FY2020 Tax Return

Tin-Lok Shea 01 Aug 2020

Who would have guessed that the impact of COVID-19 would also be felt when preparing your tax return?

With various restrictions in place since March 2020, meaning many people have been work from home, more than ever it is important to understand what expenses you can and can’t claim as a tax deduction.

In recognition that going through expenses and apportioning what relates to work might not be most people’s cup of tea, the ATO has introduced a new method for calculating your deduction for work-related expenses for the 2020 financial year (called the “shortcut method”) with the view to reducing complexity.

We have set out a summary of the three methods of calculating your deductions in the table below.

If you plan on using a method other than the shortcut method, you will need to bear in mind the following general principles when claiming a deduction:

You must have spent the money.
The expense must be directly related to earning your income.
You must have a record to prove it.

So no, that shiny new coffee machine you bought is not likely to be deductible, even if you feel it’s the only way you can get through your working day.

What you can claim	What you can’t claim	Requirements
*Shortcut method*
80c for every hour worked at home for the period from 1 March to 30 June 2020. If you work 38 hour weeks, this would mean a deduction of just under $500.	Actual costs of your expenses (e.g. utilities and equipment) – the 80c per hour is meant to cover all this.	Record of the hours you have worked from home (e.g. timesheet, roster, diary, work records).
*Fixed-rate method*
· 52 cents for every hour worked at home to cover the cost of electricity, gas and depreciation of home office furniture. · Actual costs incurred for phone calls, internet, stationery. · Full cost of work-related equipment costing less than $300 (e.g. PC monitor). · Decline in value of work-related equipment over $300 (e.g. laptops and phones), based on their effective life. For laptops this is 2 years, desktops are 4 years, mobile phones are 3 years. See link below for ATO’s ruling as to effective life.	Actual costs of electricity, gas and home office furniture (covered by the 52c per hour deductions). Non-deductible expenses, e.g: - Snacks - Toilet paper - Coffee, tea and milk - Luxury stationery - Childcare or home schooling costs - Items reimbursed by your employer.	Dedicated workspace Comprehensive records: - receipts or other written evidence of amounts spent - statements with breakdown between work and private calls to determine percentage of work-related use for a representative period (4 weeks) - diary covering the representative period showing usual pattern of work - your work-related internet use - the percentage of the year you used depreciating assets exclusively for work.
*Actual expenses method*
· Actual cost of utilities, i.e. electricity and gas. · Actual cost of cleaning for the work area. · Actual costs incurred for phone calls, internet, stationery. · Repair costs for equipment and furniture. · Full cost of work-related equipment costing less than $300 (e.g. PC monitor). · Decline in value of work-related equipment over $300 (including furniture and fittings), based on their effective life.	Non-deductible expenses per above.	Dedicated workspace. Comprehensive records (as described above) of all costs.

Can you claim the value of equipment you bought pre-COVID-19?

You can claim the decline in value attributable to the period you used the equipment for work at home, provided it has not been written off already.

For example, a laptop (which has an effective life of 2 years) bought one year ago will have one year of effective life left. If you used the laptop for work purposes, then you will allowed a deduction corresponding to the decline in value for that period.

Say the laptop was worth $4000, and you used it for work purposes 50% of the time during 1 March and 30 June 2020. The deduction you get is under the prime cost method is:

$4000 × A × B × C = $330

Where:

A = 50%, being the percentage representing 1 year of the 2 year life;

B = 33%, being the percentage representing 121 days of the year;

C = 50%, being the proportion used for work.

In this case, you are most likely already better off claiming under the fixed-rate method than the shortcut method, even if you don’t claim anything else (i.e. approximately $500 vs $654).

On the other hand, if you bought the laptop more than 2 years ago, there will be no deduction.

Can you claim expenses like your mortgage, rent and council rates?

Most likely not if you are an employee simply working from home due to COVID-19 restrictions. These expenses can be claimed for example if you run a small business from home.

The key criteria are:

1. The area claimed for occupancy expenses must be used extensively and systematically for taxpayer's work. This generally requires almost exclusive use for work such that the taxpayer and family have forgone domestic use of that room and/or that the room is not readily adaptable back to domestic use.

2. The home office is not just a mere convenient place to work.

Note you don't get the full main residence exemption if your home is your principal place of business, although you're probably entitled to a partial exemption.

Can I claim a deduction for amounts where my employer provided an allowance?

Yes, but only if the allowance is included as income in your tax return (and assuming it is not a reimbursement).

Can you claim travel from your home office to your actual office?

