Changes to tax returns 2021
ATO Warning – Copy & Pasting Claims
- ATO are setting their sights on work related expenses (such as motor vehicle, travel claims, laundry, uniform purchases and business trips).
- The expectation is that these deductions should reduce for taxpayers who were working from home during COVID 19.
- However, the ATO does expect to see jump in claims for home office expenses.
- It is really important that you do not copy your claims from the previous year.
- Taxpayers will need to ensure that they can substantiate their claims regardless of what was claimed in the previous returns.
Note that all deductions:
- need to be a nexus to work or work related
- have substantiation to prove claims such as receipts, tax invoices, dairy of hours worked at home, km travelled diaries, proof of telephone percentage used for work from bills and car logbooks
- have actually incurred the expenses themselves, such as you should not be claiming: employer reimbursed expenses or claiming family internet, company phones or using someone else’s car.
- made a reasonable apportionment of work related/ private amount of expense. For example claiming a computer allocating private use percentage.
- for rental property owners the ATO is targeting these common mistakes: wrong percentage ownership claims, wrong interest amounts claimed included private interest amounts, claiming expenses instead of depreciation capital expenditure and claiming building allowances capital costs correctly.
Tax Rates – 2020/2021
- For the 2020-21 income year, the Medicare levy low -income threshold for singles will be increased to $23,226 (up from $22,801 for 2019-20).
- For couples with no children, the family income threshold will be increased to $39,167 (up from $38,474 for 2019-20). The additional amount of threshold for each dependent child or student will be increased to $3,597 (up from $3,533)
- For single seniors and pensioners eligible for SAPTO, the Medicare levy low-income threshold will be increased to $36,705 (up from $36,056 for 2019-20).
- The family threshold for seniors and pensioners will be increased to $51,094 (up from $50,191), plus $3,597 for each dependent child or student.
How COVID has changed work-related expenses – PPE
PPE (or Personal Protective Equipment) is claimable where the taxpayer’s specific duties require this.
Facemasks: Where the taxpayer is required to be at their place of work, a face mask is not provided by the employer and they need to wear a mask.
Gloves, Hand Sanitizer, Anti-Bacterial Spray: The taxpayer’s work duties must either bring them into close contact5 with clients or customers or involve cleaning a premises.
What can be claimed
Gloves, face masks, face shields, sanitizer, anti-bacterial spray etc.
Receipts, diary entries etc. it is important to check whether the taxpayer was reimbursed this expense by their employer.
If the taxpayer’s private use is no more than incidental to the risks they are exposed to while carrying out their work duties, the taxpayer does not need to apportion the expense.
How COVID has changed work-related expenses – Home Office
A temporary shortcut method for working at home expenses is available for the 2020-2021 Financial Year.
Remember, if you want to claim desks or computers (those over $300) in future years, you will need to keep your receipts. However, if you are using 80c rate internet, telephone, and equipment are already included.
Allows for the all-inclusive rate of 80 cents per hour for every hour worked at home being claimed. Taxpayers do not need to calculate costs for specific expenses separately.
= number of hours worked at home x .80
Timesheet, rosters, diary entries that show the hours worked.
Travel Expenses Ruling – TR 2021/1
2019/2020 68 cents per km
2020/2021 72 cents per km
Remember: Maximum claim per car per tax return – 5,000 kms
While full substantiation is not required (such as receipts), the taxpayer may still be required to show hoe they calculated their claim.
There is a limit on the cost you can use to work out the depreciation of passenger vehicles (except motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than nine passengers.
The maximum value you can use for calculating your claim is the car limit (irrespective of any amount you were paid for a trade in) in the year in which you first used or leased the car.
Tax Incentive for Investment in Affordable Housing
- Australian resident individuals who provide affordable rental to people earning low to moderate income can claim an additional affordable housing capital gains discount of up to 10%
- To qualify for this additional discount, they must have provided qualifying affordable rental housing through a registered community housing provider:
- On or after 01 January2018 for a periods or periods totalling in aggregate at least three years (1,095 days), and
- Either directly or through an interposed entity from a trust or managed investment trust. The interposed entity or trust may be a trust or partnership, other than a public unit trust or super fund.
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