• The temporary shortcut method, introduced to help employees working from home during the COVID-19 pandemic, was extended to 30 June 2022. It is therefore available to use to work out deductions for working from home expenses for the 2020-21- and 2021-22-income years.
• Taxation Ruling TR 2021/1 Income tax: when are deductions allowed for employees’ transport expenses? was released. This Ruling provides guidance on when an employee can and can’t claim a deduction for the cost of travel by airline, train, taxi, car, bus, boat or other vehicles.
• Taxation Ruling TR 2021/4 Income tax and fringe benefits tax: employee accommodation, food and drink expenses, travel allowances, and living-away-from-home allowances were released. This Ruling provides guidance on when an employee is entitled to claim a deduction for accommodation, food and drink expenses.
• Section 25-125 of the Income Tax Assessment Act 1997 (ITAA 1997) was introduced. This section allows employees to claim a deduction for the cost of COVID-19 tests incurred after 1 July 2021 for the purpose of testing to determine whether they can attend or remain at their workplace.

COMMON MYTHS ABOUT WORK EXPENSE DEDUCTIONS

Many taxpayers hold many misconceptions – some results of pub talk or discussions from backyard barbeques…

Myth: Everyone can automatically claim $150 for clothing and laundry expenses, 5000 km under the cents per kilometre method for car expenses, or $300 for work-related expenses, even if they did not spend the money.

Fact: There is no such thing as an automatic or standard deduction. Substantiation exceptions provide relief from the need to keep receipts in certain circumstances. While you do not need receipts for claims under $300 for work-related expenses, $150 for laundry expenses (note: this is for laundry expenses only and doesn’t include clothing expenses) or if you are claiming 5,000 km or less for car expenses under the cents per kilometre method:

• you must have spent the money
• it must be related to earning your income, and
• you must be able to explain how you calculated your claim.

Myth: I do not need a receipt; I can just use my bank or credit card statement.

Fact: To claim a tax deduction, you need to show that you spent the money, what you spent it on, who the supplier was and when you paid. Bank or credit card statements alone don’t have this information. You don’t need these details only if substantiation exceptions apply.

Myth: I can claim makeup that contains sunscreen if I work outside.

Fact: Cosmetics are usually a private expense, and adding sun protection doesn’t make it deductible. However, it may be deductible if the product’s primary purpose is sunscreen (that is, it has a high SPF rating), the cosmetic component is incidental, and you need to work outdoors in the sun.

Myth: I can claim my gym membership because I need to be fit for work.

Fact: Very few people can claim gym membership fees. To be eligible, your job would have to depend on you maintaining a very high level of fitness, for which you are regularly tested, for example, special operations personnel in the Australian Defence Force.

Myth: I can claim all my travel expenses if I add a conference or a few days’ works to my holiday.

Fact: If you decide to add a conference or work to your holiday or a holiday to your work trip, you must apportion the travel expenses between the private and work-related components and only claim the work-related component.

Myth: I can claim my work clothes because my boss told me to wear a certain colour.

Fact: Unless your clothing is a unique and distinct uniform to your employer or protective or occupation-specific clothing you are required to wear to earn your income, you won’t be able to claim it. Plain clothes, like black pants, aren’t deductible even if your employer tells you to wear them.

Myth: I can claim my pay television subscription because I need to keep up to date for work.

Fact: A subscription to pay television is not ordinarily deductible. Keeping up to date on the news, current affairs and other general matters usually won’t have a sufficiently close connection with your employment activities to provide a basis for deducting these subscriptions. They are essentially private expenses.

Myth: I can claim home-to-work travel because I need to get to work to earn my income.

Fact: For most of us, home-to-work travel is a private expense.

Myth: I’ve got a capped phone and internet plan to claim both business and private phone calls and internet usage.

Fact: Unless you only use your phone and internet for work, you have to apportion the cost between work-related and private usage and only claim the work-related portion of your expenses.

SHARING ECONOMY REPORTING BILL INTRODUCED

Electronic distribution platforms

This legislation requires operators of electronic distribution platforms to report information to the ATO relating to transactions facilitated through their platform.

The Treasury Laws Amendment (2022 Measures No.2) was introduced into the House of Representatives on 3.8.2022 and proposed to:

• empower the Commissioner to direct an entity to complete an approved record-keeping course where the Commissioner reasonably believes the entity has failed to comply with its tax-related record-keeping obligations as an alternative to existing financial penalties
• require electronic platform operations to provide information on transactions made through the platform to the ATO
• removes the $250 non-deductible threshold for work-related self-education expenses;
• enable small business entities to apply to the small business Taxation Division of the Administrative Appeals Tribunal (AAT) for an order staying or otherwise affecting the operation or implementation of decisions of the Commissioner that are being reviewed by the AATO; and
• allow individuals aged 55 and above to make downsizer contributions to their superannuation plan from the proceeds of selling their main residence.

