Shortcut method to claim deductions if working from home
As the situation around COVID-19 continues to
develop, the ATO understands many employees
are now working from home.
To make it easier when claiming a deduction for additional running costs you incur as a result of working from home, special arrangements have been announced.
A simplified method has been introduced that allows you to claim a rate of 80 cents per hour for all your running expenses, rather than having to calculate the additional amount you incurred for specific running expenses.
This simplified method will be available to use from 1 March 2020 until 30 June 2020. You may still use one of the existing methods to calculate your running expenses if you would prefer to.
You can claim a deduction of 80 cents for each hour you work from home due to COVID-19 as long as you are:
- Working from home to fulfil your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls; and
- Incurring additional deductible running expenses as a result of working from home.
You do not have to have a separate or dedicated
area of your home set aside for working, such as
a private study.
Editor: Please contact our office if you need more information about this deduction.
SMSFs may be able to offer rental relief to related party tenants
As a result of the financial effects of the COVID-19
pandemic, some self-managed superannuation
funds (‘SMSFs’) which own real property may
want to give a tenant – who is a related party – a
reduction in rent because the related party tenant
has had a collapse in revenue.
Charging a related party a price that is less than market value is usually a contravention of the strict legislative rules SMSFs and their trustees are required to follow.
The ATO has recently advised that its approach for the 2019–20 and 2020–21 financial years is that it will not take action if an SMSF gives a tenant – even one who is also a related party – a temporary rent reduction, waiver or deferral because of the financial effects of COVID-19 during this period.
If there are temporary changes to the terms of the lease agreement in response to COVID-19, it is important that the parties to the agreement document the changes and the reasons for the change. You can do this with a minute or a renewed lease agreement or other contemporaneous document.
Editor: Please contact our office if you have an SMSF that could be impacted by a lease with a tenant, where the tenant cannot afford to pay some or all of its rent because of the economic consequences of COVID-19.
ATO reminder about salary packaged super
The ATO has provided employers with a recent
reminder that, from 1 January 2020, there has
been a legislative change to ensure that when
an employee sacrifices pre-tax salary in return
for an additional concessional contribution into
superannuation, it will not result in a reduction in the
9.5% Superannuation Guarantee (‘SG’) obligation
their employer has even though doing so reduced
their Ordinary Time Earnings.
The ATO has provided information for employers, payroll software providers and intermediaries who may need to change the way they calculate SG.
The ATO advises that, from 1 January 2020, you calculate the minimum amount of SG on the employee's ‘OTE base’. This is the sum of the employee's OTE and any OTE amounts they sacrifice in return for super contributions.
Additionally, super contributions to an employee's fund under an effective salary sacrifice arrangement no longer count towards an employer’ super guarantee obligations.
Editor: If your business allows for salary sacrifice arrangements, feel free to contact our office to ensure that you are calculating SG correctly.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.