If you plan to lodge your tax return yourself, you need to be aware that the deadline for lodging your return is now less than two weeks away.
Spurred on by the government’s low and middle-income tax offset (LMITO) – which is effectively a tax cut of up to $1,500 paid when your tax return is lodged – millions of people have already lodged their 2022 return. But many more are yet to lodge; for some of them, the clock is rapidly counting down.
With millions of dollars of unclaimed refunds on the table, it makes sense to take action now to get your return in as soon as possible in order to get back any tax that you are owed and to take advantage of the LMITO.
The latest date for self-lodgers to get their tax returns into the ATO is 31 October 2022. If you lodge after that date, you run the risk of incurring a late-lodgement penalty.
Taxpayers who use a tax agent can usually lodge well beyond that deadline without penalty. The ATO gives tax agents concessional extended deadlines, which means that they can lodge returns on behalf of clients up to 15 May 2023 without incurring any penalty.
Generally speaking, around 70 per cent of taxpayers use a tax agent, a figure that rises to over 95 per cent for small business owners. If you are entitled (or believe you are entitled) to claim deductions, either for your business or as part of your job, it makes sense to get an expert to prepare your return in order to ensure that you claim all the deductions you are entitled to.
If you think you may not be able to meet the 31 October deadline, you should now consider visiting a tax agent. You MUST be registered with the agent by 31 October in order to benefit from the extended deadline.
Self-lodgers who fail to lodge by 31 October could be hit with an immediate late lodgement penalty of $222, increasing by a further $222 for each successive 28-day period that the return remains outstanding, up to a maximum of $1110. If you still fail to lodge once the maximum penalty is reached, the ATO can issue you with a default assessment (in effect, an estimate of what the ATO thinks your income is), or they can prosecute you. Penalties are not generally applied where you are owed a refund by the ATO, or you have a nil return.
With only a few days left to go, you might well be feeling the pressure if you haven’t yet started your return. My key tip is that you should really be considering using a tax agent, particularly if you have been deterred from completing your return so far by the complexity of the task.
Not lodged your 2021 return yet?
The bad news is that if you have a return outstanding from an earlier year, like 2021, you can’t take advantage of the extended tax agent deadlines for your 2022 return, even if you use a tax agent.
So, you MUST lodge this year’s return by 31 October 2022 in order to avoid a late-lodgement penalty.
And, whilst you’re about it, it makes sense to get any prior year returns done too. Don’t worry if you’re missing information about your income and/or deductions for those earlier years. Your tax agent will typically be able to help by drawing on information already held by the ATO and advising you on what deductions you can claim.
What could I claim on my 2021-22 tax return?
There are literally millions of dollars sitting on the table in unclaimed deductions, either because taxpayers don’t realise that they can claim a particular deduction (having a tax agent like H&R Block should help to resolve this!) or because they don’t have records to substantiate a claim. Here are some common – but often overlooked – tax deductions that you could be entitled to.
Travel
You can’t usually claim the cost of the daily commute to and from work. The only exception to that rule is if you have to carry bulky equipment to and from work because there is no secure place of storage for them at your workplace.
You can claim the cost of travelling between two workplaces, such as between two offices or two shops. This includes public transport and taxi costs. In addition, you can claim the cost of travelling between two distinct jobs, provided you don’t return home in between.
If you plan to use your own car for work purposes, you can either claim a set rate of 72 cents per kilometre (for 2021-22) for all work journeys, or you can claim the actual expenses incurred. If you choose the latter, you’ll need to keep receipts for all costs (including road tolls and parking fees) and also keep a logbook of all your journeys for a 12-week period.
If you were lucky, in between COVID-19 lockdowns, you might have undertaken some tax-deductible interstate travel during the year. The cost of flights is tax deductible if they are for work-related purposes. When it comes to claiming meals, you can only do so if the expense is incurred due to your being away from work. The same applies to accommodation and incidental expenses.
Professional Development
You can claim expenses for university or TAFE fees to the extent that the course relates to your current employment and you’re not being reimbursed. You can also claim associated costs such as text books, travel to the educational institution and stationery
If you need to undertake ongoing professional development to keep up to date with the latest practices in your trade or profession, these costs will also be deductible to the extent they are linked to your current job.
You cannot, however, claim for a pre-vocational course (a course which you do to enable you to get a job in a particular field).
Working from home
As a result of COVID-19, you may have had to relocate your working activity from business premises to your home for at least some part of the last financial year. If so, you can claim a rate of 80 cents per work hour, so you will need to keep a record of the number of hours you have worked from home as a result of COVID-19. This applies until 30 June 2022.
If you use the 80 cents per hour method, you can make no other claims in relation to working from home – so items like mobile phone and internet usage are all included in the 80-cent rate.
The alternative rate of 52 cents per hour may be more appropriate. This doesn’t include phone costs, home internet or the cost of writing off home IT equipment (such as the cost of buying a laptop to work from home) so when you make separate claims for those expenses, you may find that your total claim is higher. Your tax agent will be able to advise on which method produces the best results.
Does any other tax hack boost returns?
Even if you’ve incurred any of the above expenses, the golden rule is that you can’t make a claim unless you can prove you spent the money (and also that you weren’t reimbursed by your employer). So, make sure you keep all relevant receipts, invoices, bank statements and credit card statements. If you’re not sure if you can make a claim, keep the receipt anyway and discuss it with your H&R Block tax agent.
ALSO READ: Key dates for Australian SMEs to mark on their financial calendars in 2022
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Disclaimer: Dynamic Business does not provide tax, legal or accounting advice. This article has been prepared for informational purposes only by our contributor and should not be relied on solely for tax, legal, or accounting purposes.You are strongly encouraged to consult your advisors to determine how the information may relate to you or the specifics of your business.