No - your home is still a private residence and you cannot claim your trip from home to your regular workplace.

Is Jobseeker tax-free?

It depends. Jobseeker will still constitute income, so you will need to include it on your tax return. If you remain under the tax-free threshold (taking into account all your other income), then you will not need to pay any tax. If your income is over the $18,200 threshold, then you will need to pay tax.

Early super withdrawals

Please be warned that if you made an early withdrawal of your super improperly, there is a good chance the ATO may catch you in an audit. To have been eligible for the scheme, you must have been made redundant, working reduced hours of at least 20%, be unemployed or be eligible for welfare assistance such as JobSeeker (not JobKeeper), Youth Allowance or Parenting Payment. If you are a sole trader or run your own business, and have experienced a 20% or more fall in revenue, you are also eligible.

If you made a withdrawal even though ineligible, you will be liable to pay tax on the amount withdrawn as well as penalties. If this is your situation, the best way forward is to come clean and make a voluntary disclosure. If you need assistance in this regard (or any other tax matters), please feel free to contact us.

Link to ATO website: Home office expenses

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Home-office-expenses/

Link to ATO website: TR 2019/5 – Income tax: effective life of depreciating assets

https://www.ato.gov.au/law/view/document?DocNum=0000014624&PiT=99991231235958&FullDocument=true

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Tin-Lok Shea

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AML/CTF Reforms – What Existing Reporting Entities Need to Do before 31 March 2026

