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Claiming Home Office Expenses for the 2019-2020 Financial Year

The first half of 2020 saw many employees, for the first time in their working lives, working from home for an extended period of time.  Given the uniqueness of this situation, the Government made an additional way for employees to calculate home office expenses.

This means that for the 2019-2020 financial year employees working from home actually have three ways of calculating home office expenses, as opposed to the normal two.

The new additional method of calculating home office expenses is appropriately recording the number of hours worked between 1 March 2020 and 30 June 2020 and claiming 80 cents per hour.

You can use this method where you are working from home so as to be able to fulfill your employment duties and secondly you have incurred additional running expenses as a result of working from home.

This method is intended to cover the additional costs in relation to phone expenses, internet expenses, the decline in value of equipment and furniture and the cost of electricity and gas for heating, cooling and lighting.

Should you choose this method then you can’t claim any other costs for working from home.  Note, this method does not require the employee to have a dedicated work area in the home.

How do you appropriately record the hours you worked?  The recording of hours worked through a diary, timesheet, roster or some other form of documentation that sets out hours of work is satisfactory for this purpose.

Note, as has already been stated, if you claim this method you can claim no other costs.  Therefore, if you were already working form home prior to 1 March 2020 this is not an appropriate method for calculating your costs of working from home.  In that case, you would need to use one of the two other methods for calculating working from home costs.

Note, the following types of expenses cannot be claimed when working from home :-

  • Coffee, tea milk and other general household items even if they were normally provided at work;
  • Costs incurred in relation to setting children up at home for home schooling; and
  • Costs that you are directly reimbursed for by your employer, paid for by your employer or the decline in value of items provided by an employer.

Please note that this is the simplest way to calculate deductible costs but this does not mean it will give an employee the best outcome for tax purposes.  If you are in doubt contact the friendly staff at Balanix Solutions for professional advice as to the other two methods and which one of the three methods would best suit your individual circumstances.

Jobkeeper Payments Update 28 April 2020

The latest information from the Australian Taxation Office (ATO) advises that the Commissioner of Taxation has extended the time to enrol for the initial JobKeeper periods until 31 May 2020 (previously 30 April 2020).

What this means is that if you enrol by 31 May 2020 you will still be able to claim for the fortnights in April and May, provided you meet all the eligibility requirements for each of those fortnights. Of most importance, this includes having paid your employees by the appropriate date for each fortnight.

Having said this. for the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO advises they will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by 8 May 2020.  Please note, if you do not pay your staff by this date, you will not be able to claim JobKeeper for the first two fortnights.

One of the main concerns for employers wanting to enrol for the JobKeeper Scheme is that they have to make the $1,500 payments to employees before they are eligible to receive the JobKeeper Payment.  For many employers, this is simply impossible.

Yesterday (27 April 2020), the Federal Treasurer (Josh Frydenberg) spoke with the ‘Big 4’ banks and they have agreed to establish dedicated Hotlines for employers to call in relation to accessing bridging finance.

Those Hotline numbers are: 

  • Westpac – 1300 731 073
  • NAB – 1800 562 533 (1800 JOBKEEPER)
  • CBA – 13 26 07
  • ANZ –  1800 571 123

Please Note: The comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Please contact Balanix Solutions on 07 3264 4783 for the appropriate professional advice for your individual circumstances.

JobKeeper Payments – Some Questions and Answers

Here at Balanix Solutions we have tried to answer some of the most frequently asked questions of us in relation to the JobKeeper Payments.

Do I have to have paid eligible employees the $1,500 per fortnight before claiming the payment?

Answer: Yes, the payment is a reimbursement to the employer.

What happens if an eligible employee leaves your employment?

Answer: Must notify the ATO the employee is no longer eligible.

Under the Jobkeeper Scheme can you pay a nominated employee less than the $1,500?

Answer: No, you must pay the $1,500 to all eligible employees.

Is the $1,500 taxable in the hands of the employee?

Answer: Yes, the employer must deduct tax (PAYG) from the payment.

