Wondering how you can get the most out of your 2022 tax refund? Did you know that an estimated $300 million in unclaimed tax is missed out on by Australians each year? Here at Online Tax Australia we are determined to help every day Aussies to make the most of their tax returns and make sure they receive every deduction they are entitled to.
Navigating your tax claims can be confusing at the best of times and understanding exactly what type of claims you are able to make, and how much you might get in return, can be a challenge. Here are some questions you should ask yourself when preparing your individual tax return for 2022.
1/ Did You Work From Home This Financial Year?
In the post COVID-19 era, more of us are working from home than ever before. If you have worked from home, you may be able to claim a tax deduction for some expenses in your 2022 tax return. Bear in mind you need to keep appropriate records to substantiate any claims you make.
There are three different ways for employees to claim home office expenses in the 2022 tax return.
This is by far the simplest method. You basically claim an 80 cent deduction for every hour worked from home. This is an all inclusive rate which covers depreciation on furniture (desk, chair, etc) and equipment (printers, computers, etc), power, heating, stationary, internet, mobile phone, and so on. If you choose this method, you cannot claim any other home office related expenses.
For example, if you worked from home full time for 20 weeks and then one day per week for the other 28 weeks (accounting for holidays), the claim would be as follow:
20 weeks x 40 hrs = 800 hrs
28 weeks x 8 hrs = 225 hrs
Total hrs 1,024 x 80 cents = $819 deduction
2. FIXED RATE & ACTUAL EXPENSES
With this method, you need to have a dedicated area at home to work from which cannot practically be used for other purposes. So do not use this method if you work on the kitchen table or at a desk in the main bedroom – it has to be something like a separate room or a home office.
Under this method, you claim 52 cents for every hour you work from home but can also claim the work related portions of other home office expenses incurred like stationery, printer toner, depreciation of equipment (computers, printers but not furniture like desk, chair, wall units, etc), internet usage, mobile phone, and so on. As household internet is mostly for private purposes (Pay TV, general streaming, family use) claims are usually limited to 10% (or less) of the monthly cost.
3. ACTUAL COST
This is similar to method two, but instead of using 52 cents per hour to cover light, heat and power, you calculate and claim the actual work related percentage of these bills, along with other home office expense incurred (like stationery).
Occupancy include mortgage interest, rent, rates, land tax and so on. In some cases, occupancy expenses can be claim as part of the fixed rate and actual methods. However, generally employees cannot claim these because:
- You need to show it is necessary for you to work from home as you have no alternative place to work. For example, your employer requires you to work in Melbourne but has permanently closed all offices in Melbourne and surrounding areas. It is not sufficient that you choose to live in a different state to your employer and work remotely.
- You also need to have an area of your home which is used (almost) exclusively for work purposes.
Occupancy expenses are generally apportioned on a floor area basis.
It is important to note that if you do claim interest, rates, and so on, there will probably be capital gains tax implications when you sell the property.
1/ Superannuation Contributions
When it comes to personal superannuation, taxpayers can make additional contributions over and above your employer’s direct contributions and salary sacrifice contributions. However, for your super contributions to be deductible, the following must be satisfied:
- You must have paid the contribution to your super fund prior to 30 June.
- You must notify the superannuation fund and advise them of your intention to claim a deduction. This is done by completing and lodging a ‘Notice of Intent to Claim’ form with your super fund.
- You must have received a confirmation from your super fund confirming the amount received.
It is advisable to seek financial advice prior to making additional superannuation contributions to ensure you do not breach the contribution threshold in any one year.
3/ Internet and Phone Usage
When it comes to internet and mobile phone claims, the ATO is aware that individuals also use their devices for personal reasons, such as streaming movies and so on. The ATO is also aware that a major portion of most people’s mobile phone plans relates to data costs, rather than phone call costs. So, if you use your phone primarily for calls and not data then your claim needs to reflect that situation.
It is recommended that internet claims be between 10% to 20% of the monthly cost, which then caters for family time to stream information, entertainment and so on.
Phone claims can be a higher percentage if the phone is used for work including data access.
4/ Have You Made Any Charitable Donations?
If you’ve made charitable donations throughout the last financial year you are able to claim them back on your tax return. Donations must be of at least $2 in value and the organisation must be registered as a deductible gift recipient (DGR). Credit card statements, web receipts and payment summaries can all be used as proof of a donation. The donation must be considered a true gift and you may have to prove that you did not receive anything in return.
5/ Did You Undertake Work Related Self-Education?
You can claim back investments made in self-education when the training is related to your work. In order to make this claim, the education undertaken must have a “sufficient connection” to your current employment and income according to the ATO.
The ATO provides some guidelines that can improve the chances of self-education being considered a work related expense:
- The study in question must be related to the specific skills utilised in your current employment
- Increase the likelihood of a pay rise from your employment
- Your current employer has encouraged you to undertake the course and/or funded all or part of the course
If your self-education falls under the above categories it may be eligible for a deduction. All costs associated with the course, such as the course fees and additional expenses such as a textbooks, stationery and some travel. Please note HECS/HELP charges are not deductible as fees.