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  • Tax time information for Members of Parliament

    Our tax time information for Members of Parliament.

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    Supporting your constituents

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The events of 2020 changed the way of life for many Australians. Everyone experienced a climate of uncertainty and had to adapt to a rapidly changing environment. These challenges have continued throughout 2021, and remain for individuals and businesses as they continue to deal with the impacts of the pandemic.

    We understand your constituents may have questions about tax and the economic measures designed to assist them. We note that changes to your constituents' circumstances over the 2020–21 income year may change the types of income they have received this year and what they would normally claim at tax time.

    This kit will help you and your staff inform constituents about key issues to be aware of this tax time, and where to get help and information on tax matters.

    As a starting point, we recommend directing your constituents to Tax time essentials. This page has been developed to make lodging a tax return quick, secure and simple – whether your constituents choose to lodge themselves or use the services of a registered tax agent.

    We also have a suite of Tax time toolkits designed for tax professionals, major employers, member associations and industry peak bodies. The toolkits have information about what your constituent’s can and can’t claim based on their occupation, tips for common deductions (like working from home and car expenses). They also include ready-to-use messaging employers and associations can use to help educate their members.

    What's new this tax time

    There are changes this tax time that may affect your constituents.

    For both individuals and business this includes:

    For individuals this includes:

    For businesses this includes:

    Other key changes from 1 July 2021:

    JobKeeper

    The JobKeeper payment scheme ended on 28 March 2021, with applications through our digital services closing on 30 April 2021. Employers who seek to access JobKeeper after this time will need to contact the ATO for any late applications. If employers require support after the end of JobKeeper, they may be eligible for the JobMaker Hiring Credit payment or other support and economic stimulus measures such as JobMaker.

    Employees

    Eligible employees were paid an amount equivalent to the JobKeeper payment by their employer. The employer was then reimbursed by the ATO. The payment received by employees is either incorporated into their income statements as salary and wages or an allowance. These amounts need to be included in the employees' assessable income. The ATO will pre-fill these income amounts in the employees' returns based on their employers' income statements. Most employers have until 14 July to finalise their data, they will let employees know if there are any delays in the finalisation of their income statement. Tax is withheld from employee income payments at their marginal tax rate, so they may have received less than the relevant JobKeeper amount in their bank account.

    Employers and sole traders

    JobKeeper payments are taxable and need to be included as business income in the tax return.

    If a business is a sole trader who has received JobKeeper payments, they need to include the payments as business income in their individual tax return.

    If a business is a partnership, trust or company, they need to include JobKeeper payments as either:

    • business income in the partnership or trust tax return
    • income in the company tax return.

    The business's accounting method will also affect the total JobKeeper payments that need to be included in their tax return. If the business operates on:

    • an accruals accounting basis  
      • JobKeeper payments relating to valid business monthly declarations made on or before 30 June 2020 are included in their 2019–20 tax return
      • JobKeeper payments relating to valid business monthly declarations made on or after 1 July 2020 are included in their 2020–21 income tax return
       
    • a cash accounting basis  
      • JobKeeper payments received on or before 30 June 2020 are included in your 2019–20 income tax return
      • JobKeeper payments received on or after 1 July 2020 are included in their 2020–21 income tax return.
       

    Pre-fill information

    The ATO provides information about JobKeeper payments to help small businesses prepare their 2020–21 tax returns more accurately.

    From early July, sole traders who have received JobKeeper payments for themselves and eligible employees will be able to see the total amount of JobKeeper payments received in either:

    • Online services for business account
    • Online services for individuals and sole traders through myGov.

    These amounts are 'information only' you will need to check and enter these amounts in to your tax return.

    If you lodge with a registered tax agent, they will also have access to this information.

    Small businesses and their agents should review and cross-check the payment amounts with their own records.

    Sole traders, partnerships, companies, and trusts that have received JobKeeper payments for an eligible business participant will get a letter, a myGov message or an email from us by early July to remind them to include JobKeeper payments in their 2020–21 income tax returns. Their registered tax agent may get this information on their behalf.

    See also

    JobMaker Hiring Credit

    The JobMaker Hiring Credit scheme is an incentive for businesses to employ additional young job seekers between 16–35 years old. Eligible employers can access the JobMaker Hiring Credit for each eligible additional employee they hire between 7 October 2020 and 6 October 2021.

    Eligible employers may receive up to:

    • $200 a week ($10,400 over a year) – for each eligible additional employee between 16 to 29 years old inclusive.
    • $100 a week ($5,200 over a year) – for each eligible additional employee between 30 to 35 years old inclusive.

