This is an article about tax, but I can promise you it also include a discussion about sex toys. Really! Not even in a throwaway context, either: this piece really does address the ins and outs of adult stimulation, through the medium of important financial information.
You’ll have to work for it, though. You might even learn something on the way.
We spoke to Mark Chapman, the director of tax communications at H&R Block, about what you should know about tax time – and how the coronavirus pandemic may have impacted your tax return.
Have a squiz:
If I’ve been working from home, what should I try to claim?
The coronavirus pandemic has seen scores of Australians ditch the office to work from home. Thankfully, many of the supplies you may have snagged for your temporary home office set-up are tax deductible.
“If you purchased any office equipment, like chairs or desks, or IT equipment, like computers, laptops, printers, that kind of thing, they’re all potentially claimable,” Chapman said.
The same goes for utilities you may be using for work purposes. This includes electricity, gas, water, internet bills, and phone plans related to your job.
There are three ways of claiming those expenses, each with a stack of pros and cons for you to consider.
Tax forms are just one long roast of my personal and financial situation
Form: “Are you married”
Me: “No”
Form: “Kids”
Me: “No”
Form: “Do you have property”
Me: “No”
Form: “I mean…do you have friends at least?”— Nikhil Krishnan (@nikillinit) March 9, 2019
Actual Cost Method
The first method involves working out exactly what you’ve spent on equipment, and what percentage of your utility bills were sucked up by your dedicated home office area.
“It is quite complicated,” Chapman said. “Nevertheless, that does tend to give you the biggest deduction.”
First up: You can claim the full cost of any work-related purchase under $300 as a deduction.
That said, you can’t claim the full cost of items you partially use outside of work hours; if you copped a sweet new office chair, but use it during your downtime while bingeing Vine compilations on YouTube, you’re not entitled to a full rebate. Sorry.
Claiming work-related expenses which cost more than $300 is a little more complicated, as you’ll need to figure out the decrease in that item’s value over time. If you want to avoid an accountant and sort it out yourself, it’s a good idea to use the myDeductions feature of the official ATO app. Read more about it here.
Then there are your utility bills.
To work those numbers out, you’ll need to record exactly how many hours you’ve worked from home, or create a diary showing how long you’d usually work from home over a four-week period.
Then, suss how much you spend on electricity, and try to establish how much power your appliances, lights, and heating/cooling systems use per hour.
Using those figures, you’ll be able to determine how much it costs to run all of your gear during work hours.
It’s a similar story for your phone and internet bills. Do phone calls and emails to clients, customers, and colleagues account for 30% of your mobile bill? Well, you can try to claim 30% of your bill.
It’s a bit of legwork if you’re looking to file on your own – but if you bring your receipts and hourly estimations to an accountant, they should be able to sort you out.
Fixed Rate Method
The Fixed Rate Method does away with some of those calculations, allowing you to claim a flat 52c for each hour you’ve worked from home over the past financial year. This covers ongoing utility usage, along with depreciation for home office furniture.
The Fixed Rate Method is “much easier when you don’t actually have a dedicated office space,” Chapman said.
“So if you’re working off the sofa, or you’re working from the kitchen table, it is much easier to use that as the basis of your claim, rather than trying to work out the specific area that relates to your kitchen table, because there’s going to be so many other uses of that space.”
You’ll still need to work out your phone and internet usage, tally any stationery use, and suss how much your new tech items have depreciated. Again, if you feel like filing a return yourself, it might be a good idea to have a peek at the myDeductions tool.
Shortcut Method
Then there’s the Shortcut Method, which was introduced specifically to make tax claims during the coronavirus pandemic less of a headache.
For the period of March 1 to June 30, you can claim a flat 80c for each hour worked from home.
Unlike the Fixed Rate method, this one also covers your internet and phone bills, plus depreciation on all your goodies. If you hate looking through itemised lists to suss how many minutes you were on the blower for work-related calls, this may be the best option for you.
The Shortcut Method is the simplest of the bunch. However, if you use the Shortcut Method, you won’t be able to claim any other WFH expenses.
“You don’t need to work out each individual component separately,” Chapman said.
“Basically, everything that you can potentially claim is all wrapped up within the 80 cent rate.”
It’s also possible to mix and match between the Fixed Rate and Shortcut methods. If you think you’ll get a bigger return by claiming your phone and internet bills until March 1 under the Fixed Rate Method, before swapping to the Shortcut Method for the period leading to June 30, feel free! Run the numbers to see what works best for you.
It’s worth noting that if you’re actually working more hours from home than you would in the office, you can claim them using the methods listed above. Remember to keep a diary of your logged hours, and don’t try to pretend you’re working 28 hours a day, genius.
Again, if all that seems like a headache, bring your receipts and estimates to an accountant.
every year i debate whether it would be easier to file my taxes or to abandon my life and live off the grid in the wilderness, foraging for berries and collecting rainwater
— jaik olson (@puppyteeth) March 6, 2019
Exceptions
This is tax we’re talking about, so there are obviously a stack of exceptions. All of the usual considerations apply here: don’t try to claim a computer your company reimbursed you for, for instance.
Similarly, make sure to only claim things you are using. Let’s say you’ve set up a home office corner in a shared lounge room. It’s all well and good to claim your power bill for heating over the past few months, but if your housemate was also sprawled on the couch playing Call Of Duty during your work hours, you weren’t just heating your home office.
Little office niceties, like coffee, tea, biscuits, and yes, toilet paper, are also exempt from deductions. Sorry.
How will JobKeeper impact my tax return?
