With so many of us working from home recently, your EOFY tax preparation may be a little different this year. Here, we take a look at how to claim working from home deductions, some smart strategies for your super, and a tax prep checklist for small businesses.

First, some good news: The 2019-2020 Federal Budget legislated tax offsets for low to middle income earners that could potentially see you get a bigger refund or a reduced tax bill. The offset is worth anywhere from $255 to the full $1080, depending on your income, with those earning more than $126,000 not receiving any offset.

Working from home tax deductions

The Australian Tax Office (ATO) has introduced new tax arrangements to make claiming deductions easier if you are working from home due to the COVID-19 pandemic.

The new arrangement allows people to claim a rate of 80 cents per hour for all of their running expenses, instead of calculating costs for specific running expenses as taxpayers normally would. Multiple people living in the same house can claim this new rate individually, and it is no longer a requirement to have a dedicated home office area in order to claim.

However, note that this new arrangement only applies from March 1 through to the EOFY. For any prior working from home periods prior to this you would need to use one of the pre-existing methods for claiming work from home deductions. As always, you should talk to your tax agent about which approach makes the most sense for you.

Superannuation strategies

Many of us are feeling concerned about the state of our superannuation right now so you may be thinking about ways to boost it. Speak to me (or your current financial planner) before implementing new superannuation strategies, as your eligibility will depend on factors such as your age, income and level of salary sacrifice, among other things.

Superannuation strategies to consider

Tax-deductible super contributions – You may be able to claim a tax deduction for any personal super contributions that you made to your super fund from your after-tax income. However, you must have given your super fund aNotice of intent to claim or vary a deduction for personal contributionsform and received an acknowledgement from your fund.

Salary-sacrificing super – You may be able to opt to have part of your before-tax wage or salary paid into our super account instead of receiving it as take-home pay. This can boost your super savings due to tax advantages, depending on your income. You’ll need to talk to your employer about whether this is an option.

Spouse super contribution tax offsetYou may be able to claim a tax offset for yourself if your spouse/partner’s assessable income is less than $40,000 in a financial year and you make a Spouse (or de facto) Super Contribution on their behalf if you meet all the conditions.

First Home Super Saver Scheme (FHSSS) – Since 1 July 2017 first home buyers have been able to make voluntary superannuation contributions to use towards a deposit for a first home. The total amount of either concessional or non-concessional contributions you can make under this scheme is capped at $15,000 a year, to a maximum of $30,000 in total over multiple years.

Downsizing Contributions into Super – If you are 65 or over and planning on downsizing your family home of 10+ years, you and your spouse may be able to contribute up to $300,000 from the sale proceeds to superannuation as a downsizer contribution. Check the eligibility criteria to see if you qualify.

You can find more detailed information about your super and taxes on the ATO website or moneysmart.gov.au.

EOFY Checklist for Small Businesses

If you’re a small business owner it’s time to start thinking about what you need for tax time. Step one is making an appointment with your accountant. Step two is gathering the following documents:

  • Quarterly or annual Business Activity Statement (BAS)
  • Quarterly Superannuation Guarantee
  • Annual Income Tax, PAYG Withholding, Fringe Benefit Tax, and Goods and Services Tax reports or returns
  • Records of asset purchases and capital expenditure to calculate depreciation expense claims and for use in Capital Gains Tax reporting
  • Profit and loss sheet for the year showing revenues and expenses
  • Record of outstanding debtors and creditors. If you have bad debts, they can be written off for a tax deduction.

If you could use some financial advice during these challenging times we are always here to help. Call us anytime on (02) 8268 for an obligation-free chat.