    Registrations for the scheme opened on 6 December 2020. Employers must register, nominate their eligible employees through Single Touch Payroll (STP) and then claim.

    JobMaker Hiring Credit payments are paid in arrears. For each JobMaker period, employers must submit their claim form within the relevant claim period.

    Employees do not receive the JobMaker Hiring Credit payment in their own salary, wages or other payment. Employers pay their employees like they usually would.

    All payments under the JobMaker Hiring Credit scheme are taxable. The normal deductions apply for amounts employers pay to employees if those amounts are subsidised by JobMaker Hiring Credit payments.

    Employers that are not eligible to claim the JobMaker Hiring Credit may be able to claim other government support payments, for example wage subsidies from the Department of Education, Skills and EmploymentExternal Link.

    Changes to end-of-financial-year processes for employers

    Employers who report through Single Touch Payroll (STP) will no longer need to give their employees payment summaries or lodge a payment summary annual report to the ATO for those amounts reported through STP.

    Employers who are reporting through STP should tell their employees:

    • not to expect a payment summary and to contact their agent
    • not represented by an agent, to visit myGov to complete their tax return.

    While most employers should now be reporting through STP, those who are yet to be onboarded must still provide payment summaries to their employees and a payment summary annual report to the ATO.

    Finalising STP records

    After the last pay event for the financial year, employers need to make a finalisation declaration. For most employers, they must do this by 14 July.

    Employers impacted by COVID-19 and requiring additional time can complete their STP finalisation up until 31 July. Employers that need additional time need to let their employees know when their information is finalised and 'tax ready' so they can lodge their return.

    For small employers (19 or fewer employees) who only have closely held payees, they must make a finalisation declaration by the due date of the payee’s income tax return.

    For employers who have a mixture of both closely held payees and arms-length employees, they must make a finalisation declaration for their closely held payees by 30 September each year.

    If employers can't make a finalisation declaration by the due date, they will need to apply for a Finalisation declaration deferral. Employers impacted by COVID-19 can complete their STP finalisation up until 31 July without applying for a deferral.

    See also

    STP reporting for closely held payees

    The exemption for small employers with 19 or fewer employees to report their closely held (related) payees through STP ends on 1 July 2021.

    Closely held payees include family members, directors or shareholders of a company, or beneficiaries of a trust.

    Other (arm's length) employees are already required to be reported through STP on or before each payday. Employers can choose to report their closely held payees sooner if they are ready.

    Changes to payment summaries

    Most employees will not receive a payment summary from their employer this year.

    This is because most employers are now required to report their employees’ income, tax and super information directly to the ATO through Single Touch Payroll, so taxpayers can find all their information in one place when they need it.

    For those who use a registered tax agent to prepare their income tax return, they don’t need to do anything. The ATO provides agents with a direct link to this information, so they are fully equipped to lodge on behalf of their clients.

    For those who lodge their own tax return, they can access their income statement (previously known as a payment summary) through our online services for individuals. The income statement information will also pre-fill in myTax.

    It’s important for taxpayers to wait until their employer finalises their income statement to make it ‘tax ready’. Most employers have until 14 July to do this. Employers impacted by COVID-19 who require additional time can complete their STP finalisation up until 31 July.

    The ATO will notify taxpayers, via their preferred method (for example, SMS, email) when their income statement becomes 'tax ready' through their myGov Inbox – provided they have a myGov account and are linked to the ATO.

    Taxpayers can find out whether they will be receiving an income statement or a payment summary this tax time by talking to their employer.

    For those who don’t have a myGov account, setting one up is easy – see how to create your myGov account and link it to the ATO.

    JobSeeker

    The JobSeeker payment was introduced on 20 March 2020 as part of the Social Services Legislation Amendment (Welfare Reform) Act 2018.

    JobSeeker is a taxable payment and needs to be included in tax returns under 'Australian Government Payments and Allowances'. The ATO will automatically include this information in people's returns once the information is reported by Services Australia, which is usually done by early July. If people are lodging before that information is ready, it is important that they remember to include any JobSeeker received in their return.

    A number of existing payments are being phased out or replaced with the JobSeeker payment or another type of payment, such as the Age Pension. The affected payments and their end dates are included in the table below.

