5 things to know for your 2020 tax return

5 things to know for your 2020 tax return

This year has been difficult for many due to COVID-19; and there are some significant changes this tax time as a result. So here is a list of 5 important things you need to know for your 2020 tax return to prepare and consider before lodging.

1.   Accessing your payment summary or income statement

To reduce the risk of mistakes and amendments to tax returns, wait for your employer to mark your statement as ‘tax ready’. This should be done by 31 July.

Employers no longer need to give their employees payment summaries or lodge a payment summary annual report to us for information reported and finalised through Single Touch Payroll (STP). Instead, employees’ income statements will be available to them in ATO online services through myGov.

After the last pay event for the financial year, employers need to make a finalisation declaration. They must do this by:

  • 14 July if they have 20 or more employees
  • 31 July if they have 19 or fewer employees

 

2.  Include all your income

When you do your tax return, you must include all the income you received during the financial year. This includes salary, wages, payments from Centrelink, business income, bank interest and some other types of income.

If you have received early access to your superannuation due to COVID-19, you do not need to pay tax on these amounts and do not need to include these amounts in your tax return.

If you take leave, are temporarily stood down or lose your job and receive a payment from your employer, there are different tax rules that may apply for the different payments. See tax on employment payment.

3.   Shortcut method

The ATO has introduced an optional shortcut method for employees working from home during COVID-19. Employees can claim 80 cents for each hour they worked from home between 1 March 2020 and 30 June 2020, to cover all deductible expenses.

See also:

Tax deduction for working from home during COVID-19

 

3.  JobKeeper payment

JobKeeper payments are treated the same as your usual salary or wages from your employer. If you receive JobKeeper as an employee, it will be included in your income statement as either salary and wages or as an allowance, depending on your circumstances.

If you’re a sole trader who has received JobKeeper payments, you need to include the payments as business income in your individual tax return. If your business is a partnership, trust or company, and you received JobKeeper payments, you don’t need to include it as assessable income in your individual tax return – but you need to report it as part of your business income.

See also:

JobKeeper Recap

 

4.   Instant asset write-off

From 12 March 2020 until 31 December 2020:

  • the instant asset write-off threshold is $150,000 (up from $30,000)
  • the eligibility range  was expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

 

Businesses with an aggregated turnover of less than $500 million are able to accelerate their depreciation deductions on the purchase of certain new depreciable assets. To claim this tax time, eligible assets must be first used or installed ready for use by 30 June 2020.

See also:
Instant Asset Write-Off Extended

 

5.   Progress of your return

If you are unable to make a payment by the due date, you or your tax agent can submit a payment-only deferral request form on your behalf until 14 September 2020 for eligible obligations.

The ATO starts full processing of 2019–20 tax returns on 5 July 2020 and expects to start paying refunds from 16 July 2020. Generally, they will finalise the majority of electronically-lodged current year tax returns within 12 business days of receipt.

If you lodge your own tax return using myTax, you need to do so by 31 October.

If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October.

The ATO also provides Tax Time Toolkits, a suite of resources to help you understand your obligations, prepare and lodge tax returns correctly.

 

CHECKLIST OF TAX DEDUCTIBLE ITEMS

 

Everyone wants to pay less tax, right? To do that you need to know what you can claim… and what you can’t.

It’s not about cheating the system, or creative accounting. It’s all about claiming what you’re entitled to.

Here is a PDF checklist of tax deductible items for you

 

If you need assistance with your tax return, please feel free to contact KMT office on 08 8431 0022 or email kmtp@kmtpartners.com.au.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from your accountants at KMT Partners. Information is current at the date of issue and may change.

Source: ATO

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