We sincerely hope that you are all well. What a year! From end of 2019, NSW experienced a severe bushfire. Then there came Covid-19 pandemic. Thanks to Australian government, Covid-19 cases are now under control. We are stepping back to normal economic environment. In this 2020 tax return season, we have a lot to discuss. Please do not hesitate to contact us for any queries. We shall do our best to help you.
We highly recommend that unless it is absolutely necessary, most consulting work to be done via email and telephone.
When we do meet in person, our office has Covid-19 safe environment:
- Hand sanitizer
- Facial masks
- Keep social distance
ATO has advised that individual tax payers would be better off to start reporting from late July. This is because that ATO needs time to collecting necessary data from employers and other financial institutions.
Our Business Hours for Tax Return Season (25th July – 31st Oct 2019)
Address: 23A Oscar St, Chatswood NSW 2067 (* strictly by appointments only)
Tel: 02 9410 3661
Lily mobile: 0407 017 708
Emma mobile: 0402 875 574
|Monday||10am – 5.30pm||Emma & Lily|
|Tuesday||10am – 5.30pm||Lily & Emma|
|Wednesday||10am – 5.30pm||Lily & Emma|
|Friday||10am – 5.30pm||Emma|
|Saturday||10.30am – 3.30pm||Lily & Emma|
What is new in 2020?
2020 Individual tax rates for residents (Same as 2019)
*the below rates do not include 2% Medicare levy
|Taxable income||Tax on this income|
|$0 – $18,200||Nil|
|$18,201 – $37,000||19 c for each $1 over $18,200|
|$37,001 – $90,000||$3,572 + 32.5c for each $1 over $37,000|
|$90,001- $180,000||$20,797 + 37c for each $1 over $87,000|
|$180,001 +||$54,232 + 45c for each $1 over $180,000|
To claim working from home expenses – ATO has given a flat rate for electricity, internet, stationery and other sundry: 80 cents per hour. This rate only applies from 1 March 2020;
For example, a person working from home 40 hours per week, for 12 weeks. This person can claim “work related expenses: $0.80 x 40 x 12= $384.00;
If you choose not to use the flat rate method, you need to record all working hour details and keep receipts for every payment, pro rata if necessary;
- As always, income protection insurance premium is tax deductible;
- Don’t waste your concessional super contribution cap $25,000;
- Collect all receipts and have a proper diary record for your work related expenses.
- If you study a “directly work related” course, please write a declaration why the course is RELATED to your current work.
For all small businesses and employers – (annual turnover under $50 million)
- STP (single touch payroll) All employers are required to purchase a software, which links with ATO. For every pay day, detailed staff information, withholding tax, superannuation, etc. directly reported to ATO. This is compulsory now. There are many software providers for STP, please search for ATO aproved software providers list;
- Instant Asset Write-Off: $150,000 one-off deduction for a single equipment purchased after 12th March 2020. This policy may extend to 31 December 2020;
- For assets purchased bore 12th March 2020, the one-off deduction is $30,000;
- Pay for next 12 month expenses and claim deduction, such as insurance premium, rent, interest on loan, etc.
- Review your company bank account. Division 7A – company lending money to shareholders, maybe treated as “deemed dividends”;
- Please consult professional accountants for correctly reporting Jobkeeper income, Cash flow boost, and any other government grants.
For Property Investors
- You can pay the next 12 months interest on loan and claim deduction;
- Depreciation report from quantity surveyors may help you to reduce tax payable if you meet the conditions.
For Self Managed Super Fund
- All caps remain the same as before;
- More strict rules for borrowing from members;
- More strictly monitor “related transactions”, “in house assets”.
Refresh our memory – Continue from earlier years:
- From 9th May 2017, second hand investment properties cannot claim depreciation expenses. However a quantity surveyor’s report for building cost write-off (2.5%) is still available. It does not affect brand new investment properties.
- Rental property investors cannot claim “travel expenses” anymore. Such expenses cannot be claimed against “capital gain” either – i.e. It becomes a “black hole” expense.
Removal Super Contribution “10% test”:
- Everyone can do personal deductible contribution into his/ her super fund, as long as under the annual concessional cap of $25,000.
- If you are to claim thi, please make sure you present the letter issued from your super fund, proving that you elected to claim tax deduction.
Self Managed Super Fund – many new rules effective from 1 July 2017
- Pension cap $1.6 million tax free
- Transitional retirement plan 15% tax payable
- Concessional contribution cap $25,000
- Non concessional contribution cap $100,000 (3 years bring forward on conditions)
ATO AUDIT TARGETS 2020:
- Business in Cash Economy
- The Jobkeeper estimates error
- Work related expenses overclaim
- Incorrect deduction claims for Rental Property
- Australian tax residents’ overseas income and investment reporting
- And more…… For more information please go to: www.ato.gov.au or call our office.
We look forward to seeing you all again soon!
Liability is limited by a scheme approved by the Professional Standards Legislation