    Payments being phased out or replaced with JobSeeker

    Payment name

    End date

    Target Transition Payment

    Newstart Allowance

    20 March 2020

    JobSeeker

    Widow B Pension

    20 March 2020

    Age Pension

    Wife Pension

    20 March 2020

    JobSeeker

    Age Pension

    Carer Payment

    Bereavement Allowance

    20 March 2020

    Will cease at the end of the bereavement period

    Sickness Allowance

    20 September 2020

    JobSeeker

    Widow Allowance

    1 January 2022

    New claims closed 1 July 2018

    Partner Allowance

    1 January 2022

    New claims closed 20 September 2003

    Disaster relief payments

    The following payments are assessable income. Individuals need to report this income in their tax return for the income year in which they receive these amounts.

    COVID-19 Disaster payments for people affected by restrictions

    On 4 June 2021 the Australian Government announced that it will provide COVID-19 Disaster Payments to eligible individuals from 8 June 2021. One of the requirements for eligibility is that the individual is unable to earn income because state or territory health restrictions prevent them working in their usual employment.

    COVID-19 Disaster Payments are being administered by Services Australia.

    Further information about the payment and eligibility can be found on the Services Australia website – COVID-19 Disaster Payment for people affected by restrictionsExternal Link.

    Pandemic leave disaster payments

    • these payments provide support to individuals in certain states who can't earn an income because either they:  
      • must self-isolate or quarantine at home
      • are caring for someone with COVID-19.
       

    Non-assessable, non-exempt income government payments

    • Government support payments to volunteer firefighters in relation to the 2019–20 bushfires
    • Disaster Recovery Allowance paid directly as a result of the bushfires commencing in Australia during 2019–20
    • Ex-gratia disaster income support allowance for special category visa (subclass 444) holders paid directly as a result of the bushfires commencing in Australia during 2019–20
    • payments by a State or Territory relating to the 2019–20 bushfires under the Disaster Recovery Funding Arrangements 2018External Link.

    Payments treated as exempt income

    • Disaster Recovery Payment.

    See also

    JobMaker Plan – bringing forward the Personal Income Tax Plan

    Stage 2 of the Personal Income Tax Plan was brought forward from 1 July 2022 to 1 July 2020. Taxpayers do not need to do anything different when lodging a 2020–21 tax return.

    From the 2020–21 income year, the changes:

    • Increased the low income tax offset (LITO) from $445 to $700 and adjusted the phase out rules
    • Increased the top threshold of the 19% personal income tax bracket from $37,000 to $45,000
    • Increased the top threshold of the 32.5% personal income tax bracket from $90,000 to $120,000
    • Retained the low and middle income tax offset (LMITO) for the 2020–21 income year. The government has also announced in the 2021–22 federal Budget that the low and middle income tax offset will continue to be available for the 2021–22 income year.
    • An offset is not a refund and can only reduce the amount of tax that taxpayers need to pay. The amount of the offset they may be entitled to will vary depending on their individual circumstances, such as their income level and how much tax they paid throughout the year. The maximum offset amount is $1,080 per year.
    • Taxpayers don't need to complete a section in their tax return to get this tax offset. The ATO will work out their tax offset for them once they lodge their tax return. If they use myTax, the amount will be displayed in the estimated calculation.
    • Amounts withheld under the previous withholding schedules used in the first part of the income year will be taken into account once returns are lodged.

    Exempting granny flat arrangements from capital gains tax

    In the 2020 Budget, the Government announced a capital gains tax (CGT) exemption for granny flat arrangements where there is a formal written agreement.

    The exemption will apply to arrangements with older Australians or those with a disability. The measure will take effect from 1 July after Royal Assent of the enabling legislation.

    Under the measure, CGT will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older Australians or people with disabilities.

    This change will apply to agreements that are entered into because of family relationships or other personal ties and will not apply to commercial rental arrangements.

    Working from home

    The temporary shortcut method has been extended until 30 June 2022. The shortcut method is available to employees and business owners claiming working from home deductions. It allows them to claim an all-inclusive rate of 80 cents for every hour they work from home. This method requires simple record keeping and a single calculation step. If they use this method, they can't claim any additional deductions for any other working from home expenses.

    Taxpayers can use the shortcut method to claim their work from home expenses for the periods:

    • 1 March 2020 to 30 June 2020 in their 2019–20 tax return
    • 1 July 2020 to 30 June 2021 in their 2020–21 tax return
    • 1 July 2021 to 30 June 2022 in their 2021–22 tax return.