JobKeeper, the $1500-a-fortnight payment granted to employees whose businesses have been hammered by the pandemic, is considered taxable income.
This means your employer should have treated those payments like regular wages, deducting tax along the way.
“At the end of the day, when you come to do your tax return, your employer passes all that information on to the ATO and it’s simply automatically filled into the tax return, either by the ATO or by your tax agent,” Chapman said.
“So there isn’t really much for the employee to actually do there.”
So far, so simple.
But if you’re one of the many Australians whose wages have technically increased due to the payment, you need to check if you’ve been bumped into a new tax bracket – or if you’ve entered tax-paying territory for the first time.
“You can earn up to $18,200 tax free, and if receiving JobKeeper has actually boosted your annual income over the $18,200 threshold, you could actually find yourself paying tax for the first time unexpectedly,” Chapman said.
Punters working more than one job should keep an eye out, too. If receiving JobKeeper at your first job pushes you into a new tax bracket, but your second employer doesn’t deduct tax at that new rate, you could be in for a surprise.
“If [the second employer] carried on deducting tax at a lower rate, that could flow through into a higher tax bill when they come to do their tax return,” Chapman said.
The opposite is true, too. JobKeeper recipients who lost a big chunk of their income in recent months, but were still taxed as if they were earning higher wages, may find themselves with a significant kickback.
“In that kind of situation, you might find you actually get a bigger refund, because the amount of tax that was taken out pre-COVID-19 was more than then was appropriate, given that you’ve now lost your job or had your hours substantially reduced,” Chapman said.
And JobSeeker?
Like JobKeeper, it’s taxable income, with Centrelink informing the ATO of what’s what.
“Centrelink, much like your employer does with JobKeeper, normally withholds tax from JobSeeker payments and just pays you the net amount,” Chapman said.
“They then notify the ATO at the end of the year of any amounts that they paid to you.
“So again, there shouldn’t be much for people to do in terms of actually reporting that. It will be automatically downloaded by Centrelink to the ATO.”
Heads up, though: it can take a few weeks for information regarding those Centrelink payments to flow through to the ATO. If you’re keen to file your tax return in the first week of July, make sure all of the relevant info is there! Otherwise, consider waiting a couple of weeks and trying again.
I withdrew cash from my superannuation fund under the Government’s early access scheme. Will that come back to bite me at tax time?
Your super withdrawals are tax-free, so it’s only going to be an issue if you rorted the system.
The scheme requires you to prove you’re unemployed, eligible for an income support payment, experiencing a 20 per cent or greater cut to your regular hours, or were recently made redundant.
If you somehow withdrew from your super fund without meeting one or more of those requirements, well…
“If somebody has pushed the envelope and applied for those super withdrawals, but maybe they weren’t entitled, that will probably come out once they’ve lodged their tax return,” Chapman said.
“I don’t think many people have done that. But that’s pretty obviously a stupid thing to do.”
Outside of the usual expenses you can claim as a deduction – laundering my uniform, work-related travel costs, that sort of deal – what else can I claim?
You may be able to claim personal protection equipment, like masks, gloves, and hand sanitiser, if you’ve worked a public-facing role during the coronavirus crisis.
“It kind of depends what you actually do for a living,” Chapman said.
“So if you’re in an occupation that requires you to sort of breach social distancing rules – I’m thinking of hairdressers, beauty salon workers, people in the medical profession, receptionists, cleaners, massage therapists, support staff – anybody who’s getting close to members of the general public and can’t stick to that 1.5 metre social distancing rule.
“Anybody who’s doing that, as part of their work, would be able to claim personal protection equipment.”
That may apply to food service staff and supermarket workers, Chapman said. However, many of those workplaces now have personal protective equipment (PPE) on deck for employees.
“If you’re in a smaller retail environment where your employer can’t afford to put in place screens, and you have to pay for your own hand sanitiser, in that kind of situation, yes, you would be able to claim your PPE,” he added.
It feels like I’m forgetting something…
I was gonna do my taxes today but then I spent 20 minutes trying to get pictures of my cat eating a banana peel so here ya go sorry IRS pic.twitter.com/1Kx5weO6hJ
— Anna Rumer (@AnnaRumer) March 7, 2019
Yeah, you’ve forgotten about all of the charitable donations you’ve made over the past year.
Whether it was cash for a bushfire relief fundraiser, an annual event like the World’s Greatest Shave, or a more recent donation to a group fighting for racial justice, you may be able to claim a tax deduction.
“There are just a couple of things to be aware of,” Chapman said.
“First of all, you’ve got to be making your donation to what’s called a deductible gift recipient, which is basically a charitable organisation that is registered with the Government.”
To check, you can look up the organisation’s name on the Australian Charities and Not-for-profits Commission website.
It’s worth noting that personal crowdfunding campaigns may not fall under this category, so watch out for that one.
Donations to those organisations over $2 are tax deductible. Happy days.
The second thing to do, of course, is to hold on to your receipt.
Okay, wonderful. Now, please tell me about this sex toy thing.
Fine! God.
As you are probably aware from reading this piece, you can claim a whole lot of work expenses as tax deductions.
This includes music lessons if you’re a musician, stage makeup if you’re an actor, and, well.
Take it away, Mark:
“Adult entertainers can claim sex toys, which is an extreme example, but it illustrates the point I’m making,” Chapman said.
“Some people have absolutely no chance of claiming those, but if it’s a big part of your job you can claim it.
“Most of us who don’t have that kind of exotic occupation, the kind of deductions that we can claim are probably a bit more mundane.”
There you go. Have fun and stay safe – and if you absolutely must fuck something, make sure it’s not your tax return.
