More than 30% of Australians are expected to get a bigger refund from the taxman this year according to one of Australia’s leading tax experts.
As the COVID-19 pandemic continues to put a stranglehold on the global economy, most taxpayers are expected to have reduced taxable incomes for the 2019/20 tax year due to a variety of reasons ranging from lower income from wages and investments in conjunction with increased home office expense claims.
Dr Adrian Raftery, principal of Mr Taxman and author of 101 Ways to Save Money on Your Tax - Legally! 2020-2021 edition (Wiley, May 2020, AU$25.95), says that there will be a rush to lodge tax returns in July this year as a result.
“One of the few positives to come out of this whole COVID-19 pandemic, is that there will be a bit of relief this financial year when we go to lodge our tax” says Dr Raftery.
“Many Australians will have lower incomes from losing their job and going on JobSeeker, or have had their hours reduced with their wage dropping to the $750 per week JobKeeper subsidy level”
Traditionally work-related car expenses would be one of the biggest claims that taxpayers would make each year however the ATO would be expecting a substantial reduction this year due to the lockdown requirements according to Raftery.
Likewise interstate and overseas travel is another big claim which is expected to reduce this year due to these travel restrictions with taxpayers attending fewer conferences and seminars.
Raftery expects claims for work-related clothing & laundry will also drop.
“If you are working from home unfortunately you can’t claim your trackie daks!”
Self-education expenses are expected to rise as more study at home online during this lockdown but Raftery warns a tax deduction is only available if the study is in relation to your current employment – either maintaining or improving a specific skill; or leads to more income.
“You can’t claim for self-education if you are out of work or you are studying to look towards a change in career.”
Whilst there will be a surge in home office expenses this year Raftery warns taxpayers to be careful.
“If you are intending on being lazy and just claiming the 80 cents per hours shortcut method, this only equates to a deduction of $544 based on the 40 hours per week over 17 weeks (from 1 March when the claim can be first made),” says Raftery.
“If you were to take your actual expenses incurred for phone and internet, computer consumables, stationery and computer equipment and office furniture as well as the heating, cooling and lighting of your office, you probably could claim up to $1500 depending on your circumstances. “
Investors are expected to take a dip in their investment income this year with interest rates and dividends decreasing as well as tenants struggling to pay their rent.
“Negative gearing losses might be quite high this year. It might be a good idea to complete a PAYG Withholding Variation form for 2020/21 if these increased losses are prolonged & you are struggling with cashflow especially as you need to start repaying the banks again.”
Whilst the sharemarket has experienced a significant fall in 2020, Raftery warns that there might be some taxpayers will have some big capital gains tax to pay this year.
“People forget that the market reached record highs in January this year so they could have sold for a nice profit in the first 7 months this year. There will also be some who bought at the depths of the stockmarket correction in March and again have made some nice gains from the buyback.”
“If you have made a capital gain this year but sitting onto some shares which have made a paper loss then maybe worthwhile selling some shares before 30 June & crystallise losses which can be used against any future gains.”
Raftery suggests that taxpayers use this downtime to collate all their receipts via the ATO’s myDeductions App and ensure that they have logs for car, travel and mobile phone use as well as time spent in the home office.
“Times are tough during this COVID-19 pandemic, so every dollar saved counts more than ever before.”
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MR TAXMAN’S 10 QUICK TAX TIPS TO DO BEFORE 30 JUNE
1. Claim a deduction for the costs you incur in running your home-office
2. Keeping a car log book could increase your refund by thousands
3. Take advantage of the Government’s free money service known as the “Super co-contribution”
4. Minimise capital gains tax (CGT) by deferring sale or offsetting losses against gains already made
5. Build your nest egg quicker by paying 15% rather than 47% by salary sacrificing into super
6. Income expected to be lower next year? Bring forward some 2020/21 expenses into this year
7. Recontribution to split superannuation between spouses
8. Buy a new business asset for under $165,000 and claim it as a tax deduction this year
9. Keep your receipts
10. Get a great accountant
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This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.
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These tips were provided by Mr Taxman, Adrian Raftery, author of 101 Ways to Save Money on Your Tax - Legally! 2020-2021 edition (Wiley, May 2020, AU$25.95). @mistertaxman www.mrtaxman.com.au
101 Ways to Save Money on Your Tax – Legally! 2020-2021 edition
By Adrian Raftery
Published by Wiley May 2020
ISBN 9780730384625
AU$25.95 / NZ$28.99
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For further information or to request an interview, please contact: Adrian Raftery on 1800 TAXMAN (1800 829 626) or 0418 210 599 adrian@mrtaxman.com.au