Practice Update - September 2020
How COVID-19 may affect your return?
The ATO has released a range of new recording methods to make tax time easier for businesses and individuals under COVID-19 circumstances.
Working from home
The ATO has introduced a new "shortcut method", which applies from 1 March 2020 to 30 September 2020. Under this new method, employees working from home as a result of COVID-19 can claim expenses incurred at a rate of 80 cents for each hour worked from home.
Employees must keep a record of the hours they worked from home as evidence to support their claim. Deductible running expenses include:
- Utilities such as heating, cooling and lighting.
- Cleaning costs for your work area.
- Mobile or landline phone expenses for work calls.
- Internet connection.
- Computer consumables and stationery.
- Repair costs for home office equipment and furniture.
- Depreciation of home office equipment, computers, furniture and fittings.
Small capital items such as a computer (purchased for the purpose of working from home) can also be claimed if they cost under $300. If the cost exceeds $300, the decline in value (ie. depreciation) can be deducted.
COVID-19 protective equipment
Occupations that require public interactions may be able to claim personal protective equipment (PPE), including face masks, sanitiser, anti-bacterial spray, and gloves. This would typically apply to industries such as healthcare, retail and hospitality. Many workplaces now have this PPE available for employees, however employees who pay for their own COVID-19 PPE without reimbursement will be able to make a claim.
Sole traders receiving JobKeeper payments on behalf of their business are required to include these payments as assessable business income in their individual tax return.
Businesses that are a partnership, trust or company receiving JobKeeper do not have to include it as assessable income in the business owner's individual tax return. However, these businesses will need to report JobKeeper payments as business income in their partnership, trust, or company tax return.
Employees under the scheme will have their JobKeeper payments automatically filled out in their tax return, and will not have to do anything differently. The payments will be included as salary and wages, or an allowance that appears on the regular income statement or payment summary provided by employers.
Government cash flow support
The support received by employers as part of the Government's COVID-19 boosting cash flow for employers scheme is tax-free as it is considered non-assessable non-exempt (NANE) income. Cash flow boost amounts should be included in tax returns in the same manner as other NANE income. Employers under the scheme will still be entitled to a deduction for the PAYG withholding paid.
Accelerated depreciation deductions
Businesses may also be able to accelerate their depreciation deductions on the purchase of certain new depreciable assets if they have an aggregated turnover of less than $500 million. This applies to eligible assets that were held and first used, or installed and ready to use from 12 March 2020 to 30 June 2021.