1. Overview of the Reforms Significant changes to Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime are taking effect under the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (the Amendment Act) and the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (the Rules). These reforms represent a fundamental shift toward an outcomes-based, risk-oriented framework, aligned with international standards set by the Financial Action Task Force.The core pillars of the reform include:• Stronger governance and oversight, with clearer accountability for the board and senior management; • Expanded risk assessments, including explicit coverage of Proliferation Financing (PF) risk; and• New transitional measures, including a three-year transition period for initial Customer Due Diligence (CDD) obligations.2. Who Do These Reforms Apply To?The AML/CTF reforms affect a broad range of businesses. If your business provides any of the designated services regulated under the AML/CTF Act, you are a “reporting entity” and must comply with the reformed regime.Existing Reporting Entities (Tranche 1)Entities already regulated under the AML/CTF Act must comply with the reformed regime from 31 March 2026. These include:• banks, building societies, and credit unions;• life insurers and friendly societies;• securities dealers, futures brokers, and managed investment scheme operators;• remittance service providers;• gambling service providers, including casinos and online wagering operators;• bullion dealers; and• virtual asset service providers (formerly digital currency exchange providers).Newly Regulated Entities (Tranche 2)A major expansion of the AML/CTF regime will bring approximately 90,000 new businesses under AUSTRAC regulation from 1 July 2026. These “Tranche 2” entities include:• lawyers and law practices;• accountants;• real estate agents;• trust and company service providers; and• dealers in precious metals and stones (jewellers).Tranche 2 entities will be able to enrol with AUSTRAC from 31 March 2026 and must be enrolled by 29 July 2026. AUSTRAC has released sector-specific guidance and program starter kits to assist newly regulated entities in preparing for their obligations.3. Governance and Oversight: New Statutory ObligationsA central feature of the reforms is the introduction of defined roles for the “Governing Body” and “Senior Manager”, together with heightened expectations for effective internal controls.Governing BodyThe “Governing Body” refers to the individuals or body (such as a Board of Directors) with primary responsibility for the governance of the reporting entity. The Governing Body is expected to maintain ongoing oversight of AML/CTF compliance and be sufficiently informed of Money Laundering (ML), Terrorism Financing (TF), and Proliferation Financing (PF) risks to ensure that the AML/CTF Program is identifying and mitigating those risks in practice.Under the Amendment Act, the Governing Body has proactive obligations to provide “appropriate ongoing oversight”. The Australian Transaction Reports and Analysis Centre (AUSTRAC) has indicated that this may be demonstrated by:• including AML/CTF compliance and ML/TF/PF risk as a regular standing agenda item in board or management meetings;• reviewing relevant matters in AML/CTF compliance officer and independent evaluation reports;• questioning how the business will address any adverse findings in those reports; and• interrogating the root causes of non-compliance and the effectiveness of existing controls.Senior ManagerA “Senior Manager” is an individual who makes, or participates in making, decisions affecting the whole or a substantial part of the reporting entity. The reforms sharpen accountability by making them legally responsible for approving the ML/TF/PF Risk Assessment, AML/CTF policies, and any material updates to those documents.The Senior Manager's approval is also required for high-risk individual matters, including:• providing designated services where politically exposed persons are involved; or • establishing or maintaining a nested services relationship.Both of these roles must be held by individuals with greater active governance, oversight and executive decision-making responsibility. 4. Proliferation Financing (PF)A key reform is the explicit requirement for reporting entities to identify, assess, and manage PF risk. PF involves financing activities linked to the development or acquisition of weapons of mass destruction. While many institutions are already familiar with sanctions compliance and screening requirements, the reforms clarify that PF must be treated as a distinct AML/CTF risk category.PF should be integrated into the ML/TF/PF Risk Assessment as part of routine risk management. For many entities, this will require refining existing methodologies to ensure PF is assessed with sufficient specificity (for example, through jurisdictional exposure, transaction typologies, and counterparty risk indicators), rather than being subsumed within broader AML/CTF risk settings.Where an entity reasonably assesses PF risk as low, a standalone Counter-Proliferation Financing policy is not required, provided the risk is appropriately managed through existing ML/TF controls. However, any low-risk assessment must be properly documented to satisfy AUSTRAC’s expectations for an auditable process. If PF is not addressed at all in the Risk Assessment and AML/CTF Program documentation, the framework may be non-compliant. 5. Implementation Timeline and Transitional MeasuresThe compliance deadline for existing reporting entities is 31 March 2026. Entities should use the remaining time to finalise necessary structural and governance updates.Three-Year Transition for Initial CDDOn 22 January 2026, AUSTRAC announced that existing reporting entities will be granted an additional three years (i.e. until 30 March 2029) to comply with the new initial CDD obligations. During this period, entities may choose either to:• continue applying their existing Applicable Customer Identification Procedures when onboarding new customers; or • transition to the reformed initial CDD obligations at any time before 30 March 2029.Entities must apply whichever framework they choose consistently across all new customers and customer types. Once an entity formally transitions to the reformed CDD obligations, it must apply the new requirements from that point forward.The three-year transition applies only to initial CDD (i.e. new customer onboarding). Ongoing CDD obligations under section 30 of the AML/CTF Act must be implemented from 31 March 2026 with no deferral.Other Transitional MeasuresAUSTRAC has also confirmed the following transitional arrangements:• existing reporting entities have until 30 May 2026 to notify AUSTRAC of their AML/CTF Compliance Officer; • staggered deadlines will apply for entities that have recently completed an independent review; and • on 9 February 2026, AUSTRAC released exposure draft amendments to the AML/CTF Rules for industry consultation. The transitional rules being developed by the Department of Home Affairs under Schedule 12 of the Amendment Act are expected to be finalised shortly. 6. Your Compliance Readiness Checklist With the 31 March 2026 deadline imminent, each reporting entity should assess its current position against the following:(i) Integrating PF as a distinct risk category in your ML/TF/PF Risk Assessment, ensuring the assessment methodology is sufficiently specific to identify threats;(ii) Clearly designate the Senior Manager responsible for statutory approvals of policies and risk assessments and define the Governing Body's duty to exercise “appropriate ongoing oversight”;(iii) Assess whether the AML/CTF Compliance Officer meets the new statutory criteria, including being an Australian resident (where applicable), a fit and proper person, and possessing sufficient authority and independence;(iv) Refresh AML/CTF Programs and controls to align with the updated Rules and the outcomes-based framework;(v) Align evaluation schedules with the new statutory requirement to test Program effectiveness at least every three years, noting that any adverse findings now trigger an immediate review of the Risk Assessment;(vi) Implement ongoing CDD processes under section 30 of the AML/CTF Act; and(vii) Document transitional implementation steps, including approvals, milestones, and remediation activity.The immediate task for existing reporting entities is not to start from scratch, but to ensure that existing frameworks are updated to meet the new expectations in governance accountability, PF risk assessment, and CDD obligations.AUSTRAC has made clear that its approach to compliance will be “pragmatic and proportionate” but has also signalled that entities that fail to manage their ML/TF risks or ignore their obligations will face regulatory action. Having a documented implementation plan in place by 31 March 2026 is essential. 7. How We Can Assist H & H Lawyers has extensive experience advising reporting entities on AML/CTF compliance, risk assessments, and governance frameworks. We understand the practical challenges these reforms present, particularly for businesses operating across multiple jurisdictions.Our team can assist with:• reviewing and updating your ML/TF/PF Risk Assessments and AML/CTF Programs;• advising on governance structures, including the designation of Senior Manager and Governing Body roles;• assessing AML/CTF Compliance Officer suitability under the new statutory criteria;• preparing documented implementation plans and transitional strategies; and• providing ongoing compliance support as the reforms take full effect.To discuss how these reforms affect your business, please do not hesitate to contact us. DisclaimerThis newsletter is intended as general information only and does not constitute legal advice. The content is current as at 23 February 2026. Readers should seek professional advice tailored to their specific circumstances before making compliance decisions. To the extent permitted by law, H & H Lawyers excludes all liability for any loss or damage arising from reliance on the information contained in this newsletter.

