2020 has been difficult, but your tax return doesn’t need to be. “There is always a range of myths that need busting around Tax Time and the changed circumstances this year have seen some new additions to the list,” Assistant Commissioner Karen Foat says.
Check out this list of 2020’s top tax myths to avoid!
1, Bank details need to be updated
According to the ATO, last year many people in their rush to lodge early forgot to update bank details and delayed their refund. While the ATO receives information from banks, this doesn’t extend to updating details for the bank account you nominate to have your refund deposited into.
2, You can’t “double dip”
The ATO is concerned that some taxpayers may “double dip” by claiming their working from home expenses using the all-inclusive shortcut method while claiming for specific items such as laptops or desks. If you are claiming under the shortcut method, you cannot claim a separate additional deduction for any expenses you incur as a result of working from home.
3, You can’t claim home to work travel
According to the ATO, if you are working from home as a result of COVID-19, but sometimes need to travel to your regular office, you cannot claim the cost of travel from home to work as these are still private expenses. Although you are working from home, your home is still a private residence – it is not a ‘place of business’. Generally, you can only claim the cost of traveling from home to work if you are required by your employer to transport bulky tools or equipment and there is not a safe place to store these at your workplace.
4, You can’t claim $300 if you had no expenses
Ms. Foat stated that the ATO often sees people claiming a deduction although they did not purchase anything, and this is often because they thought everyone is entitled to claim $300. While people don’t need receipts for claims of expenses up to $300, they must have spent the money and can show the ATO how they worked out their claim.
5, Work-related expenses must be work-related!
The ATO finds taxpayers trying to claim personal expenses under the guise of work-related expenses, but the truth is, you can only claim for expenses that are directly related to earning your income.
For example, if you are working in jobs that require physical contact or close proximity to customers and you had to buy your hand sanitizer, gloves, or masks to use at work, you can claim these items. On the other hand, if you are not in jobs that aren’t close to the public or if you have purchased these items for their general use, you cannot claim these items.
Furthermore, you cannot claim for the costs of setting your children up for homeschooling, as the ATO views these costs aa being private expenses.
6, Lodging early not necessarily means an early refund
For this year, the COVID-19 element is likely to mean third-party information from employers, banks, private health insurers (and this year JobKeeper for employees and JobSeeker amounts) may not be fully available until later in July or mid-August. For most people, this information is ready by the end of July.
Therefore, you should lodge when the ATO has automatically included this information for you. Lodging earlier can leave out some important information, which can slow your return down as a result.
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