(1 March – 30 June 2020 and now extended for 1 July – 31 Dec 2020)

You may be able to use the shortcut method to claim a deduction on your tax return. This applies for both the 2019-20 and 2020-21 income years for expenses you incurred relating to that work.

(This does not apply if your home is your principal place of business.)

To simplify this for most taxpayers, the ATO has introduced the shortcut method to calculate the deduction you can claim, where all you need to keep is a record of the hours that you have worked from home.

By using the shortcut method, you simply claim 80 cents per hour for each hour you worked from home.

All employees who work from home during these dates can use this method if you:

• Are working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls
• Have incurred additional running expenses as a result of working from home.

What’s included:

The shortcut method covers all your working from home expenses, such as:

• phone expenses
• internet expenses
• the decline in value of equipment and furniture
• electricity and gas for heating, cooling and lighting.

If you use this method:

• You can’t claim any other expenses for working from home.
• You don’t need to have a dedicated work area to use this method.
• You must keep a record of the number of hours you have worked from home. This could be a timesheet, roster, a diary or documents that set out the hours you worked from home.

You don’t have to use the shortcut method, you can choose to use one of the previously existing methods to calculate your work from home tax claim. Similarly, if you had a work from home arrangement with your employer before 1 March 2020, then you have to use one of those existing methods to calculate your deduction for the period 1 July 2019 to 29 February 2020. More information can be found in our newsletter of June 30 2020

Contact us at consulting@austasiagroup.com and we can help you with this.

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• have a dependent child or secondary student younger than 20 years of age who is not receiving a Government benefit such as Youth Allowance
• provide care for a child at least 35% of the time
• meet an income test

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This statement is usually used to encourage people who are losing enthusiasm for a task or goal.

But it also reflects the way many people feel about personal succession planning. They think that so long as you have a Will, your wealth will be passed correctly to your family and your loved ones will be taken care of.

But this is not necessarily the case. Personal succession planning is much more than just having a Will, especially for blended families and families with stepchildren.

Did you know that in 2012/2013, in Australia, step and blended families accounted for approximately 6% of all families¹ with children under 18. The days where mum, dad, and 2-3 blood children made up the average Australian family are a thing of the past.

Often people in blended families – with their second or third spouse – want to ensure their children of an earlier marriage are provided for or ensure a former spouse cannot access their Estate.

Here are a few important questions that you may relate to if you had a former relationship, have a blended family or live with stepchildren:

• Have you had a legally binding property settlement following the breakdown of former relationship/s?
• Have you removed your former spouse as a joint owner where assets were purchased in joint names previously?
• Do you have any financial responsibilities from any former relationships?
• Have you updated all beneficiary nominations on investments and policies which name your former spouse as the beneficiary?
• Do you have vulnerable beneficiaries (such as beneficiaries dealing with separation/divorce, beneficiaries facing addiction or with special needs)?
• In the event of your death, would you like to provide for your children from a previous and/or current relationship or provide for stepchildren?
• Is there anyone who may have a claim on your estate, who you do not wish to benefit from your death (such as an ex-spouse or a vulnerable beneficiary)?
• Would you like your estate assets to be held in trust for your children and be distributed to them at a certain age?
• Are there any assets you wish to retain within the family bloodline?

Without an appropriate succession plan, you may not have certainty that the right assets will go to the right people at the right time in the most tax effective way.

Do I need a personal succession plan?

Personal succession planning is something all parents should consider and address. By doing so you’ll ensure loved ones have access to appropriate financial assistance, educational opportunities, and anything else they might need to ensure their quality of life continues when you’re no longer around.

At a minimum, every parent should have:

• A current Will to distribute estate assets;
• Guardianship arrangements for young children and teenagers;
• An Enduring Power of Attorney to cover situations where they’re unable to make financial decisions themselves; and
• Appropriate estate planning arrangements to distribute specific assets that are not covered by the Will (such as superannuation benefits, life insurance proceeds, assets held in family trust/s).

What are the benefits of personal succession planning when you have a blended/stepfamily?

Personal succession planning can:

• Provide certainty that your children from a previous and/or current marriage and/or your stepchildren are taken care of;
• Provide certainty by getting the right assets in the hands of the right people, at the right time; and
• Enable you to provide for your loved ones while minimising tax payable by your nominated beneficiaries.

What are the consequences of NOT having a personal succession plan?

Personal succession is something you should address now. Don’t wait until it’s too late.

If you have previously nominated your ex-spouse to be the executor and beneficiary of your Estate and/or the beneficiary of your superannuation or life insurance and if you die without updating your nomination, the proceeds from these policies may be distributed to your ex-spouse which may not reflect your wishes.

If you die without a valid Will, intestacy legislation will determine how your estate assets are distributed to your surviving family members.

And, if you’re badly injured in an accident or lose mental capacity, who will manage your affairs while you’re still alive but unable to make your own decisions?

How can we help you?

AustAsia Group provides advice on tax, legal matters, financial matters, superannuation, and investments. So we are able to assist you to:

• Ensure you’re making the right ownership decisions when acquiring new assets or re-structuring your existing assets. For example, your financial adviser can help you determine whether it’s best to invest in your name, your partner’s name, or jointly with your partner. We may consider your situation to investigate further tax and legal advice to consider another arrangement such as a trust or company.
• Determine if you have sufficient means to achieve your estate planning objectives. Additional life insurance inside or outside of superannuation may be necessary to provide your family and loved ones with a lump sum payment or an income stream to repay debts, meet ongoing living expenses and cover your children’s future education costs when you’re no longer around.
• Make a provision in your Will to allow for the establishment of testamentary trust/s for minor children. The establishment of testamentary trust in a Will can provide flexibility and can enable distribution of estate assets in a tax-effective way to beneficiaries including children from previous marriages, young children and teenagers. A reliable Trustee of your choice will ensure that distributions are made to such beneficiaries with their welfare in mind.
• Make a provision in your Will to allow for the establishment of testamentary trust/s for adult children. The establishment of testamentary trusts in a Will can provide asset protection in the event of a relationship breakdown and/or bankruptcy.
• Develop a range of strategies to provide certainty, tax efficiency and/or asset protection. For example, your financial adviser can explain superannuation death benefit and life insurance beneficiary nomination options. By making appropriate nominations now, your beneficiaries will be able to effectively and efficiently receive the death benefits when you’re no longer around.

AustAsia Group is able to assist you with all of your estate planning and succession planning requirements.

¹ Australian Bureau of Statistics, Family Characteristics and Transitions 2012-2013, Families with children aged 0-17. Release date 26 February 2015.

Click here to download this article in PDF format.

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We published an article on Business Succession Planning back in June this year and with Christmas and the New Year break on the horizon, we thought it an apt time to revisit the topic.

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