Ad hoc and Institutional Arbitration

Arbitration is an increasingly preferred alternative to traditional litigation, particularly in commercial and international disputes. For businesses engaged in cross-border transactions, especially within the Asia-Pacific region, choosing between institutional and ad hoc arbitration can significantly influence the efficiency, cost and enforceability of dispute resolution. This article outlines key differences and practical considerations to help parties make informed decisions. Institutional Arbitration Institutional arbitration is conducted under the rules of a recognized arbitral institution, such as the Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC) or the Australian Centre for International Commercial Arbitration (ACICA). These bodies offer a structured procedural framework and dedicated administrative support. The benefits of institutional arbitration include clearly defined rules that reduce procedural uncertainty, experienced panels of arbitrators and stronger international recognition of awards. Importantly, parties do not need to negotiate fees directly with arbitrators, as institutional rules often prescribe a fee schedule or allow the institution to manage these arrangements. The presence of a secretariat or case management team ensures that timelines are monitored and adhered to, minimizing procedural delays. Institutions also handle logistical and ancillary services such as transcription, interpretation, and hearing room bookings, relieving parties of the administrative burden. While institutional arbitration is often associated with higher administrative costs and reduced procedural flexibility, many institutions now offer streamlined rules and expedited processes to balance efficiency with oversight. Some institutions even extend their facilities, such as venues and financial administration services, to support ad hoc arbitrations, providing a hybrid option that blends autonomy with professional support. Ad hoc Arbitration Ad hoc arbitration does not involve an administering institution. Instead, the parties themselves agree on procedural rules, nominate arbitrators and manage the process independently. This approach offers greater flexibility and can be more cost-effective in the right circumstances. The appeal of ad hoc arbitration lies in its autonomy and adaptability. Parties can customise procedures to suit their commercial needs, potentially achieving faster outcomes with reduced expense. However, without institutional support, parties must arrange all aspects of the process, including arbitrator appointments, fee negotiations and ancillary services. This lack of infrastructure can lead to delays, especially when parties are uncooperative or disputes arise about procedure. Additionally, enforcement of awards may be more difficult if procedural irregularities affect the arbitration’s perceived legitimacy. Strategic Considerations for PartiesFor businesses operating in the Asia-Pacific, selecting the right arbitration model depends on factors such as dispute complexity, anticipated costs, international enforceability and the likelihood of party cooperation. Institutional arbitration is generally better suited to large-scale, cross-border disputes where predictability, enforceability and reputational assurance are important. The procedural structure and secretariat support offered by institutions can be critical in managing complex cases and ensuring compliance with deadlines. In contrast, ad hoc arbitration may be appropriate for smaller claims or domestic matters where parties are aligned on process and cost considerations and may still benefit from certain institutional services when needed. Ultimately, well-drafted arbitration clauses are essential. Legal advice at the contract negotiation stage can ensure that the chosen arbitration method aligns with a company’s broader commercial objectives and mitigates legal risk. As arbitration continues to expand across the region, businesses would do well to engage counsel experienced in both institutional and ad hoc frameworks to guide their approach. ConclusionWhile both institutional and ad hoc arbitration have their respective merits, the growing preference for institutional arbitration, reflected in a 2015 survey where 79 per cent of users opted for institutional mechanisms, underscores its practical advantages in the context of international commercial disputes. Institutions offer procedural certainty, administrative support, and enhanced credibility of awards, which are crucial when dealing with complex, cross-border matters. Additionally, the elimination of direct fee negotiations with arbitrators and the availability of ancillary services contribute to a smoother and more reliable process. Although institutional arbitration can be more costly and less flexible, its structured framework often proves more dependable, particularly where cooperation between parties is limited. Ultimately, the decision between institutional and ad hoc arbitration should be informed by the specific needs of the parties, the complexity of the dispute, and the importance of enforceability and procedural support.

How Can International Arbitration Be Made Cost Effective?

