It’s no secret that the global COVID-19 pandemic changed many aspects of our lives and now that COVID appears to be here to stay, it’s time to learn what it means for your tax return.
If you’re like the millions of other Australians who’ve had their work arrangements change, it’s important you understand how your tax refund could change as a result.
3 ways COVID can impact your tax return
The following items can be listed on your tax return – and they will often boost your tax refund:
- Working from home expenses
- Work related COVID purchases like RAT tests
- Change of income
- Working from home COVID tax deductions
If you made the switch to a hybrid (or full time work from home) working style due to COVID, then you could be eligible to claim your work from home expenses and boost your refund.
Work from home deductions are the expenses you incur while working from home (e.g lighting, heating, cooling, phone, internet expenses and home office equipment).
From March 2020 there are three methods individuals can use to calculate work from home expenses:
Fixed Rate Method
52c per hour worked at home. Plus, you can separately claim the work-related portion of your phone, internet, computer depreciation and a range of other expenses. This method usually gives you the best deduction claim.
Using the size of your office versus the rest of your property, you claim a percentage of items such as electricity, heating, phone. This is a more complicated method of claiming and is only available if you permanently work from home on an ongoing basis, with no office provided by your employer to work in.
Available only from March 2020 onwards, you can claim 80c per hour. But, and this is important, it includes everything. You can’t claim any other items like phone and internet separately. The ATO is promoting this “80 cents” method, but be careful, this method usually leads to a smaller tax refund.
- Work related COVID purchases
Some of the most common COVID work related purchases that may be tax deductible include:
- Working from home purchases such as Laptop, Furniture, Printers etc.
- Rapid Antigen Tests (RATs) and Personal Protection Equipment.
- Change of Income due to COVID
Loss of income
If your income decreased due to COVID, then you may find yourself with a larger than expected tax refund. Here’s why:
Each week, your employer taxes you a set tax rate. This is calculated based on your expected yearly income. However, if you lost your job, or had your hours reduced, the tax rate from the start of the financial year might have been too high for what your yearly income ends up being.
If you fall into this category any extra tax you paid during the year will be used to bump up your tax refund.
Need more help?
That’s ok, we are here! If you’re unsure how to maximize your claim from COVID, our Accountants are ready to help. Simply reach out to us and let us know how we can help!