What you need to know about lodging your tax return in 2020

Most Aussies will be lodging their tax return between July 1 and October 31. This year has been somewhat different, however, with covid-19, so you need to find out if you’re eligible for any coronavirus-related tax deductions before you file.

If you’ve been working from home, lost some or all of your working hours, or if you’ve received extra benefit payments, you might be able to claim more deductions than usual.

How to lodge your tax return

At a tax agent’s office

Some agents have been able to open their offices again so they can meet clients. Some are choosing not to, however, or you might want to maintain social distancing.

With an online tax agent

If you prefer to use a tax agent but you’re unable or unwilling to see one in person, then an online tax agent could be the answer. An online agent will do everything for you that an in-person agent will and you can also write the cost of this service against your return.

With myGov

If your tax return is simple, then you can file it – free of charge – with myGov any time between July 1 and October 31.

Do I have to file immediately?

No, you don’t need to lodge your tax return straight away. You’ve got until October 31 2020, or May 2021 to file if you’re using an agent, so you can take your time. You’ll need your up-to-date income statement from your employer in order to file for the 2019-2020 tax year, as you might find you’re owed a refund.

This year, more than most years, you should take the time to find out if you’re eligible for any extra deductions and how to claim them. You could see a few hundred extra dollars in your pocket.

Coronavirus-related deductions

The ATO is offering a few extra deductions this year due to coronavirus.

Working from home expenses

When lockdown started in March of this year, any Australians able to work from home did so, with hundreds of thousands changing their office for their living room. 

You can claim your home-based office and its running expenses against your tax return and because so many people were suddenly working from home, the ATO devised an easy way to claim.

You can claim 80 cents per hour for each hour you worked from home from March 1 2020 to June 30 2020. This makes it easy to claim for all your office expenses, such as heating, broadband, new office furniture and so on. It’s also not necessary this year to have a dedicated office – if you can do what you need to do from your sofa, that’s good enough. 

Home-schooling expenses aren’t deductible

Any expenses relating to your children’s education, such as online resources, books, art supplies or similar aren’t deductible. Tax deductions are for expenses that enable you to earn an income or to increase your earning capacity, so you can claim for your own learning costs, but not for those of your children.

Claiming for PPE

If you’ve bought personal protective equipment to reduce your chance of contracting covid-19 then you might be able to claim the costs back, but only if you need it to do your job effectively.

If you’re a nurse, doctor or ambulance driver, for example, and you bought your own gloves, sanitiser and face masks to use at work, then you can claim these expenses. If you bought another set of gloves, masks and sanitiser to use at home and for grocery shopping, you can’t claim for these.

If you bought your PPE for work and your employer has reimbursed you, then you can’t claim for them on your tax return.

Tax on JobKeeper or JobSeeker payments

If you received any JobKeeper or JobSeeker payments in the 2019-2020 financial year then you might need to add more details into your return.

JobKeeper payments

These payments are taxable, at your standard rate. The money is included in your total taxable income for the year.

The good news is that you don’t need to declare this money on your tax return – your employer will simply pay you as usual and the usual amount of tax will be deducted at source.

If, however, it turns out you’ve paid too much tax during the year, you’ll get a refund. If, then, you’re getting JobSeeker payments and you’re below the tax–free threshold for the year ($18,200 for 2019–2020) you won’t be paying any tax on them.

JobSeeker payments

JobSeeker payments are also included in your overall taxable income and you might need to pay tax on these payments when your return is assessed. You can ask Centrelink to withhold a small amount of your JobSeeker for tax to make life easier.

If your total income for 2019–2020 is less than $18,200, then you won’t have to pay any tax and if Centrelink withheld tax from your payments and you earned under the threshold then you’ll get a refund.

Tax on annual leave payouts and redundancies

Do I pay tax on my redundancy payment?

Very often, redundancy payments are tax – free and don’t go towards your assessable income. If the payout is quite large, however, you might need to pay tax on some of it. Redundancy payments vary in size and the tax – free amount is affected by how long you worked for the employer.

The 2019–2020 tax–free amount is $10,638 plus $5,320 for each year you worked there. 

If your redundancy payment was $25,000 and you worked full–time at the company for three years, you’d face a tax threshold of $10,638 + ($5,320 x 3), which comes to a total of $26,598. Your redundancy payment of $25,000 is under this threshold so it doesn’t need to be included in your tax statement. Any amount over this threshold does need to be declared, however.

Tax on annual leave payouts

If you leave your job voluntarily or you’re made redundant, then your employer owes you your annual leave balance. If you have any holiday saved up at the time you leave, you’ll get a lump sum. This lump sum is liable for tax at your standard rate, but your employer usually withholds the tax so you don’t have to do anything.

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