tax Returns must be lodged by 30 June 2019 for lump sum claims for family assistance and for balancing family tax benefit payments

The Dept of Human Services allows a period of one year to submit a lump sum claim for family assistance and confirm your income for that year.

If you wish to submit a lump sum claim for the 2018 financial year for the following:
• Family Tax Benefit (FTB);
• Child Care Benefit (CCB); or
• Single Income Family Supplement (SIFS) if you do not receive FTB for the whole year;
you and your partner need to confirm your income by lodging your tax return for the 2018 year, or advising that you do not need to lodge a tax return, no later than 30 June 2019.
If you don’t submit your lump sum claim for CCB by 30 June 2019, you will not be assessed on your eligibility for a Child Care Rebate.

The 2017–18 financial year is the last year you can claim child care payments as a lump sum. After this date the Child Care Subsidy started and if you are eligible, it is paid directly to your child care provider to reduce the fees you pay.

Note that you will also need to lodge your 2018 tax return no later than 30 June 2019, in order to be eligible for any top ups or supplements to Family Tax Benefits if you received payments during the 2018 year.

To ensure both you and your partner’s Tax Returns are lodged on time,Please simply click on the button below. To enable us to lodge your returns by this deadline, we will need your work no later than Wednesday 19th June 2019.

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Finance EOFY Wrap-up

Finance Market

It has been an interesting year for the finance market with a lot of uncertainty which was highlighted in the way of a royal commission. The BIG4 banks were put under the microscope but tried their best to shift the spotlight to every other part of their world. This meant that the mortgage broking industry and others had the spotlight put on them.
This wasn’t and is never a bad thing and whilst the initial recommendations were off the mark, the outcome proved what the customers have been saying – keep business as usual as 96% of customers are happy with their broker and the service they continue to provide.
With 60% of all loans now written through a broker and growing, customers have spoken for the industry by continuing to come back and refer others.

Interest Rates Wrap-up

Movement in interest rates has been very sporadic for the past 12 months with the majority of lenders increasing rates throughout the year noting an increase in funding costs.
In more recent times, lenders have been focusing on decreasing their fixed rates to get customers before the anticipated RBA cash rate cut. In the month of May, there were 531 interest rate movements with 85% of these being cuts to fixed rates.
The RBA has now finally moved the cash rate after 3 years, with a decrease by 0.25% which all lenders have passed on in part or full.

Health Check

There is a real difference in what all lenders will give in regards to interest rates to new business versus what they give to existing customers which is concerning.
This means that your existing lender may be giving new customers up to 1% less on their interest rate than what you are currently paying.
And with interest rates now hitting an all time low, there is no better time to come in for a full financial health check to ensure you are continuing to get the best deal in the market.
Our Finance team are always available for a FREE consultation and are ready and geared up to help you. Contact us use the button below.
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