THE END OF the 2019-2020 financial year is almost upon us and while you are preparing your tax return please not that business deductions will not be as usual as there are some new additions.  

We have just received word from the ATO that they are introducing new deductions to help business who have been impacted as a result of COVID-19 that will help provide you with additional support.  So please take note and take advantage of them.  

ARE YOU WORKING FROM HOME?

This year, the ATO is introducing a simplified method for claiming deductions for anyone working from home as a result of COVID-19. Between 1 March and 30 June 2020, taxpayers will be able to claim 80 cents per work hour for all their additional running expenses, rather than needing to calculate costs for specific running expenses. This new method is designed to make tax returns simpler for businesses who have transitioned to working from home due to COVID-19 and will help them more simply and easily claim their relevant deductions.

PROTECTIVE CLOTHING
Another deduction some people might be claiming due to COVID-19 is expenses for protective items required for work.

There is now provision for taxpayers who work requires them to be in physical contact, or close proximity with their clients during COVID-19 measures, may be able to claim a deduction for items such as gloves, face masks, sanitiser or anti-bacterial spray if they have paid for the items and not been reimbursed. 

ADDITONAL DEDUCTIONS YOU CAN CONTINUE TO CLAIM

While there are a few new deductions that can benefit this year, don’t forget your existing one that will continue to apply for your 2019-2010 tax return. Here is a brief summary:

Travel expenses:

If you have incurred travel expenses for work-related purposes you can claim these.  For example, if you were required to travel away from your home overnight in the course of performing your employment duties, to attend a training session or attend a conference or seminar or another work-related event. Permissible expenses include meals, accommodation, fares and incidental expenses that you may incur. Please note, however, that you cannot claim a deduction if the travel is paid for, or you are reimbursed by your employer or another person. Receiving a travel allowance from your employer doesn’t mean you can automatically claim a deduction. You still need to show that you were away overnight, you spent the money yourself, and the travel was directly related to earning your employment income.

Uniforms and cleaning costs:

You can claim purchases, hiring or cleaning cost of uniforms or garments that are only worn specifically for your work. You can’t claim a deduction for the cost of buying or cleaning plain clothing, for example, a white pair of trousers worn at work, even if you only wear it to work or if it’s a requirement by your employer this is still not considered a tax deduction. In other words, the whole garment must be purchased as your uniform. 

Additional deductions:

As long as the expense relates to your employment, you can claim a deduction for the work-related portion. For example:

  • Professional association membership fees
  • Professional journals, magazines, technical and work-related publications
  • Mobile phone calls
  • Conference registrations that relate to your industry

Motor vehicle expenses:

This is good news if you are an employee or a contractor.  

  • You can claim motor vehicle expenses if you are driving between separate jobs locations on the same day e.g. you are a part-time worker, working for two difference salons or clinics.
  • You are commuting for the same company but from different locations. 

However, you generally can’t claim the cost of normal trips between home and work, even if you have to work outside normal hours, this includes parking fees and tolls when you drive to and from work.

Self-education expenses:

If your studying a course that relates directly to your current job then you can claim that cost as part of your expenses. However, if you are studying in a general way to perhaps help you get a new job and move into a new area of work, this would not be a qualified expense.

Tools and equipment:

You can claim tools or equipment that are used for work-related purposes only.  You cannot fully claim these deductions if you are taking these tools at home for home use. Only the percentage of use in the business would be considered a deductable expense.

Tools and equipment permissible deductions:

  • More than $300 – you can claim a deduction for the cost over a number of years as depreciation 
  • $300 or less – you can claim an immediate deduction for the whole cost

If you are considering expanding your equipment, this is a good time to do so.  Please talk to your accountant as there are also some excellent tax-deductable benefits and rebates that are also currently available.

The end of financial year is also an excellent time to invest in additional stock or equipment as there are also tax benefits in doing so.  Please talk to your accountant.

If you are seeing to lease or borrow funds towards these purchases PLEASE consider the rates available though one of our financial services company as they have over 80 lenders and can secure you incredibly good rates.  Here is the link to Valiant https://apanetwork.valiant.finance/

Make sure that your accountant is kept up-to-date with these changes as these can substantially benefit you and your tax return.  Full details are also available on the ATO website ato.gov.au.