Published on Jul 7, 2020
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In the wake of the COVID-19 pandemic and the recent drought and bushfire crisis, people are being urged to be on the front foot leading up to tax time.
The Australian Taxation Office (ATO) is preparing for a massive task and is taking a range of additional measures to help businesses process tax returns that may be quite different than they are used to.
A new Tax Time Essentials resource has been introduced to help taxpayers understand changes to their tax returns as a result of the pandemic.
It’s expected that there will be a substantial increase from individuals claiming deductions for working from home in recent months.
In response, the ATO has announced that individuals will have access to a simplified way for claiming tax deductions, under a new ‘working from home shortcut’. This will allow people to claim a rate of 80 cents per hour for all running expenses while working from home.
The temporary shortcut method can be applied from March 1 2020 through to June 30 2020.
For people who use the shortcut method, all you need to do is keep a record of the hours worked from home as evidence for your claim. Existing arrangements are still in place and people can still make claims that involve calculating all or part of their running expenses.
It has also been confirmed that multiple people living under the same roof will be able to make individual claims.
If your income has been impacted by COVID-19, rather than leaving it to the very last-minute individuals are being urged to be proactive and process returns earlier rather than later.
From expenses and deductions related to working from home, to charitable donations that may have been made in recent months, there is plenty of tax considerations to be mindful of when processing tax returns this year.
Here is our checklist to get you through end of financial year:
- Keep it together!
Make sure your documents are organised and keep a paper trail.
Make sure you understand what types of purchases you are able to claim as a deduction for your business and retain all receipts. Read more about what tax deductions you can claim.
- Registered Agent
Doing your tax with an agent makes the task much simpler, however you need to make sure your agent is registered with the Tax Practitioners Board (TPB) as you will have no protection should you utilise an unregistered tax or BAS agent.
Ensure your business is meeting the appropriate requirements or you might get a shock at tax time.
- Gains and losses
Your business might have property, equipment, furniture or items used within your business that can attract capital gains or losses at tax time. There are some exemptions from Capital Gains Taxes.
Time to review your finances, check your financial position and assess your business performance. Set your business new financial targets and create a cash flow forecast to predict any shortfalls ensuring the longevity of your business through the next financial year. It might also mean that your business and marketing plans require review to ensure you can meet the new targets or that your circumstances or net position has changed and you need to update your insurances.
For specific advice on taxation it may also be best to see your Registered Tax Agent and confirm that your approach meets your individual needs.
The Australian Taxation Office also provides a range of online tools and support. Visit the ATO website for more information about the $150,000 instant asset write-off.
For more information on essential tasks for the end of financial year, please visit the Australian Government’s Online Business Hub.