    Taxpayers can use the method that will give them the best outcome, so long as they meet the criteria and record keeping requirements. The other available methods are the:

    • Fixed rate method – 52 cents per hour for the additional running costs incurred (such as electricity, heating, cooling), plus the work-related portion of phone and internet costs, stationery and the decline in value of IT equipment
    • Actual expenses method – claim the actual work-related portion of all their running expenses, which need to be calculated on a reasonable basis.

    The temporary working from home shortcut method can also be used by individuals running home-based businesses.

    See also

    Services Australia income compliance program refunds

    For individuals who receive a refund from the Services Australia income compliance program as a result of the cancellation of their debt, they or their tax agent do not need to take any action for tax purposes. That is:

    • they will not be taxed on this amount
    • they should not include it in their tax return
    • they do not have to submit an amendment for a prior year return.

    Submitting an amendment may affect their assessable tax income and any repayment amounts. If they need to lodge an amendment for other purposes, they should contact the ATO or their tax agent for assistance.

    Eligible Services Australia clients will also receive settlement payments under the recently concluded Income compliance class action. Services Australia expect to start making these payments in early 2022 so impacted clients don't have to do anything in respect of those payments this income year. The ATO will advise as soon as possible if there are any tax implications for these payments for next year.

    Early release of superannuation due to COVID-19

    The COVID-19 early release of super program closed on 31 December 2020.

    Individuals who accessed their super early under the COVID-19 early release of super program do not need to declare this in their tax return. Any eligible amounts withdrawn under this program are tax-free.

    Reducing superannuation minimum drawdown rates

    To support retirees during the COVID-19 pandemic, the Government reduced the minimum annual payment for account-based pensions and similar products for the 2019–20 and 2020–21 income years. The minimum drawdown payment requirements for these income years was reduced by 50%.

    On 29 May 2021, the Government announced that this reduction will also be extended to the 2021–22 income year. Regulations to enable this extension have yet to be enacted.

    Retirees can contact their superannuation fund to let them know if they want to reduce their minimum pension drawdown amount, and they will make the changes for them.

    Superannuation drawdown rates will return to their full requirements for the 2022–23 and later income years.

    Boosting cash flow for employers

    Eligible businesses and not-for-profit organisations who employ staff will receive between $20,000 and $100,000 in cash flow boost amounts by lodging all monthly or quarterly activity statements from March to September 2020.

    The initial cash flow boost is generally based on the amount of PAYG withholding for the relevant period.

    Additional cash flow boosts will be applied when activity statements are lodged for June to September 2020. They will be credited in either two or four instalments, depending on the reporting cycle.

    Employers must lodge their activity statement to receive the cash flow boosts.

    If entitled, cash flow boost amounts will be credited when employers lodge up until two years after the due date of the eligible activity statements. For example, if the June 2020 activity statement was due 28 July 2020, employers will have until 28 July 2022 to lodge to receive the cash flow boost.

    Employers don't need to pay tax on the amount of the cash flow boost and the cash flow boost is not subject to GST because there is no supply for the payment.

    While the September 2020 activity statement is the last one to receive cash flow boosts, help is still available. We understand some businesses may continue to struggle. If taxpayers are worried they won’t be able to pay on time, or they've already missed a due date, we encourage them to contact us now to discuss their situation. We have a range of options to support them.

    Interaction of tax depreciation incentives

    In 2020 the government introduced measures to help businesses recover from the impacts of COVID-19.

    Eligible business entities may be looking at which tax depreciation incentive is right for them.

    Only one incentive can apply for an asset. If more than one incentive could apply to an asset the order of application is (subject to opt out choices):

    1. Temporary full expensing
    2. Instant asset write-off
    3. Backing business investment
    4. General depreciation rules

    A high-level snapshot is available to explain the Interaction of the tax depreciation incentives. For a summary of this content in poster format, see Interaction of tax depreciation incentives (PDF, 1.2MB)This link will download a file.

    Temporary full expensing

    The current law allows businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. Corporate tax entities unable to meet the $5 billion turnover test may still be eligible for temporary full expensing under the alternative income test. The eligible new assets must be first held, and first used or installed ready for use for a taxable purpose, between 7.30pm AEDT on 6 October 2020 and 30 June 2022.

    For businesses with an aggregated turnover of less than $50 million, temporary full expensing also applies to the business portion of eligible second-hand depreciating assets.

    Businesses can also immediately deduct the business portion of the cost of improvements to eligible depreciating assets (and to assets acquired before 7.30pm AEDT on 6 October 2020 that would otherwise be eligible assets) if those costs are incurred between 7.30pm AEDT on 6 October 2020 and 30 June 2022.

