The BIG change coming to your tax return if you work from home and not everyone will like it
Why Aussies Working From Home Will Have a VERY Painful Time Filing Their Tax Returns: ‘Be Much Better Prepared’
- Home workers lose a shortcut when filing their tax return
- The 80 cents-per-hour method that started in March 2020 will end on June 30
- That means electricity, heating and phone calls have to be added up manually
- H&R Block’s Mark Chapman Said Home Workers Should Now Keep Receipts
Australians who work from home will no longer be able to claim a shortcut method when filing their tax returns next year.
Since the pandemic began in March 2020, professionals have been able to claim a flat rate of 80 cents per hour for their expenses instead of manually adding them up.
The shortcut was supposed to end on June 30, 2021, but the Australian tax office extended it for another year as Sydney and Melbourne were placed in lengthy lockdowns.
With Delta outbreaks no longer forcing people to work from home, the convenient 80 cents per hour method will no longer be available from July 1.
Instead, those who work from home have to keep their electricity, internet, and phone bills and manually add up their expenses to claim a lower deduction of 52 cents per hour.
Australians working from home will no longer be able to claim a shortcut method when filing their tax returns next year (pictured is stock photo)
Mark Chapman, tax communications director at tax advisor H&R Block, said those who still work from home should get into the habit of keeping their receipts.
What will change on July 1?
Under the outbound 80 cents per hour method, home workers can claim a flat rate without manually adding up their expenses
But from July 1, that shortcut will no longer be available
That means those who work from home must claim a lower rate of 52 cents per hour and manually add up their electricity and heating bills for a given floor space, along with telephone charges and furniture depreciation.
The Australian tax authorities advise anyone in that position to keep records of all hours worked from home, receipts of all depreciated assets and equipment used in working from home and records of work related use of your assets
“It really means taxpayers need to be much better prepared from 1 July,” he told the Daily Mail Australia.
“They will have to bear in mind that they have to keep copies of their documentation.
“We train the clients they need to maintain a degree of documentation.
“If you count on that 80 cents, when we go into the new tax year you will have a big adjustment because you have to keep significantly more administration.”
The existing 80 cents per hour rule will remain available to those filing their tax returns for fiscal year 2021-2022.
“If you’re filing your tax returns for this year, don’t worry about that,” said Mr Chapman.
“You don’t want to get to this time next year and you suddenly realize, ‘Oh, I haven’t kept any copies of documentation, so I may not be able to claim them.'”
Mr Chapman said the tax office had made the wrong decision to scrap the convenient but temporary 80 cents per hour method, although this typically yielded lower returns and therefore put less pressure on government revenues.
“I certainly don’t think it was too expensive because it usually gave a lower deduction, so it was probably beneficial to the ATO,” he said.
“The ATO believes the pandemic is over.
The Australian tax office’s assistant commissioner, Tim Loh, said a new method is likely to be announced later this year for those who work from home.
“If the ATO thinks everyone’s going back to the office, they’re probably wrong.”
The Australian Revenue Commissioner’s Assistant Commissioner Tim Loh said a new method is likely to be announced for those working from home later this year.
“We are looking to modernize work-from-home practices for fiscal year 2022-23 and we will, as always, consult and expect to be able to provide information on this later in the calendar year,” he said.
H&R Block calculated that those who used the 52-cent-per-hour method gave an average of $2,600 in tax refunds, compared to $1,100 for those who used the 80-cent-per-hour outbound method.
Beginning July 1, those who work from home and seek tax refunds must use the 52-cent-per-hour method and add up their expenses for lighting, heating or cooling their home workspace and any depreciation on their furniture.
But charges on computers and mobile phones have to be submitted manually.
Individuals have until October 31 to file their tax returns.
Mark Chapman, tax communications director for tax agent H&R Block, said those who still work from home should get into the habit of keeping their receipts (pictured is a Zoom room in a NSW home)