02 Jun 2020

Tax Return Checklist for Project Managers

Tax
Tax Return Checklist for Project Managers

As a project manager, just like any other company employee or independent contractor, you may be entitled to claim a range of expenses from training and education to tools and equipment. That is if the expense is directly work related and has not been reimbursed by your employer.

In these times when we are thinking about tightening our belts, it’s worth taking a moment to make sure you are getting all you are entitled to.
 

HERE'S A QUICK CHECKLIST, INCLUDING THE LATEST RULES FROM THE ATO:

Education and industry membership: There are plenty of opportunities in a project management career to further your education or get certified. These are all generally claimable activities and the same applies for membership dues for professional organisations and associations such as the AIPM to which you might belong.

Clothing and laundry: Other deductions will generally depend more on the specific industry you project manage in. You can claim a deduction for the “cost of buying and cleaning occupation-specific clothing, protective clothing and unique, distinctive uniforms”. This one may take on more relevance for a broader group of people in the current environment.

Travel expenses: This is likely to be way down right now and generally you can't claim for normal trips between home and work - as it is considered private travel. But project managers in the building and construction industry – or other industries where you must travel to places other than your principal workplace may be able to.

Tools and equipment: If you buy tools, equipment or other assets to help earn your income, you can claim a deduction for some or all of the cost. This includes computers, software and other digital assets or tools. These have more complex rules around how much you can claim based on their value and how much of the asset or tool you use for work versus personal reasons. So, again, take a look at the ATO’s guidance and/or speak to your tax advisor.


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COVID-19 AND WORKING FROM HOME

For many of us, working from home is a new reality, which we had to get used to pretty quickly. For those of us that are company employees, it might be the first time we have had to make a few work-related purchases in order to get our home offices operational. Whether it’s a computer or monitor, desks, office chairs, stationary or other items you need to get the job done, you are generally entitled to claim these expenses.

Because of the increase in people now working from home, the ATO has put together a few special rules for just how you can claim during the current crisis. Take a look at the guidance provided by the ATO and of course speak to your tax advisor - but essentially these rules make it simpler for employees to make a claim, if you are entitled to. The ATO has introduced a “short cut” method for claiming work from home deductions which will be in place until 30 June 2020 – or the end of this financial year (this may be extended).

Using this method, 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

  • incurring additional deductible running expenses as a result of working from home.”

If you do use the shortcut method, you need to keep a detailed record of the hours you worked at home using timesheets or diary notes as opposed to other methods where you must itemise and have receipts for each deduction you claim.

Also, if you usually work from home one day a week and due to an emergency situation such as COVID-19, bushfire or drought you're required to work from home for an extended period, you will need to keep records for both the actual hours you’ve worked from home due to the emergency situation and your usual working from home arrangements.

Thompson Reuters tax expert, Ian Murray-Jones explains, “keeping a diary is probably the last thing any of us are thinking of at the moment, but you don’t want to risk having your work at home deduction knocked back for lack of proper documentation. The balance between business viability and tax housekeeping obligations has never been so sharp.”

In some circumstances, it may make sense to use the other methods to claim deductions – particularly if you are going to be working from home for the foreseeable future. So make sure you read the guidelines carefully and/or speak to your tax advisor. 

The government has initiated a wide range of measures to assist everyone right now. So whether you are an employee or operate as an independent consultant or contractor do your homework. For example, if you think that your income is going to drop by 30% or more, then you may be able to access the JobKeeper allowance - if you run your business through a company, partnership or as a sole trader. For eligible small to medium sized businesses that employ people tax-free, cash flow boost payments of up to $100,000 are also available.

It’s worth mentioning here too, there are very generous depreciation measures enacted in response to COVID-19 that accelerate the allowable rate of depreciation of assets. In addition, the instant asset write-off threshold has been increased from $30,000 to $150,000.

It’s important to take a step back and take a look at your current position right now. Jobs, workspaces and government support programs are all changing and will do so for at least this tax year and the next. Seek proper tax advice if you need to or as your circumstances change.
 


Did you know that AIPM membership is tax deductible for project professionals? Renew or join and you can claim your membership as a tax deduction. 
 



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