If I am nominated as an individual to receive a payment as an eligible business participant is the partnership, trust or company required to pay me the $1,500?

Answer: Unlike the wording relating to employees there is no requirement to pass on the $1,500 to the nominated person. So, in the case of a partnership with three partners they could take $500 each.

What if I am a new business and cannot compare with a compatible time last year e.g. March or April?

Answer: The ATO will be making a legislative instrument to deal with new businesses in operation less than a year, and some other circumstances such as businesses who had a temporary fall in turnover in 2019 due to drought. This will be available soon.

Do I have to satisfy the turnover test every month going forward?

Answer: Each month, you must reconfirm the eligibility of your business and your reported eligible employees to the ATO.

You must also provide information as to your current and projected GST turnover. This is not a retest of your eligibility, but rather an indication of how your business is progressing under the JobKeeper Payment scheme.  (This is directly from ATO website)

I have a rental property and my rent drops by more than 30%, can I claim the JobKeeper payment?

Answer: In short it is very unlikely the ATO would consider you to be running a business therefore you would not meet the criteria to claim Jobkeeper. 

If you wish to discuss your specific needs please contact Balanix Solutions on 07 3264 4783

Short Term Cut Method for Claiming Home Office Running Costs

The Australian Taxation Office (ATO) has announced a temporary simplified method for individual taxpayers to claim deductions for additional expenses incurred as a consequent of working from home due the Coronavirus.

Based on the announcement, the ATO will allow individuals to claim a deduction for all running expenses incurred during the period 1 March 2020 to 30 June 2020, based on a rate of 80 cents for each hour an individual carries out genuine work duties from home.  This is an alternative method to claiming home running expenses under existing arrangements, which generally require an analysis of specific running expenses incurred and more onerous record-keeping.

So, what will it cover?

  • Electricity expenses associated with heating, cooling and lighting the area at home which is being used for work.
  •  Cleaning costs for a dedicated work area.
  •  Phone and internet expenses.
  •  Computer consumables (e.g., printer paper and ink) and stationery.
  • Depreciation of home office furniture and furnishings (e.g., an office desk and a chair).
  •  Depreciation of home office equipment (e.g., a computer and a printer).

Therefore, if you claim the 80 cents for each hour you cannot claim any separate claims for these costs.

Under this announcement, there is no requirement to have separate or dedicated area set aside for working.  Also, multiple people could claim where a number of people share the same house.

So, each individual will only need to keep a diary of the number of hours they have worked from home as a result of the Coronvisa during the period 1 March to 30 June 2020.

This new announced method may not give the best result for everyone therefore please contact  Balanix Solutions on 07 3264 4783 for the appropriate professional advice for your individual circumstances.

Please Note: The comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

Working from Home – What Tax Deductions can I Claim

With more and more people isolating and working from home during the current crisis (some experiencing working from home for the first time), a question being asked is “what can I claim as a tax deduction if I have to work from home?”

If you’re an employee and temporarily work from home due to recent events, such as COVID-19 (coronavirus), bush fire and drought, you may be able to claim a deduction for expenses you incur relating to that work.

You may be able to claim a deduction for additional running expenses you incur such as heating, cooling and lighting. You can also claim the work-related proportion of the decline in value of office equipment.

Employees are generally not able to claim occupancy expenses. Occupancy expenses include:

  • rent
  • mortgage interest
  • property insurance
  • land taxes
  • rates.

However, you can only claim the work-related proportion of your occupancy expenses in two very limited circumstances which are a bit complex to explain here so we suggest you contact Balanix Solutions on 07 3264 4783 for more detail.

In most cases, there are no capital gains tax (CGT) implications for your home if you work from home as an employee and claim working from home expenses

It is strongly recommended that you always keep receipts for expenditure and how you calculated the claim you have made.

Click Here for the Australian Taxation Office information relating to Employees Working from Home.

Please contact Balanix Solutions on 07 3264 4783 if you require assistance in this matter.

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.