Tax time: Toowoomba accountant shares how to make most out of 2021 tax return

We all want to reduce our tax bill, and while not all deductions are open to everyone there may be some that you’re unaware of.

Tax time is upon us once again and it’s no doubt been another difficult year following the COVID-19 pandemic.

We all want to reduce our tax bill as much as possible, and while not all deductions are open to everyone there may be some that you’re unaware of.

While life is returning to some sort of normalcy, many of us were still working from home at the start of last financial year and it’s worth knowing what you can claim.

Toowoomba’s Lawson Accounting accountant Daniel Foelz said the ATO had extended the shortcut method for home office deductions to simplify the calculations for tax payers.

Daniel Foelz and Carmen Lawson of Lawson Accounting. Picture: Kevin Farmer

“So the same as last year, individuals can claim 80c per hour for working at home and this covers expenses incurred for phone, internet, and decline in value of office furniture and equipment and electricity/gas,” he said.

“However with this method it is important to note that individuals cannot claim any other expense for working from home and taxpayers will be required to keep a record of the number of hours worked from home – this could be timesheets, diaries or rosters.”

Mr Foelz said the two methods people usually claim a motor vehicle remain the same however the set rate method which most individuals use to calculate their claims had changed.

He said the ATO will be monitoring motor vehicle claims closely due to lockdowns and travel restrictions in place throughout the year.

“The rate has increased from 0.68c per km to 0.72c per km. So where a taxpayer with proof of travel and a logbook claims the maximum 5000km this deduction is now worth $3600 as opposed to $3400,” he said.

There is also some good news for individual taxpayers with two offsets which may help boost refunds this year.

The first is the Low Income Tax Offset which has increased from $445 to $700, and the offset gradually decreases for every $1 above $37,500.

The second is the Middle Income Tax Offset which has been extended from last year and the full amount a person could be eligible for is $1080, but this can depend on an individual’s own circumstances such as how much tax has been paid or their taxable income.

Daniel Foelz and Carmen Lawson of Lawson Accounting. Picture: Kevin Farmer

“These offsets will reduce the amount of tax payable by an individual and are automatically calculated and included in the tax refund estimates,” Mr Foelz said.

Mr Foelz said he acknowledged tax time could be confusing for many people and it was important to enlist the help of an accountant to get the most out of their return.

He said it was a way to save time, stress and money.

“Accountants specialise in tax and are constantly required to maintain an understanding of it. This means that accountants are generally aware of genuine deductions that are potentially ‘out of the norm’ or ones that clients may not be aware of,” he said.

“Having this expertise and assistance in lodging returns gives individuals peace of mind that their return has been lodged correctly and in accordance with ATO requirements.

“Accountants also have access to ATO lodgement extension so where an individual lodging themselves only has until October 31 each year, if they currently use an accountant they have until May 15 the following year to lodge.”

For more information phone Lawson Accounting on 07 4613 1833.

OTHER CHANGES TO NOTE

1. The Income Tax Thresholds have changed

The upper limit of the threshold in the 19% bracket has raised from $37,000 to $45,000 and the upper limit for the 32.5% rate from $90,000 to $120,000.

This means that individuals that fall into this change will effectively have a reduction in tax and an increase in take home pay. Taxpayers may expect a slightly larger refund then usual as they may have been paying too much tax between July 1 2020 and when the changes were passed in October 6 2020.

2. The ATO will access the records of up to 1 million Australians in a crackdown on cryptocurrency trading

The ATO will be able to access information from cryptocurrency trading platforms such as CoinSpot and will also work with data from banks and financial institutions to identify individuals who may have purchased, sold, transferred or swapped any digital coins. The disposal including selling or swapping of any coin is treated as a Capital Gains event for tax purposes and individuals will need to report this in their returns, even if they made a loss on the transaction.

3. Employers have until the July 14 each year to finalise employee income statements and submit these to the ATO

Though taxpayers may be keen to lodge their tax returns early we would suggest that the best thing to do is to wait until after the July 14 so that you can be sure that the amounts being lodged are accurate and correct. Even if lodgements are processed before the 14th the ATO generally do not begin processing these and issuing refunds until after this date.