2020 has been a difficult year for everyone due to the significant challenges that the community has experienced. The Australian Taxation Office (ATO) recognises these circumstances and have made some changes to support the community.
- Jobseeker (Newstart Allowance)
This payment is available for individuals who have been stood down by their employers, self-employed, casual workers and contract workers who meet the income test as a result of the economic downturn due to COVID- 19. The payment amount depends on your situation and from April 2020, the payment rate includes a job keeper payment and a COVID-19 supplement of $550. Click Jobseeker for more information.
2. Early Access to Superannuation
Individuals financially affected by COVID-19 can access their superannuation early and need not pay any tax on amounts released and will not need to declare in their tax return. Eligible Australian and New Zealand citizens and permanent residents are able to apply to access up to $10,000 until 30 June 2020 and an additional $10,000 from 1 July 2020 until 24 September 2020. Click Superannuation for more information.
3. Additional Work Related Expenses
Taxpayers working in jobs that require physical contact or close proximity with customers or clients during COVID-19 may be able to claim a deduction for items such as face masks, gloves, sanitiser or anti-bacterial spray if they have paid for the items and not been reimbursed by employers. Click 2020 Deductions for more information.
The ATO has introduced a temporary “shortcut method” of deducting 80 cents per hour for all running costs and depreciation of working from home from 1 March to 30 June 2020. The shortcut method covers all additional deductible running expenses, including: electricity for lighting, cooling or heating and gas heating expenses, the decline in value of home office furniture or equipment, phone and internet and computer consumables, such as printer ink and stationery. Click Home Office Expenses for more information.
4. Business and Employers
Instant Asset Write Off. Businesses with an aggregated turnover of less than $500 million are able to claim their depreciation deductions on the purchase of eligible new depreciable assets held and first used or installed from 12 March 2020 until 30 June 2020. The instant asset write off threshold amount for each asset is $150,000 from 12 March 2020 to 30 June 2020 up from $30,000 previously.
Job keeper payment is a subsidy provided by the government to businesses impacted by COVID-19. This grant will allow businesses to continue paying their employees and provides a fortnightly payment of $1500 (before tax) per eligible employee until 27 September 2020. All Job Keeper payments are assessable income of the business that is eligible to receive the payments. If you have received jobkeeper payment, it should be shown on your payment summary from your employer.
5. Other Changes
- Medical Expenses. Tax offset for medical expenses or disability aids, attendant care or aged care is no longer allowed to be claimed.
- Vacant Land. Interest incurred on loans to acquire the land, land taxes, council rates, maintenance costs are no longer tax deductible after 1 July 2019 even if the land is acquired before this date. However, if the land is used for producing assessable income, used in carrying on a business or vacant due to fire, flood or substantial building defects the occurred with the last three years then a deduction can still be claimed. These changes do not apply to corporate tax entities but affect individuals, partnerships, self-managed superannuation funds and certain trusts.
- Stapled Structures. From 1 July 2019, a 30% withholding tax rate applies to trading income that is converted to passive income via a stapled structure or distributed by a trading trust or income from agricultural land and residential housing (other than affordable housing).
- Capital Gains Tax for foreign investors. The Capital Gains Tax main residence exemption which allows taxpayers not to pay tax on their main residence will only be able to be claimed for disposals that happen up until 30 June 2020 and only if they meet other existing requirements for an exemption.
- Payment Summaries. Employers are no longer required to issue payment summaries nor lodge a payment summary annual report. Employees will be able to access their payment summary on ATO’s online service through MyGov or through their tax agent.
- Family Trusts. Trustees of family trusts are liable to pay trustee beneficiary non-disclosure tax (TBNT) on circular trust distributions from 1 July 2019. When trustees of those trusts become presently entitled to a circular trust distribution, TBNT is imposed on the untaxed part of that distribution at the top marginal tax rate, plus the rate of Medicare levy.
- Assessable Income. Crypto-currency, sharing economy and crowd-funding come with tax implications and need to be declared on tax return. Additionally, taxable grants, additional income-earning activities, employment termination payments, and JobSeeker payments need to be included and declared on taxpayer’s tax return.