    If the business' income year ends on 30 June, deductions under temporary full expensing are only available in the 2020–21 and 2021–22 income years.

    If an asset qualifies for an immediate deduction under temporary full expensing in an income year, a business can choose to claim a deduction using other depreciation rules. However, they must notify us in an approved form that they have chosen not to apply temporary full expensing to the asset. The choice is unchangeable, and they must notify us by the day they lodge their tax return for the income year to which the choice relates.

    As part of the 2021–22 federal Budget the government announced an extension to the temporary full expensing measure until 30 June 2023.

    As at 1 July 2021 this extension is not yet law.

    Loss carry back

    Under the current law the loss carry back provides a refundable tax offset that eligible corporate entities (companies, corporate limited partnerships and public trading trusts) can claim:

    • after the end of their 2020–21 and 2021–22 income years
    • in their 2020–21 and 2021–22 company tax returns.

    Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it was able to deduct the loss in the earlier year using the loss year tax rate.

    The eligible entity does not need to amend the earlier income years to claim the offset.

    If an entity does not choose to carry back a loss, the loss may be carried forward to use in a later income year.

    Loss carry back is intended to interact with temporary full expensing, encouraging new investment which may result in tax losses. The choice to carry back tax losses may result in a tax refund which will increase business cash flow.

    As part of the 2021–22 federal Budget the government announced an extension to the temporary loss carry back to the 2022–23 income year.

    As at 1 July 2021 this extension is not yet law.

    Instant asset write-off

    If temporary full expensing doesn't apply to an asset, businesses may still be able to apply the existing instant asset write-off.

    For each asset first used or installed ready for use between 12 March 2020 and 30 June 2021, and purchased by 31 December 2020, the instant asset write-off threshold amount is $150,000 (up from $30,000). Eligibility extends to businesses with an aggregated turnover of less than $500 million (up from $50 million).

    Eligible businesses can claim a deduction for the business portion of each asset first used or installed ready for use, costing less than the relevant threshold amount. The instant asset write-off eligibility criteria and thresholds have changed over time, so constituents should make sure they check the eligibility criteria for their business.

    For a small business choosing to use the simplified depreciation rules, this deduction applies to most assets, whether the asset they bought is new or second-hand. They claim the deduction in the year the asset was first used or installed ready for use.

    If the cost of the asset is the same as or more than the relevant instant asset write-off threshold, the asset must be placed into the small business pool. They must deduct the balance of the small business pool at the end of an income year ending between 6 October 2020 and 30 June 2022.

    Instant asset write-off thresholds for small businesses that apply the simplified depreciation rules

    Eligible businesses

    Date range for when asset first used or installed ready for use

    Threshold

    Less than $10 million aggregated turnover

    12 March 2020 to 30 June 2021, providing the asset is purchased by 31 December 2020

    $150,000

    Less than $10 million aggregated turnover

    7.30pm (AEDT) on 2 April 2019 to 11 March 2020

    $30,000

    Less than $10 million aggregated turnover

    7.30pm (AEDT) on 2 April 2019 to 11 March 2020

    $25,000

    Less than $10 million aggregated turnover

    1 July 2016 to 28 January 2019

    $20,000

    Prior to 1 July 2016 other eligibility, thresholds and date ranges apply, see Instant asset write off for further information.

    Instant asset write-off thresholds for businesses with an aggregated turnover of $10 million or more but less than $500 million

    Eligible businesses

    Date range for when asset first used or installed ready for use

    Threshold

    Less than $500 million aggregated turnover

    12 March 2020 to 30 June 2021 providing the asset is purchased by 31 December 2020

    $150,000

    Less than $50 million aggregated turnover

    7.30pm (AEDT) on 2 April 2019 to 11 March 2020 (see note)

    $30,000

    Note: You must have purchased the asset on or after 7.30pm (AEST) on 2 April 2019

    Backing business investment – accelerated depreciation

    For the 2019–20 and 2020–21 income years, eligible businesses with an aggregated turnover of less than $500 million may be able to deduct the cost of new depreciating assets at an accelerated rate.

    This applies to each eligible asset acquired and first used or installed ready for use from 12 March 2020 until 30 June 2021.

    To be eligible, the depreciating asset must:

    • be new and not previously held by another entity (other than as trading stock)
    • be first held on or after 12 March 2020
    • first used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021
    • not be an asset to which an entity has applied either    
      • temporary full expensing
      • the instant asset write-off rules.
       

