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Maximising Your Tax Return Deductions and Super Contributions for Australians Working from Home

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As the end of the financial year approaches, it’s crucial for Australians working from home to review their tax strategies and ensure they’re making the most of the available deductions and superannuation contributions. With the rise of remote work due to technological advancements and the COVID-19 pandemic, more Australians than ever are setting up home offices and using their own resources to power their workday.

The Rise of Working from Home in Australia

Working remotely has become increasingly common as companies invest in technology that enables employees to work from anywhere. Research from Roy Morgan found that at the height of the COVID-19 pandemic shutdown in early 2020, 32 per cent of Australian workers, or over 4.3 million people, were working from home.

Certain industries, such as finance and insurance, public administration and defence, and communications, have found it easier to adapt to remote work. However, more “hands-on” industries like retail, manufacturing, transport and storage, and agriculture still require staff to be present on-site.

Tax Deductions for Home Office Expenses

If you’ve been working from home, you may be able to claim a variety of home office expenses on your next tax return. These deductions can help you maximise your refund and offset the costs of using your own resources for work purposes.

Deductible home office expenses include:

  • Electricity
  • Cleaning costs for your dedicated work area
  • Phone and internet expenses
  • Computer consumables (e.g., printer paper and ink cartridges)
  • Stationery
  • Home office equipment (e.g., computers, printers, phones, furniture, and furnishings)

The Australian Taxation Office (ATO) provides a complete list of the available deductions and guidelines on how to calculate each on its website.

Calculating Your Home Office Expenses

There are two methods employees can use to calculate their home office expenses:

  1. Fixed-rate method: 67 cents per work hour
  2. Actual cost method

When claiming home office expenses, it’s essential to ensure you calculate and apply your deductions correctly. For example, you can claim the full cost of home office equipment up to $300, but for items that cost over $300, you need to claim the decline in value (depreciation).

Regardless of the calculation method you choose, you must keep records, including receipts for purchases, relevant utilities and bills, and a timesheet, roster, or diary showing the hours you’ve worked from home. To save yourself a significant administrative workload at tax time, keep your relevant records and receipts aside and updated throughout the year.

Plan Ahead for Maximum Benefits

In addition to home office deductions, planning ahead before June 30 allows you to take advantage of various opportunities to reduce your tax liability and boost your superannuation savings.

Consider paying for certain expenses before June 30 if you have the financial means. By doing so, you can claim the tax break from the ATO earlier, rather than waiting more than 12 months for the return. A common example is prepaying interest on an investment loan. However, be cautious, as not all expenses are eligible for a tax deduction in advance.

Superannuation Contributions: Don’t Waste the Limits

June 30 is also an ideal time to review your superannuation contributions and take advantage of the annual caps.

The annual limit for tax-deductible contributions is $27,500 per annum, regardless of age. For employees, this limit covers both employer super guarantee and salary sacrifice contributions. Review how much your fund has received in contributions so far this year and adjust your arrangements if necessary.

Individuals under 75, whether working or retired, can contribute $110,000 each year to super as after-tax or non-concessional contributions. You can also contribute $330,000 in a single year by bringing forward the limit for the following two years. However, it’s crucial to check your total super balance to ensure any extra contributions do not exceed the general balance transfer cap of $1.9 million.

Remember that the total contribution is based on how much is received by your fund, not when you sent it, emphasising the importance of planning ahead to ensure your contributions are processed before the June 30 deadline.

Seek Professional Advice to Maximise Your Refund

With the range of deductions available and the different calculation methods for home office expenses, having a registered tax professional prepare your tax return can be a worthwhile investment. Often, the maximised refund will more than cover the cost of having a professional prepare your return.

At Tanti Financial Services, we offer a comprehensive range of services under one roof, making it easier for you to access the professional advice you need to maximise your tax return. Our experienced team of accountants, mortgage brokers, and financial planners work together to provide you with a holistic approach to your financial well-being.

Our accountants are well-versed in the latest tax legislation and can help you navigate the complexities of claiming home office deductions. They can guide you through the record-keeping requirements, calculation methods, and ensure you’re claiming all the deductions you’re entitled to, ultimately maximising your refund.

Our mortgage brokers and financial planners can provide additional support, assisting you with finding suitable home loans, structuring your loans in a tax-effective manner, and offering valuable insights into superannuation contributions, investment strategies, and long-term wealth creation.

By having access to this diverse skill set under one roof, you can benefit from a coordinated approach to your financial well-being. Contact Tanti Financial Services today, and let our friendly and knowledgeable staff help you make the most of your opportunities and achieve your financial objectives.

If you’re unsure about the home office deductions you’re entitled to or need guidance on other tax strategies, contact Tanti Financial Services today. Our friendly and knowledgeable staff are ready to help you make the most of your opportunities and achieve your financial objectives.