If all this sounds familiar… similar legislation was introduced during the last parliament but lapsed in the Senate before the May Federal Election.

SHINING A LIGHT ON ‘OFF-THE-BOOKS’ PAYMENTS

Building & construction, cleaning, courier, road freight, IT, security, surveillance industries

Dodgy contractors trying to keep income ‘off-the-books’ and businesses helping them do so are being put on notice as the Australian Taxation Office (ATO) continues to shine a light on shadow economy behaviour.

Paying cash in hand to avoid paying taxes is a significant part of the shadow economy. However, the taxable payment reporting system (TPRS) allows the ATO to investigate this conduct.

Around $350 billion in payments made to 950,000 contractors were reported to the ATO in the last financial year. The ATO expects more than 270,000 businesses to complete a taxable payment annual report (TPAR) for 2021-22 years.

TPRS obligations apply to businesses in the building and construction industry, as well as businesses that provide cleaning, courier, road freight, information technology and security, investigation, or surveillance services and have paid sub-contractors in relation to these services.

The ATO is reminding these businesses that they will have to lodge a TPAR with the ATO by 28 August, setting out payments to their contractors.

Sole-traders

The ATO uses information reported on the TPAR to make sure that businesses are complying with their tax obligations, for example, reporting the correct amount of income, lodging business activity statements (BAS) and income tax returns, paying the right amount of tax, being registered for GST if required, and using a valid Australian business number (ABN).

Businesses and tax professionals can view the data the ATO receives about their business, like taxable payments reported under the TPRS, as a reported transaction on ATO Online platforms.

The ATO’s new reported transactions services can help businesses and their tax professionals to view their data to make it easier to meet tax obligations.

ATO reminds sole traders any payments reported to the ATO through TPRS will be pre-filled in their tax return at tax time.

If you’re a sole trader, any payments you received as a contractor reported in a TPAR will be available as a pre-fill information report in your tax return. Whether you lodge your tax return yourself or through an agent, just remember to double-check that the pre-fill information is complete and correct before lodging, especially as not all your income may have been reported to the ATO.

The ATO reminds businesses and tax professionals lodging on behalf of their clients to contact the ATO if they need additional time to lodge their TPAR.

UNFAIR CONTRACT TERMS LEGISLATION

The Government intends to make unfair contract terms illegal, protecting small businesses and the hard-working Australians they employ.

Small businesses and consumers often lack the resources and bargaining power to effectively review and negotiate terms in standard contracts. Existing laws haven’t stopped the use of unfair terms, which remain prevalent in standard form contracts.

The Government has introduced legislation to strengthen unfair contract terms protections for small businesses and consumers.

The amendments will introduce civil penalty provisions outlawing the use of, and reliance on, unfair terms in standard form contracts. This will enable a regulator to seek a civil penalty from a court.

Additionally, a larger number of small business contracts will be afforded protection. This will occur by increasing the small business eligibility threshold for the protections from less than 20 employees to less than 100 employees and introducing an annual turnover threshold of less than $10 million as an alternative threshold for determining eligibility.

These reforms will help to improve consumer and small business confidence, allowing the small business sector to grow with confidence.

SMALL BUSINESSES URGED TO SAFEGUARD DOMAIN NAMES

The Australian Small Business and Family Enterprise have implored small businesses to take urgent action to safeguard their brand and identity on the internet or risk seeing impersonators, web-name campers or cyber criminals take up domain names just like theirs. With all the challenges small business owners and leaders are facing, the last thing anyone needs is someone ripping off their domain name.

With only a handful of weeks left before owners of .com.au, .net.au and similar domain names lose their priority access to the abridged .au domain name equivalents, there are significant concerns about plans to allow an open slather sale of business internet names under the new .au domain.

All business owners must take a few minutes to work out if they want the shortened .au domain or will be unhappy for someone else to have it. If the .au domain name is important, small business owners are urged to take a few minutes and few dollars to register it or potentially face someone else grabbing it and using it to digitally ambush your business, to demand big dollars later to surrender it to you or misuse it to masquerade as you or to help them engage in cyber-crime.

The Australian Small Business and Family Enterprise mentioned the change imposed by the non-government regulator, .au Domain Administration (auDA), had potentially momentous consequences that could see businesses lose their customer base or be at the mercy of cyber criminals impersonating them if they did not proactively sign up to the new system.

The auDA introduced the new system on 24 March, allowing anyone with a connection to Australia, such as businesses, associations, and individuals, to register a new domain name category. Instead of ending with .com.au, .net.au, asn.au, etc., people could register the shorter .au name. For example, shoes.com.au could be shoes.au

It also decided that Australian businesses with an existing domain name would only have until 20 September to reserve or register their equivalent .au domain name before it became available to the general public.