Australian women could be in for a bigger than usual tax refund this year but will they make the most of work-from home deductions?
Tax experts say that because women have been hardest hit by covid-19 related job cuts and reduced paid work hours, that many may find that the drop in their income could result in a bigger tax refund as lodging a tax return is essentially a reconciliation process.
“Tax is deducted from wages based on an estimate of annual earnings, so the [reconciliation process] is simply a function of the difference between what was estimated they would earn in a year compared to what they did actually earn,” said Curtin University’s Professor Helen Hodgson.
For instance, if a woman was supposed to earn $40,000, but lost her job in March and went on JobKeeper, her end of financial year income may be significantly reduced and her tax bracket changed to reflect lower earnings. This may result in her having paid more tax than she needed to and potentially a tax refund.
While everyone loves a tax refund, there is much more to actually getting one and maximising your chances in a COVID-19 work from home world.
So far we know that women are more likely than men to have been working from home in the period between late April and early May, Australian Bureau of Statistics data shows.
But this doesn’t necessarily mean that women will be making the most of work-related deductions. In fact behavioural traits may get in the way.
“Behaviourally I find men are more aggressive at tax time and are more likely to claim more in tax deductions and take more risk whereas women are more likely to be more conservative with tax claims,” said AMP financial adviser Andrew Heaven.
Various studies have highlighted the different risk tendencies of the genders in respect to finance, including when it comes to tax deductions with men often claiming much more.
The Australian Tax Office has been bracing itself for an increase in work-related tax deductions and has simplified the rules around work-from-home claims to assist people in making claims for expenses not otherwise covered by their employer.