As we come out of the calamity that is COVID-19, we’re beginning to see the breadth of effects that this pandemic will have on life, which isn’t limited to, but certainly includes doing our taxes. Does Jobkeeper or Jobseeker need to be considered come June 30? Maybe. Can more be claimed after working from home over the past two months? Potentially. Can I still claim travel costs even though I’ve been locked in my apartment for a good part of 2020? Probably not.
To find out what’s really going on at the end of this financial year, we spoke with Andrew Elmore who heads up Darkwave, a chartered accounting firm in Fitzroy specialising in creative, the arts, hospitality and digital.
Come tax time, do you anticipate there to be some changes due to COVID-19?
The biggest change we anticipate this year will be the reluctance of people to come into the office for face to face meetings this year to sort out their tax affairs. This is perfectly understandable, and should encourage clients to summarise their information into digital formats (scanned receipts, excel spreadsheets) to then be able to email this to their accountant.
A lot of people will have been working from home over the past few months. Will that change what people can claim?
The biggest change to tax claims this year will be the increase in working from home expenses, such as utility use, home internet costs, and office supplies. The ATO has already released information on this, and has provided a new rate of 80 cents per hour that can be claimed to cover working from home expenses during the COVID-19 shutdowns. Conversely, there should be a reduction in costs claimed for work travel, seminars & conferences, and self-education courses if they couldn’t be run online.
Will any of the government support payments like JobSeeker and JobKeeper affect people’s tax this year?
Yes, it’s probably a forgotten element of JobKeeper that the payments are taxable income, especially by those smaller sole-trader and freelancer businesses. The money received for Jobkeeper will need to be disclosed in personal tax returns at tax time, which may result in people having a tax debt when receive their completed return from their accountant. JobSeeker is also taxable however these payments will be reported directly by Centrelink to the ATO so will already appear in each individuals tax information at year’s end.
What can people do to better prepare for their tax return for this financial year?
The first thing that people should be doing now, especially if they aren’t working much and are on JobKeeper or JobSeeker, is to start preparing their information for tax time. This should be in the form of summarising receipts and banking records to make it easier to their accountant to prepare their tax return.
As already noted, handing in a box of receipts and papers to your accountant this year may not be physically possible, so summarising means using a computer to digitise your tax information so it can be emailed or access granted via Dropbox or Google Docs. With tax records, it’s also important to provide as much detail as possible, such as dates of transactions, amounts paid in exact amounts and to whom, and then summarise income and expenses into categories. Supplying one figure on an email such as “Computer Expenses $500” is not summarising your information.
There were a number of fraud cases related to the early release of super. Is this something people need to be aware of when doing this year’s tax return?
Absolutely, identity theft is one of the worst things that can happen, and your personal tax information is a prime target for criminal syndicates. It’s important for people to be aware of who has access to their tax information, so they should be asking the question of their accountant if they use overseas contractors or staff to prepare their return, and who has access to their data. There is a legal obligation for your accountant to advise you if they are offshoring your accounting and taxation work, so it’s always good to ask the question if you are unsure or uncomfortable with this happening to your personal data.
Any other watch-outs leading up to the end of the financial year?
As always, there will be businesses out there trying to take advantage of people who are in a stressful financial situation by promoting tax-schemes and deductions that “nobody else has access to”. The key with your tax affairs is to understand that anything that sounds too good to be true will more than likely be illegal. Also, ensure that the accountant you use to prepare your return is a registered Tax Agent, the easiest way to tell this will be whether they ask to access your myGov account—Tax Agents have their own access to the ATO and don’t need or require your myGov login details.
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Image credit: Austin Distel | Unsplash