Making International Arbitration More Cost Effective International arbitration remains a preferred method for resolving cross-border disputes, especially in the Asia-Pacific. However, the process can be costly and protracted, often attracting criticism from commercial parties who seek timely and efficient outcomes. As arbitration continues to evolve in the region, cost effectiveness requires coordinated efforts from parties, arbitrators, institutions and legislators alike. Enhancing Efficiency Through Strategic PlanningMuch of the responsibility for controlling arbitration costs lies with the parties and their legal representatives. Early case assessment and a clear procedural strategy can significantly reduce inefficiencies. By developing a well-defined case theory from the outset, parties can better assess settlement options and avoid unnecessary procedural steps. Importantly, parties should give more thought to dispute resolution clauses before a dispute arises. Too often, these clauses are treated as boilerplate without due consideration of their strategic impact. This is the moment to agree to mechanisms that can streamline future proceedings, such as adopting the IBA Rules on the Taking of Evidence in International Arbitration, which typically provide for more limited disclosure than common law approaches. Likewise, agreeing on the preparation of core document bundles and the use of admissions, even where these may be unfamiliar in civil law jurisdictions, can help narrow the factual issues in dispute and avoid unnecessary fact-finding. Choosing the right arbitrator is equally critical. Opting for a sole arbitrator, particularly one with availability and relevant industry experience, can eliminate the risk of scheduling conflicts and streamline decision-making. This is especially important in the Asia-Pacific region, where access to experienced arbitrators is competitive. Technology also plays a key role in reducing costs. Remote hearings now offer a practical alternative to in-person appearances, eliminating travel expenses and enabling greater flexibility in scheduling. Additionally, focusing on essential evidence and narrowing the scope of issues helps prevent the arbitration process from becoming unnecessarily prolonged. Arbitrators as Drivers of Procedural Efficiency Arbitrators play a pivotal role in setting the tone for an efficient process. Active case management, through clear timelines, procedural orders and firm expectations, helps ensure alignment throughout the arbitration. A key efficiency measure is for arbitrators to clarify the live issues early on, either by preparing their own list for party comment or asking the parties to jointly define them. This can dramatically reduce the time spent arguing peripheral matters. While arbitration is, to some degree, the parties' process, arbitrators should not be overly deferential. Effective case management may require firm intervention. Arbitrators should feel confident using procedural tools such as bifurcation, summary dismissal, or early partial awards, and they should not be deterred by concerns that being prescriptive might affect future appointments or trigger challenges to the award. The tribunal has a responsibility not only to the parties but also to the integrity of the arbitral process. Limiting the volume of submissions and requiring parties to justify the relevance of their evidence are further levers that tribunals can use to ensure the arbitration stays focused and proportionate. Arbitrators should also remain alert to opportunities for early settlement. In jurisdictions such as Singapore and Hong Kong, where mediation is well integrated, they can encourage or facilitate early resort to alternative dispute resolution (ADR) mechanisms. Institutional Support and Legislative Reform Arbitral institutions in the region, including the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC), have taken steps to improve procedural efficiency. Many now offer expedited procedures that compress timeframes and reduce unnecessary steps, making them ideal for less complex or lower-value disputes. Institutions can go further by actively managing arbitrator availability, enforcing award delivery timelines, and promoting the use of ADR within the arbitration process. In countries such as Australia and New Zealand, where mediation is common, institutions could empower tribunals to stay proceedings to allow for meaningful settlement discussions. Legislation also plays a role. Clear statutory endorsement of summary procedures and expedited mechanisms can remove uncertainties about their enforceability and encourage broader adoption. Recent reforms in arbitration laws across the Asia-Pacific reflect a growing appetite for speed and economy in international arbitration. Practical Steps to Consider To maximise cost efficiency, parties and legal representatives should: • Carefully negotiate dispute resolution clauses during contract formation, considering procedural rules (e.g. IBA Rules) that limit scope and disclosure. • Include pre-arbitration settlement or ADR clauses in contracts. • Agree early on procedural matters such as timelines, core bundles and potential admissions. • Engage experienced arbitration counsel familiar with regional practices. • Limit evidence and witnesses to those strictly necessary. • Consider remote hearings wherever appropriate. Conclusion Cost effective arbitration is not achieved through isolated efforts. Instead, it requires a coordinated approach involving proactive parties, decisive arbitrators, supportive institutions and forward-looking legislation. By embracing efficient case management, agreeing procedural rules and issues upfront, leveraging technology and adopting expedited procedures, international arbitration can continue to serve as a reliable and commercially viable dispute resolution mechanism, particularly for businesses operating across the Asia-Pacific.