Australians are being urged not to forget to claim COVID-19 pandemic-related expenses on tax returns during the current end of financial year period.
And taxpayers should be aware they can also claim unusual items, even sex toys and pet dogs, under certain circumstances.
Mark Chapman, director of tax communications at H&R Block, said items related to working from home have been among the most overlooked deductions since the pandemic began.
Moreover, people who do claim working from home expenses shouldn’t do so incorrectly – that is, they use what’s known as the shortcut method which enables them to claim 80 cents for every hour they work from home.
That covers expenses such as phone, internet and electricity.
Chapman advised they could get a “much larger deduction” if they use the fixed-rate method, which is 52 cents an hour but enables the taxpayer to separately claim expenses.
“You can very often get a much large deduction using the 52c per hour fixed rate, which enables you to claim your mobile phone costs, your internet, depreciation on your computer,” he told 7NEWS.com.au.
“Rushing in and using the 80c rate – which covers all those things, but you can’t claim anything else – often produces a much lower deduction.”
Chapman also said workers “in a customer facing setting, where you can’t socially distance” can claim items such as “face masks, hand sanitisers and soap”.
He said a trio of circumstances are needed to claim an item – you’ve spent money it, it relates to your job and you can substantiate it.
As an example, he said a sex worker can claim sex toys as a deduction.
“That is clearly related to the job and therefore it’s claimable,” he said.
“We had someone coming into their office claiming a clown costume because they’re a professional clown.
“It’s work related clothing, so they can claim the clown costume plus the red nose.
“You can claim for dogs if you require them for security, or a farm work situation. You can claim provided the dog is appropriate for the job.
“There are unusual tax deductions, that not everyone can claim.”
He said people who are unsure of what they’re entitled to claim should talk to a tax professional.
How does the $1080 payment work?
Low income earners and small business will be the main beneficiaries of tax changes that came into operation July 1.
It will see more than 10 million Australians receive a $1080 refund payment after they file their tax return in 2021.
Parliament passed the the Low and Middle Income Tax Offset (LMITO), meaning that the cash splash could hit Aussie hip pockets in July.
Australian residents who earn under $126,000 annually are eligible to receive the handout.
ATO tax return focus areas
The ATO has laid bare the targets in its sights for people submitting their 2021 tax returns.
A spokesperson told 7NEWS.com.au it will be cracking down on:
- work-related expenses (including double-dipping when claiming deductions and work-related expenses that AREN’T related to work)
- rental properties
- capital gains from cryptocurrency, property and shares
Tax brackets 2021
Individual income tax rates show the amount of tax payable in every dollar for each income tax bracket, depending on your circumstances.
There are different tax brackets for residents, foreign residents, children and working holiday makers.
The below information has been supplied by the ATO.
When can I do my tax return in Australia in 2021?
“We start full processing of 2020–21 tax returns on 7 July 2021. We expect to start paying refunds from 16 July 2021,” says the ATO website.
“We aim to finalise the majority of electronically lodged current year tax returns within 12 business days of receipt.”