2019/20 Key Tax Changes

KEY CHANGES

COVID-19 Related Changes

This year so far has been an extraordinary year and facing uncertainty due to the world pandemic. No federal budget and no tax changes except for the government’s emergency economic response. I highlighted main ones put out by the government.

Increasing and Extending the instant Asset Write-Off – As part of the government’s economic response to COVID-19, the instant asset write-off threshold has been increased from 12 March 2020 until 31 December 2020 to $150,000 (up from $30,000). The eligibility range has been expanded to cover businesses with an aggregated turnover of less than $500 million.

The car limit $57,581

However this instant asset write-off does not applies to passenger vehicles over the car limit.

Home office running expenses during COVID-19 – Special arrangements have been put in place for employees to claim a work-related expense for working from home during COVID-19. The $0.80 per hour rate applies from 1 march 2020 until 30 June 2020 at which time it will be reviewed to see whether it needs to be extended.

There are 3 ways of calculating home office expenses. The methods are the:

1. Shortcut method (80 cents) – only available 1 March to 30 June 2020.

2. Fixed rate method (52 cents)

3. Actual cost method

Minimum pension drawdown rates halved for 2019/20 and 2020/21 – On 22 March 2020 the federal government announced that the minimum pension drawdown rates would be temporarily halve for the 2019/20 and 2020/21 financial years. This is due to many retirees losing a significant portion of their super account balance as sharemarkets have plunged due to the coronavirus crisis. This rule change assists retirees who do not wish to sell their investment assets while the value of those assets is reduced.

Jobkeeper and Jobseeker – Those who have received JobKeeper payments from their employer don’t need to do anything different.

The payments will be included as salary and wages or allowances in their regular income statement, which their employer provides directly to the ATO.

Sole traders who have received the JobKeeper payment on behalf of their business will need to include the payments as assessable income for the business.

Tax-free cash flow boosts for employers – Temporary cash flow boosts will support small and medium businesses and not-for-profit organisations during the economic downturn associated with COVID-19.

Eligible businesses and not-for-profit (NFP) organisations who employ staff will receive between $20,000 to $100,000 in cash flow boost amounts by lodging their activity statements up to the month or quarter of September 2020.

The cash flow boosts will be delivered as credits in the activity statement system. They will generally be equivalent to the amount withheld from wages paid to employees for each monthly or quarterly period from March to June 2020. In practice, this means you keep the amounts you have withheld from payments for these periods. However, there are some exceptions.

An additional cash flow boost will be applied when activity statements for each monthly or quarterly period from June to September 2020 are lodged. These credits are equal to the total boosts credited for March to June 2020. They will be paid out in either two or four instalments depending on your reporting cycle.

You must lodge your activity statements to receive the cash flow boosts.

Early access to superannuation – For those who took advantage of the government scheme allowing early access to superannuation.

If you received early access to your super this year under the special arrangements due to COVID-19, any amounts you’ve withdrawn from super under this program are tax-free and you do not need to declare them in your tax return.