The end of the Australian 2020/2021 financial year is getting close. Doing your personal tax return is often considered a long and tedious process for most people. But it is not that much of an issue if you are aware of the fundamentals involved. Once you know about the working and the basic considerations of this system, it would be very easy for you to go through this process.
In this article, we are going to talk about some vital things that you should check before filing your 2021 tax return. Let us have a look at it without further delay.
Important things to check before you file your tax return
Before discussing other things, we would recommend you to know the system first. There are some things to care about before you make the final move. Several new rules and regulations arrive each year before the return filing starts.
So, you should wait until all essential information is available. You should be looking for such essential information for your 2021 tax return, at least up to the end of July. Though this time may go up to the middle of August.
Make sure that you have all the necessary documents the Australian Taxation Office (ATO) will require, before you reach the tax agent. Some of the important documents include an income statement from the employer and that should be tax-ready, information about your private health insurance if you have any, etc. There is a nice application from ATO.
Use the tool called myDeductions to upload all the required documents in order to pre-fill your tax return. Now that you are aware of the fundamentals, take a look at the things you should check before you file your 2021 tax return.
Ensure all your income has been declared
This is the first thing that you should check before you file your tax return. The income is declared in the income statement that you get from your employer. This statement becomes tax-ready after your employer finalises it. The employers having less than 20 employees have to do it before 31 July. On the other hand, those who have more than 20 employees finalise this statement before 14 July.
In case you get JobKeeper payments, these are also considered as your regular salary by the ATO. But you don’t have to do anything in this matter. Whether you are receiving JobKeeper or JobSeeker payments, these incomes will be automatically considered by the ATO.
The ATO has different rules for different forms of payment. In case you were unable to work but got payment from the employers, there are different rules that govern such incomes.
Apart from these, you also have to include information about accident insurance, and other such payments. When you are declaring your income, you have to include all the details about your cash, as well as, online transactions.
The ATO now receives data from several websites like Uber, eBay, etc. make sure that your claims match with that data. If you have rented your property/possession, or use online media like Facebook to sell your products, you may have deductions in your expenses here.
Claim all of your tax deductions
This is another important thing to consider before you file a 2021 tax return. It has become particularly more important in this time of pandemic when the government has announced several relief funds, which will help you save money. The way people get work-related expenses has changed significantly from last year.
As most people are working from home, most people will not be eligible for getting travel expenses. Along with this, ATO also expects a significant drop in the laundry expenses of common people. As most people are working under different patterns, they have to give information about this new work pattern for more convenience.
Deductions are available in your 2021 tax return for motor vehicle expenses as well. If you use a motor vehicle for work, there are two ways for claiming your deductions. In one case, you will be able to get deductions on cents per km basis when the total travels lie under 5000.
In this case, there is no need for written evidence but your tax agent will ask you about this situation. While in the other case when your travel exceeds 5,000km, you can claim all the travel expenses by using the logbook method.
In your 2021 tax return, you can also claim self-education expenses if you are studying something that directly relates to improving your skills. You can get this deduction even if you are studying something that may increase your income. These expenses include textbooks, student union fees, stationary expenses, course fees, etc.
Working from home deductions
There is a deduction for those who have permanently used their homes for work. If a part of your home has turned into the office, you are also eligible for this deduction. The ATO has a different arrangement for those who have worked from home due to the pandemic.
In this case, the ones who have worked from home can claim this deduction. In this case, the amount of deduction may go up to 80%. Anyone is eligible for this claim if they fulfil two conditions:
- They have worked from home to fulfil the needs of the employer. If someone was engaged in minimal tasks while working from home, they can’t claim the deduction.
- When they had to spend some extra money in order to be able to work from home.
Should you choose the shortcut method to claim the work from home expenses, you will not be able to claim other expenses. You will be able to claim these expenses if you have kept all the important records while you were working from home. They include sheets, diaries, and other essential documents. They should show the duration of time that you spent while working from home.
This article was all about making you aware of the important things that you should check before you file a 2021 tax return.
One of the most important things to do here is to check your income declaration, claim the deductions, and consider the latest changes that have been made as an effect of the pandemic.