The practical compliance guideline that was issued relatively recently, PCG 2020/3, covers working from home and incurring additional running expenses in relation to their income-producing activities during the COVID-19 pandemic.
As the COVID-19 pandemic continues to affect the community and there will be an impact on some taxpayers’ working arrangements after 30 June 2020, the ATO has now announced that the date of effect of this guideline has been extended.
The PCG now applies from 1 March 2020 to 30 September 2020 and allows taxpayers still working from home to continue using the simplified method referred to as the “shortcut method” to claim their additional running expenses.
The ATO states that there is also the option to extend the PCG application further, depending on circumstances.
Additional running expenses include lighting, heating, cooling and cleaning costs, electricity for electronic items used for work, the decline in value and repair of home office items such as furniture and furnishings in the area used for work, phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device.
Clients should still be reminded that occupancy expenses relating to a home such as rent, mortgage interest, property insurance and land taxes will not become deductible only because they are required to work from home temporarily as a consequence of COVID-19.
Clients who wish to rely on the shortcut rate to calculate their additional running expenses will need to keep a record of the hours they have worked at home. This could be in the form of timesheets, rosters, a diary or similar document that sets out the dates and hours worked. As with claims for the 2019-20 income year, a notation stating “COVID-hourly rate” will need to be placed next to their deduction for home office expenses in the eventual 2020-21 return.
Criminals take any opportunity to steal valuable information from your business – such as your business, staff and client records. Anyone can fall victim and they target everyone and take advantage of situations which can make you vulnerable, including this year’s natural disasters and COVID-19.
However, a few simple steps can save you and your business from being the victim of identity crime:
You can protect your business and employees by:
As a taxpayer you can play a big part in protecting your records, client information and your employee information and making sure it is safe online. We encourage you to remain vigilant, take precautions, address security, and uphold your client and business privacy by assessing your online practices at least quarterly.
You can use ATO’s online security self-assessment questionnaire to:
The questionnaire is voluntary and anonymous – ATO don’t record any of your personal information.
If you’ve paid a tradie or other contractor for building and construction services in the last year, you might need to lodge a Taxable Payments Annual Report (TPAR) by 28 August, if:
Over 70 occupations and work activities meet our definition of ‘building and construction’.
If you’re unsure whether you need to lodge a TPAR, check our list to see what’s covered.
If you claim deductions for contractor expenses in your tax return, it’s likely you’ll need to report.
The ATO has a free webinar available that will help you to:
Remember, tax agents and BAS agents can help you lodge a TPAR on your behalf.
Find out more:
Reporting through Single Touch Payroll (STP) requires changes to your end-of-financial-year (EOFY) processes.
You’ll no longer need to provide payment summaries to your employees or lodge a payment summary annual report for information you’ve already reported and finalised through STP.
Advise your employees you won’t be giving them a payment summary because they will now get their new income statement in their ATO online account via myGov or through their tax professional.
Encourage your employees to check their personal details with you and in ATO online before tax time. Out-of-date or incorrect details may prevent their information from appearing in their ATO online account.
You must make a finalisation declaration for each employee after your last payment for the financial year. For the 2019–20 financial year the finalisation declaration deadline is:
The sooner you finalise, the sooner the income statement will display as ‘tax ready’ in your employees’ ATO online accounts and be ready to use in their tax returns.
If you have what we call ‘closely held (related) payees’, you may have a later due date for those payees.
Good record keeping helps you keep track of
It also helps provide a snapshot of your current situation to help with your business decisions and planning, which is why it’s important to do it properly.
Consider your record keeping practices, do you:
Good record keeping practices will make it easier for you, and your registered agent if you use one, when it’s time to lodge.
If you’re having difficulty with your cash flow, you can prepare a cash flow projection to help you plan and manage. You can also talk to a registered tax professional who can work through our cash flow coaching kit with you.
Find out about: