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ATO announces big changes to tax refunds and deductions

The end of the financial year is here and the Australian Tax Office has announced a variety of changes that impact your tax return.

The ATO has realised that the coronavirus pandemic has changed the lives of many and have pulled together new resources to help Aussies navigate their tax returns.

“We know many of our clients and their agents will have questions about how different types of income and expenses may affect their obligations this year. We’re helping to make sure people know how to get it right,” assistant commissioner Karen Foat said.

“We have published information on our website to help you get it right when lodging this year, including the Tax Time Essentials page which is a one-stop-shop for the things that are a little different this year and how they impact your return.

“If you’ve read through the information on our website and still have a question, search our online forum ATO Community. This forum is available 24 hours a day and we have a great community of expert members who respond to questions.”

The ATO has also outlined the most common ways COVID-19 will impact the tax returns of workers.

Working from home

A temporary shortcut method has been applied to working from home expenses between March 1 and June 30, 2020, which allows people to claim a rate of 80 cents per hour for all of their running expenses.

This saves people calculating costs for specific running expenses like taxpayers usually would under normal circumstances.

This new method covers all deductible expenses and can be used by multiple people working from home in the same house.

“If you use the shortcut method, all you need to do is keep a record of the hours you worked from home as evidence of your claim. But it is all-inclusive, meaning you can’t claim for any other working-from-home expenses,” Ms Foat said.

You are still able to use the other existing methods to calculate working expenses if you prefer.

Protective clothing

Another deduction which is set to see an increase is protective items, such as gloves, face masks or hand sanitiser needed for work.

These items can only be claimed if the taxpayer paid for the item and were not reimbursed.

Industries that were more likely to claim these expenses include retail, hospitality and healthcare.

What you can't claim

Ms Float said that employees couldn't claim the cost of travelling to and from work and that the COVID-19 pandemic would not affect that rule.

“For example, if you are working from home because of COVID-19 but need to go to your regular office one day per week, your home to work travel is still private travel and cannot be claimed,” Ms Foat said.

Ms Float also said that you should try to reduce claims that aren't relevant.

“If you aren’t travelling for work, you can’t claim travel expenses. If you aren’t wearing your work uniform, you can’t claim laundry expenses,” she said.

“It’s still important to meet the three golden rules: You must have spent the money and not have been reimbursed, it must relate directly to earning your income, and you must have a record to prove it.

“What you can claim really depends on your circumstances. While we are trying to make it easier for people to claim what they are entitled to, we are also asking people to take a bit of extra care if their circumstances have changed this year.”

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money, finances, tax, tax time, ATO, australian tax office