Trackies and ugg boots may be your working from home uniform, but they are on the list of no noes at tax time.
COVID restrictions have led workers to try to claim everything from pet daycare to Zoom backdrop decorations on their tax returns.
But the days of generous working from home deductions are almost over, said Elinor Kasapidis, senior manager tax policy at CPA Australia.
Elinor Kasapidis, CPA Australia: Does it pass the yeah, nah rule? Photo: Supplied.
“There is a shortcut method for working from home, which is 80 cents an hour and you only need to keep a diary, but that’s coming to an end on June 30,” she said.
“From the first of July if you do want to claim working from home expenses you’ll need to keep better records – all of your receipts, how often you work from home, where you work from home.”
The new tax rule comes despite twice as many employed Australians working from at least once a week this year compared with before COVID-19 restrictions in March 2020 (46 per cent compared with 24 per cent according to the Australian Bureau of Statistics).
A good rule of thumb is the ‘yeah, nah’ test, said Kasapidis.
“Some people are now thinking, ‘Well, if I’m investing in working in home I’m going to be spending more in establishing a routine’ and that means they think they can often claim a lot more expenses,” she said.
“But it’s a good idea to step back and think, ‘Can I claim this?’ and if it’s a feeling of yeah, nah it’s probably a nah.”
The Low and Middle Income Tax Offset – also known as the ‘lamington’ – is also available for Australians earning less than $126,000 a year. The offset was increased by $420 this year, meaning those eligible will now receive between $675 and $1500 (up from between $255 and $1,080 last financial year).
Tony Greco, Institute of Public Accountants: Don’t forget all sources of income on your tax return. Photo: Supplied.
But Tony Greco, general manager technical policy at the Institute of Public Accountants, warned people against being too hasty to file their returns and receive the offset.
“We try to encourage people not to rush because the ATO gets data from all sorts of agencies and it gets that data over a period of weeks, so if someone rushes in to get their hands on the $1500 LMITO and may have forgotten they’ve got interest on a bank account or a dividend from Telstra or earned some income from another source,” he said.
“The ATO has data from third parties, so they can find out if someone has done an Airtasker job or if someone has earned some money from crypto. Once you lodge a return it doesn’t mean that’s final. Even if it’s processed, it doesn’t mean they won’t hit you with an amended assessment.”