Tax Time – 2020 – The ATO Hotspots

June 14, 2020

It is that time again. The ATO now that this year will be very different due to COVID-19 and so many working from home…

ATO assistant commissioner Karen Foat has now urged taxpayers to reduce claims for work-related expenses in the last quarter of the 2019–20 year that would have been impacted by government-mandated restrictions imposed as a result of COVID-19.

“With more people working from home, working reduced hours or unfortunately not working at all, we expect to see claims for laundry expenses or travel expenses decline this year,” Ms Foat said.

“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.

“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.”

Despite millions of Australians being forced to work from home where possible as a result of COVID-19 restrictions, Ms Foat said the ATO will take a dim view of travel claims from home to work.

“Generally, most people cannot claim the cost of travelling to and from work, and working from home as a result of COVID-19 does not change this,” Ms Foat said.

“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.”

In contrast, the ATO expects to see a substantial increase in people claiming deductions for working from home or for protective items required for work.

A new method has been introduced by the Tax Office for taxpayers to calculate home office expenses at a rate of 80 cents per hour for the period between 1 March and 30 June 2020.

The new method is in addition to the existing fixed-rate method and actual cost method, with taxpayers able to choose the appropriate method for their circumstances.

Ms Foat said agents and taxpayers looking to claim working-from-home expenses using the shortcut method should include the amount at the “other work-related expenses” question in their tax return and include “COVID hourly rate” as the description.

Claims before 1 March 2020 must be under the two standard approaches.

This article has been taken from the Accountantsdaily – Tax and Compliance website – Author Jotham Lian