2021/22 financial year key tax changes

COVID-19 disaster payment –If you received a COVID-19 disaster payment during 2021-22, because state or territory health orders prevented you from working in your usual employment, that payment is exempt from income tax, and you do not include the payment in your return

Pandemic leave disaster payment –For 2021-22 you must include it in your tax return as income. These payments were made to eligible individuals who were unable to earn income because either you had to self-isolate or quarantine at home or you were caring for someone with COVID-19.

Deduction for COVID-19 test –You can claim a deduction in 2021-22 for costs you incurred for COVID-19 test expenses. This is if you used the test for a work-related purpose, such as to determine whether you could attend or remain at work. The test can be PCR or rapid antigen (RAT) test

Low and middle income tax offset (LMITO) increase – The base amount is $675 for taxable income less than $37,000. The maximum is $1,500 for taxable income less than $90,000.

For taxable income from $90,001 to $126,000 you get $1,500 minus 3 cents for every dollar of the amount above $90,000.

As previous income years, if your taxable income is $126,000 or more, you will not receive the LMITO.

Personal super contributions cap –For 2021-22 and onward the concessional contributions cap increased from $25,000 to $27,500

Government super contributions –Lower income threshold increased to $41,112 and higher income threshold increased to $56,112. The maximum entitlement of $500 remains unchanged.

Removal of the $450 super threshold –The threshold meant workers were only entitled to SG contributions if they were over the age of 18 and earned $450 or more from an employer per calendar month. The removal of the threshold has now been legislated and come into effect on 1 July 2022. Therefore, from start of new financial year all workers are entitled to SG contributions regardless of age and earnings.

Director identification number (director ID) – From April 2022 director ID is required prior to set up a new company.

A director ID is a unique identifier given to a director who has verified their identity with the Australian Business Register Services (ABRS). This will help to prevent the use of false or fraudulent director identities.

The director must apply for their own director ID to verify their identity. No one can apply on behalf of the director.

Small Business Income Offset – This offset for unincorporated small business entities (with an aggregated turnover of less than $5m) has increased to 16% and capped at $1,000 per individual for each income year.

For 2021-22– 16% and $1,000 rebate offset.

Increase in SMSF membership from 4 to 6 – From 1 July 2021, the maximum numbers for a Self-managed superannuation funds (SMSFs) and Small Australian Prudential Regulation Authority (APRA) funds has increased from 4 to 6 members.

New Company Tax Rate – The company tax rate for base rate entities reduced to 25%. Aggregated turnover of $50m and tax rate for all other companies of 30% remain unchanged

Loss Carry Back Extension –Loss carry back (LCB) was introduced in the 2020-21 financial year that provided a refundable tax offset that eligible corporate entities can claim

1. After the end of their 2020-21 and 2021-22 income years

2. In their 2020-21 and 2021-22 company tax returns.