Working from home may deliver a tax time bonus

Working at home because of COVID-19? You might be giving your tax return a boost.

Jun 12, 2020, updated Jun 12, 2020


While logging in to work from home is fast becoming the new normal, that can come at a cost.

Not having to commute can save some dollars. But being home during working hours can add to your heating (or cooling) costs, stretch your internet capacity, and there’s a chance you’ve even need to upgrade your home office layout to stay productive.

Here’s how the tax office is helping people tackle the COVID-19 challenge.

A temporary shortcut

If you’ve been working from home, you may be eligible to claim some of your expenses as a tax deduction. To get the ATO tick of approval, you need to meet certain conditions:

First, you must have actually spent the money. The expenses need to be directly related to earning your income. And you must keep records to prove it.

If your employer provides items to help you work from home, or reimburses you for expenses, then you can’t claim those costs.

(You can’t claim the costs of tea, coffee, or snacks either, even if they were provided free in your usual workplace).

You can claim the costs of cooling, heating, lighting, phone, internet, and depreciation – but you’ll need to keep very good records.

But if you’re looking for a shortcut, the tax office will let you claim 80 cents for each hour you work from home between 1 March and 30 June 2020, provided you’re doing more work than just checking emails, and have actually incurred some costs.

You don’t need to document your actual costs, but you will need to keep a record of hours worked, like a diary or timesheets.

Now is also a good time to take a look at your superannuation.

Sort your super

There’s still time before the end of the financial year to check your super contributions to make sure you’re making the most of the available tax concessions.

Payments to your super account which are eligible for a tax deduction are called concessional contributions. These include your employer’s Super Guarantee payments, contributions made under a salary sacrifice arrangement and contributions you make yourself which are claimed as a tax deduction.

There is a limit of $25,000 per annum on concessional contributions, and payments above this amount can incur penalties. So, before you make any additional payments check that you’re under those limits.

Time for a top up?

Did you know it’s now possible to boost your super, and benefit from a tax deduction as well? Thanks to recent changes in superannuation law, if you make personal contributions to your fund, you can claim the amount paid as a tax deduction when you lodge your return.

Any payments claimed are still subject to the $25,000 per annum concessional contribution limit, but if you’ve got some available funds, it’s a strategy worth looking at. Most people under the age of 65 will be eligible to claim a deduction (once you turn 65, you’ll need to meet a work test to be eligible).

If you didn’t reach that $25,000 cap last financial year, you could be able to top up your contributions even more.

Provided your super balance is under $500,000 (as at 30 June 2019), any ‘unused’ super contributions ($25,000 less your total concessional contributions last year) can be carried forward to this financial year.

Your super fund or pay office will be able to give you details of whether you have any unused contributions from last financial year.

To find out more about the tax concessions available from super, get in touch with your nearest Morgans office.

Disclaimer: The information contained in this article is provided to you by Morgans Financial Limited as general advice only and is made without consideration of an individual’s relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.
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