The tax office has released an updated guide to help Australians lodge their returns during COVID-19.

The step-by-step guide comes after ATO assistant commissioner Karen Foat urged taxpayers to check for common mistakes before filing and is intended to help people file before the October 31 deadline.

Anyone using a ‘registered tax agent’, such as an accountant or some qualified financial advisers, may be able to file after this date.

All registered tax agents are included in the searchable Tax Practitioners’ Board register, which you can access here.

Everyone else will need to create a MyGov account and link it to the tax office. This will enable them to file their own taxes.

Adding all your income

The past financial year has been difficult for many Australians, with devastating bushfires ravaging the nation in January before a global pandemic set in.

Each of these challenges has been met with various forms of financial support or payouts, so many Australians will have to include forms of income they don’t normally receive when filing their taxes.

These forms of income include:

• Salary and wages
• JobKeeper payments
• Some insurance payouts (including income protection, sickness, and accident insurance)
• Government payments (including JobSeeker and some state-based support packages)
• Disaster assistance payments – whether taxable or not
• Rental income (including back payments and lost rent insurance payouts)
• Sharing economy income (money earned through things like Airbnb, Uber and Car Next Door).

Much of this information should be provided to the ATO on your behalf by employers, banks, government agencies and health funds.

But because this information is not always provided to the ATO until late July, the tax office is encouraging Australians to wait until it has been supplied before filing their returns.

MyGov will send an email notifying you once it has received that information.

Filing incorrect figures could result in processing delays or penalties.

The power of deduction

Deductions have also been complicated by a “difficult” 2020, the ATO noted.

More Australians than ever are working from home and are thus entitled to claim new deductions.

To make the process easier, the ATO introduced a new, ‘shortcut’ method for measuring expenses – meaning taxpayers have three methods to choose from.

The shortcut

The shortcut method allows you to claim 80 cents for every hour worked between March 1 and June 30.

To be eligible, taxpayers need to have properly worked from home (not just undertaken minor tasks) and incurred additional expenses as a result.

You’ll need to have a record of the hours you worked, such as a timesheet or diary.

This method is designed as a flat rate for all deductibles, so taxpayers won’t be able to claim any additional expenses incurred during that timeframe. 

The fixed rate

This method allows you to claim 52 cents per hour, but it only covers your work-related energy and cleaning costs, and the decline in the value of your office furniture.

This method allows you to claim 52 cents per hour, but you will need a dedicated work-from-home space to qualify.

Phone bills, internet bills, stationery and depreciation of work equipment like computers have to be calculated separately.

Actual cost method

Calculating the actual cost is the most difficult method available and requires “complex calculations and record keeping”.

It allows you to claim the actual cost of all work-related deductions, in line with the ATO’s three golden rules:

1. The expense must have been for your business, not for private use
2. If the expense is for a mix of business and private use, you can only claim the portion that is used for your business
3. You must have records to prove it.

The ATO recommends speaking with a tax agent, or checking the examples provided online before attempting to file using this method.