More Australians are Working from Home Than Ever

Remote work skyrocketed during the COVID-19 pandemic and has stayed part of everyday life for millions. Research from Roy Morgan found that at the peak of the pandemic in early 2020, around 32% of Australian workers, over 4.3 million people, were working from home.

While remote work is more feasible in sectors like finance, public administration and communications, it’s becoming more common across all industries. If you’re one of the many Australians working from home, there may be strategies and deductions you’re eligible for that could boost your tax return and help you achieve your short and long-term goals.

Setting Financial Goals for Tax Time

Setting financial goals for tax time is the foundation of good financial planning. By developing a financial plan that considers your tax-deductible expenses, potential tax deductions and tax offsets, you can make better financial decisions and get the most out of your tax return. A financial adviser can work with you to create a personalised plan that suits your unique situation and goals.

When planning for tax time, think about both your short and long-term goals. For example, you might want to focus on retirement planning, building your savings or simply improving your cash flow for the year ahead. Identifying your financial goals early allows you to make strategic decisions about your expenses and deductions and get more financial freedom.

A good financial plan doesn’t just help you at tax time, it sets you up for the whole year. By working with an adviser, you can ensure your plan is tailored to you and help you achieve your retirement and wealth creation goals while making the most of every tax opportunity.

Managing Cash Flow When Working from Home

Working from home brings new challenges and opportunities when it comes to managing your cash flow. With changes to your daily routine and potential tax deductions on travel expenses, home office costs and other work-related expenses, you need to keep a close eye on your finances.

A financial planner can help you create a budget that reflects your current income, expenses and tax obligations. By tracking your spending and identifying all the deductions you can claim, you can make sure you’re not leaving money on the table at tax time. Accurate record-keeping is key – keep receipts and documentation for all work-related expenses to support your claims and avoid any surprises. Good cash flow management not only reduces financial stress but also gets you on track to achieve your long-term financial goals. With the right planning, you can make the most of your income, maximise your tax return and build a stronger financial future.

What Can You Claim?

If you work from home, the Australian Taxation Office (ATO) allows you to claim a range of home office expenses, including:

• Electricity used for heating, cooling and lighting your work area
• Cleaning costs for your dedicated workspace
• Phone and internet expenses
• Stationery and office supplies
• Computer consumables (e.g. printer ink and paper)
• Depreciation or cost of office equipment like computers, chairs and desks

In addition to these expenses, you should also keep track of your assets, such as property and investments, and liabilities like loans and your mortgage to have a complete picture of your financial situation. Having an account to manage and track these financial details will help you stay organised and ensure accurate record-keeping.

Only the portion of these expenses related to your work can be claimed, and you’ll need to keep detailed records to support your claims.

How to Calculate Your Deductions

The ATO provides two ways to calculate your work-from-home expenses:

1. Fixed-rate method (67 cents per hour): You can claim 67 cents for every hour you work from home. This method covers energy expenses, internet and phone use, stationery and computer consumables. You must have a dedicated work area in your home to use this method.

2. Actual cost method: This method allows you to claim the actual expenses you’ve incurred. While it may yield a higher deduction, it requires thorough documentation, including receipts, utility bills and records of your work hours.

In addition to these calculation methods, payments made to your super fund, interest on eligible loans and fees for professional services may also be deductible depending on your situation.

When preparing your claim, keep records of every payment you make for work-related expenses, including interest and service fees, to ensure you can substantiate your deductions.

You can also claim the full cost of any home office equipment up to $300, while for items over $300, you’ll need to claim depreciation over time. Make sure to track when you pay for these items.

Stay Organised Throughout the Year

Being organised is key to good financial planning and a stress-free tax return. By keeping your financial documents, receipts and records in order throughout the year, you’ll be better prepared when tax time arrives. A financial planner or adviser can help you set up a system to track your income and expenses so you can spot opportunities for savings and deductions.

Consider using budgeting tools or apps to monitor your spending and stay on top of your financial situation. Regularly reviewing your finances allows you to make adjustments as needed so you can stay on track to achieve your financial goals. Consulting with a financial adviser will give you valuable insights and help you refine your financial plan as your circumstances change.

By being organised and proactive, you’ll not only make the most of your tax return but also set yourself up for long-term financial success.

What to Watch Out For

When it comes to tax deductions, accuracy matters. The ATO is increasing scrutiny of work-from-home claims, so make sure:

• You only claim for work-related use
• You keep timesheets, rosters or diaries showing your work hours
• You retain receipts and records of your purchases and expenses
• You use the correct calculation method for your situation
• You determine which expenses are eligible based on your situation

If possible, manage your tax documents and records effectively throughout the year to avoid a last-minute rush at tax time and to ensure you act in your best interests when preparing your return.

Common Mistakes to Avoid

Even with the best intentions, it’s easy to make mistakes when it comes to financial planning and preparing your tax return. Some of the most common pitfalls include not creating a budget, not tracking your expenses and not seeking professional advice from a financial adviser. These oversights can result in missed deductions, unnecessary stress and missed opportunities for financial freedom.

Other common mistakes include overlooking available tax deductions, not having a clear investment strategy and not reviewing your financial situation regularly. Without a comprehensive financial plan that considers your financial goals, risk tolerance and investment goals, it’s hard to make informed decisions that support your long-term success.

To avoid these errors, work with a financial adviser to develop a tailored financial plan, keep detailed records of your expenses and deductions and review your progress regularly. By doing so, you can achieve your financial goals, reduce risk and make the most of your tax return, setting yourself up for a brighter financial future.

Why Professional Advice Matters

Working from home deductions can be tricky, especially with changing rules and different calculation methods. That’s why getting help from a registered tax agent or financial adviser can be a good idea, as there are many benefits to getting professional financial advice from qualified advisers.

Before you engage their services, make sure to check the qualifications of financial advisers so you get expert advice. A professional can help you:

• Know which expenses you can claim
• Advise you on complex tax matters
• Ensure you’re using the correct calculation method
• Maximise your deductions while staying compliant

Financial advisers offer a range of services to help you make informed decisions and achieve your financial goals.

How a Professional Can Help

A qualified professional can:

• Help you identify all the deductions you’re eligible for
• Choose the calculation method that gives you the best return
• Ensure you comply with ATO requirements
• Save you time and reduce stress at tax time

More often than not, the value of a maximised refund will more than cover the cost of having your tax return prepared.

Need Help Preparing for Tax Time?

At Insight Wealth Planning, we know how to make tax time less taxing, especially if you work from home. We can help you claim what you’re entitled to, stay compliant and make the most of your income.

If you want to improve your financial decision-making or learn more about investing, contact our team today.