Suitable for: All users who have claimed WFH expenses in their 2020 tax return and also intend to in their 2021 tax return

Tax Difficulty: Easy

Time to Read: 2-3 minutes

Tax Focus: WFH expenses and ATO’s expectations

Please note this article is in related to the 2021 FY, if you seek advice regarding later years please see other articles in our help centre.

Claim work-related deductions relevant to FY2021

With both 2020 and 2021 being years heavily impacted by COVID-19, it is important to remain vigilant and treat them separately, where the claims you made in 2020 will not necessarily be the same in your 2021 tax return. We at Airtax would like to inform you of a recent announcement by the ATO, warning taxpayers to refrain from “copy/pasting” their 2020 work-related claims into their 2021 return without evidence.

After a busy year, the ATO is beginning to shift back its focus on the overclaiming of work-related expenses such as car and travel claims that are predicted to decrease in this year’s tax return due to continued COVID-19 circumstances. They have noted that they expect claims for work-related expenses to reflect the changes that COVID-19 has imposed on taxpayers’ work habits. 

Potential changes the ATO may expect to work-related expenses brought about by COVID-19 include:

• The temporary shortcut method for home expenses has been extended and is available for the entire 2020–21 and 2021-22 financial year (The ATO recently the ending of this method, with FY23 using either the 'fixed-rate' or 'actual-cost' methods.
• The ability to claim for personal protective equipment (PPE) such as gloves, face masks, sanitiser, or anti-bacterial spray if a taxpayer's duties require physical contact or close proximity to customers or clients, and
• A potential decrease in claims related to work-related expenses for cars, travel, non-PPE clothing and self-education as a result of the introduction of travel restrictions and limits on the number of people who could gather in groups.

The ATO acknowledges that you may have some unusual but legitimate claims. As long as such claims have standing and you have evidence to back them, there is nothing to feel concerned about and you should claim with confidence.

At Airtax, our accountants are determined to help you lodge your 2021 tax return with peace of mind. It's free to sign up and you only pay when you lodge. To complete your tax return from just $179, get started here.

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This document merely provides a broad outline of the subject and is necessarily general in nature.  If you require specific advice, which is tailored to your specific circumstances, please do not hesitate to contact us (fees would apply).

Source: ATO warns on “copy/pasting” claims, [media release], ATO website, 20 May 2021, accessed 20 May 2021.