Tax return tips: Fintech CFO explains how smart search and more can help at EOFY

It’s hard to believe that the EOFY is almost upon us, but it is! We’re six months into the year and if you dread tax time, round about now you’ve probably got a sinking feeling. The good news is 86 400’s chief financial officer Belinda Hogan has given us some great tips on how to organise your tax return paperwork.

Here’s a rundown of what Hogan had to say.

Pick a method

First of all, Hogan says to figure which of the three tax return methods to use. These are: the shortcut method, the fixed rate method and the actual cost method.

Hogan describes the shortcut method as “by far the simplest.” With this method you can claim 80c per hour, for each hour you worked from home in the 2020/2021 financial year. “It covers all of your working from home deductions - so your phone, internet, cleaning, stationery, even depreciation on your phone or computer.”

The main thing to do with this method is work out how many hours you’ve worked from home over the past 12 months. This may be a little trickier than last year, as most people have started working part-time from home and part-time from the office. Hogan notes her “in-office days” in her calendar to keep track of them. Public transport records are another way you can check what days you travelled into the office. Or if you have regular in-office days, that will make it even easier. 

However you work it out, Hogan says to keep a record of your calculations: “If the ATO asks to inspect your claim, they will expect you to know which days you were in the office.”

The second option is the fixed rate method. Hogan says that with this method you can claim a fixed rate of 52cents per hour worked from home for electricity and cleaning, and claim separately for more complicated expenses, such as stationery, a work phone, internet data used for work, or any decline in value of equipment - for example, your laptop or computer. 

Hogan says this method might be one to consider if you have bought a lot of stationery for work. For instance, if you have a printer and you’ve spent a lot on ink and paper. Or if you’ve spent more on internet data or a phone and you have a dedicated home office space.

Lastly, the third method is one very few people use, Hogan says. This is the ‘actual cost method.’ 

“It’s basically the actual costs for everything, so that means figuring out how much of your house’s electricity your dedicated work space uses,” she says. 

86 400’s new ‘Smart Search’

Next, Hogan says 86 400 account holders can take advantage of the neobank’s new ‘smart search’ feature. Customers already had the ability to view multiple accounts (from different banks) through the 86 400 app, but now they can also use the ‘smart search’ feature to better filter results.

Hogan says this feature will be particularly useful at tax time as the financial year is so long and often it's difficult to keep track of transactions. So for example, she says if you bought something from Officeworks for work and you can’t find the receipt in your email inbox, you can use smart search to figure out not only the date of the transaction, but also what bank account you used. “It’s a time saver, because rather than having to separately search your 86 400, Westpac and ING apps (for instance), you can search all of these at once.”

You can also apply a whole load of filters, including specific dates and even amounts. Hogan says, “For example, if I knew I bought a computer mouse for $60 in February, but I couldn’t remember where I bought it from and can’t locate the receipt - I could filter all transactions in ‘February’ that were ‘$60’ and search across all my accounts.”

What not to claim

Once you’ve picked a claim method and tracked down your receipts, the next step is to suss out what you cannot claim. Hogan says this is equally as important as knowing what you can claim and that it might be a good idea to make a list of these.

Some things you cannot claim are:

• Household expenses such as milk, tea, coffee etc. Even though your office might provide these you cannot claim expenses such as these while working from home.
• Anything you’ve been reimbursed for - if your employer is already reimbursing you for some things, such as internet costs, mobile phone etc, you cannot also claim these as a tax deduction.

Tax brackets matter

Next Hogan says knowing your tax bracket matters, especially come EOFY time. This is because being aware of your tax bracket also means having the ability to be savvier about EOFY deals.

“In the lead up to EOFY, sometimes people rush to spend money on tax deductible items,” Hogan says. “Retailers know this and put on sales to encourage it. The thing is if you don’t know your tax bracket, you won’t know exactly how much you’re getting back.” 

As an example of this Hogan says someone in the 37c tax bracket would get $37 back from purchasing a $100 tax deductible item. However, if someone else was in a lower bracket, say the 19c bracket, they would get $19 of that purchase back.

Having this knowledge could help when deciding whether or not a certain item is worth purchasing. If the tax you get back on it isn’t that much, you might decide to go without.

Prep for next year

Lastly, we talk a lot about the financial year coming to an end, but not about the fact that a new financial year is also starting straight afterwards. July marks a clean financial year slate and is the perfect time to put in place new systems that will help make things easier come tax return time in 2022.

One top tip Hogan gives is to organise your email inbox and create a folder specifically for receipts. That way you can keep a record of all your online purchases. “When a receipt comes through I’ll pop it straight into that folder, that way at tax time I can easily relocate it.”

If you’re more of an in-person shopper, Hogan recommends using MyGov’s myDeductions app. She says that the app lets you take and store pictures throughout the year and is an easy way to keep track of your purchases throughout the tax year.

One final tip Hogan gives is to not start your tax return too early. “It might seem counterintuitive, but if you give it a couple of weeks, your information will most likely be prefilled,” she says.

If you’re doing your tax return yourself, waiting for all the information to appear will make things a bit more straightforward.

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