By Noela Lee, Trilogy Accounting Group
The Australian Taxation Office (ATO) has signalled that it will be looking closely at work related deductions and rental property claims in 2022.
If you are unsure of what you are entitled to claim and the rules around claims, there is plenty of information on the ATO website https://www.ato.gov.au/Individuals/Income-and-deductions
Some of the expenses you may have incurred due to the Covid 19 pandemic are:
Home office expenses: If you were required to work from home you can claim a deduction for home office expenses using the temporary shortcut method.
You will need to have an agreement with your employer to work from home and have a record of the number of hours worked.
If claiming the 80c per hour, you cannot claim phone, internet, and other technology expenses eg laptop depreciation or printer costs. You may be able to claim these costs using the set rate 52 cents per hour or the actual method.
Refer to the ATO website for further information on these methods.
Covid tests: tTe cost of RAT and PCR tests are tax deductible if required for work purposes. The cost of a RAT to travel to Sydney to watch the cricket is not work related and not deductible.
You must have paid for the tests and not been reimbursed by your employer.
Protective equipment (PPE): If you work in an industry where you are exposed to a high risk of infection from Covid and had to wear PPE eg masks, gloves, sanitisers, you can claim the cost of the PPE. This will only be the case if the employer does not supply the PPE or reimburse you for the costs.
Support payments you may have received:
• Jobseeker is taxable and will be prefilled in tax returns – this information is usually available by the second week of July. If you wish to lodge your return before this information is prefilled, you will need to add your payments manually.
• Covid disaster payment for people affected by restrictions – these are non-taxable payments and are not entered into tax returns.
• Pandemic Leave Disaster Payments – these payments, paid by Services Australia, are taxable and need to be entered into the tax return. They will not prefill to the tax return and must be added manually. Services Australia provided a letter each time a payment was made – you need to ensure you enter all these payments.
• Covid vaccine incentives paid by employers – if a cash incentive was paid, this is treated as salary and wage income. Non-cash incentives could be a fringe benefit and will be included in reportable fringe benefits.
Four top tips to ensure your tax return is completed correctly:
1. Do not copy and paste deductions – think about what has changed since last year and adjust your deductions accordingly.
2. Do not double dip – if you are using a set rate to claim expenses, do not add in costs that have already been included in the set rate calculation. Don’t claim for expenses that have been reimbursed by your employer.
3. Check that you have included all Covid support payments.
4. Ensure you have records (receipts, diary entries) to support your claims.
If you need further assistance with anything tax, check out the ATO website – they even have occupation specific deduction guidelines – and your friendly tax agent.