    Businesses can claim the deduction when lodging their tax return for the income year in which the asset is first used or installed ready for use for a taxable purpose. The usual depreciating asset arrangements apply in the subsequent income years that the asset is held.

    If a business is eligible for backing business investment – accelerated depreciation, they can choose not to apply these rules to an asset. The choice can be made on an asset-by-asset basis. The business cannot revoke their choice once it is made for an asset.

    For most businesses, they must:

    • make the choice in their tax return
    • notify us by the day they lodge their tax return for the income year to which the choice relates.

    However, if a business has a Substituted Accounting Period and lodges before 1 July 2021 they must use the Temporary full expensing and Backing business investment schedule –substituted accounting period or lodging a tax return for a part year form to make the choice.

    Under the measure, different rules apply depending on whether an entity is using the simplified depreciation rules for small businesses.

    Small business entities that use the simplified depreciation rules can add eligible assets to the general small business pool and deduct an amount equal to 57.5% of the business portion of a new depreciating asset in the first income year it is used or installed ready for use. In later years, the asset will be depreciated under the general small business pool rules.

    All other eligible businesses can, for the first income year the asset is used or installed ready for use, deduct 50% of the cost of the depreciating asset, plus the amount of the usual depreciation deduction that would otherwise apply but calculated as if the cost or adjustable value of the asset were reduced by 50%.

    Where a business does not use the simplified depreciation rules and an asset is eligible for the backing business investment – accelerated depreciation and instant asset write-off measure, businesses must determine which measure best suits their circumstances.

    There is no limit on the number of eligible assets this can be applied to.

    There is no limit on the cost of an eligible asset, unless it is a passenger vehicle.

    See also

    Lower company tax rate changes

    From the 2017–18 to 2019–20 income years, companies that are base rate entities must apply the lower 27.5% company tax rate.

    The lower company tax rate for base rate entities reduced to 26% in 2020–21 and will be 25% from the 2021–22 income year. A base rate entity is a company that both:

    • has an aggregated turnover less than the aggregated turnover threshold – which is $25 million for the 2017–18 income year and $50 million for the 2018–19 to 2021–22 income years
    • 80% or less of their assessable income is base rate entity passive income (such as interest, dividends, rent, royalties and net capital gain) – this replaces the requirement to be carrying on a business.

    When working out the rate to use when franking their distributions, companies need to assume that their aggregated turnover, assessable income and base rate passive income will be the same as the previous year.

    Note

    • They still need to be a small business to be eligible for other small business tax concessions.
    • The tax rates for all other companies do not change.

    See also

    Increased small business income tax offset

    Small businesses can claim the small business income tax offset if they either:

    • are a small business sole trader
    • have a share of net small business income from a partnership or trust.

    The small business income tax offset applies to small businesses with turnover less than $5 million. The rate of offset is:

    • 8% from 2016–17 to 2019–20
    • 13% in 2020–21
    • 16% from 2021–22.

    The maximum offset is $1,000 and the ATO will work out their offset based on amounts shown in their tax return.

    Super Guarantee rate rise

    Employers

    On 1 July 2021, the super guarantee contribution rate will rise from 9.5% to 10%. Employers will need to ensure their payroll and accounting systems are updated to incorporate the increase to the super rate.

    If employers need help to work out how much super they need to pay for their employees after the rate increases, they can use our super guarantee contributions calculator. The percentage employers are required to apply is determined based on when the employee is paid, not when the income is earnt. For salary and wage payments made on or after 1 July 2021, the minimum superannuation guarantee contribution rate of 10% will need to be applied, even if some or all of the pay period it relates to is before this date.

    The super guarantee contribution rate is scheduled to progressively increase to 12% by July 2025. The scheduled rate increases and dates are available on our website.

    See also

    Employees

    If an employee is eligible for super guarantee (SG) contributions, their employer must, from 1 July 2021, pay a minimum of 10% of their ordinary time earnings into their super account at least every three months. If the employee thinks their employer isn’t paying their super contribution at the correct rate from 1 July 2021 they should discuss with their employer.

    See also

    Help with lodging and paying

    The ATO has support for difficult times for individuals, sole traders, small or medium businesses. Those having difficulty meeting their tax and super obligations due to unexpected circumstances including COVID-19 and natural disasters can either:

    • phone the Emergency Support Infoline on 1800 806 218
    • speak with a trusted tax advisor or registered tax agent.

    If taxpayers can't pay their bill by the due date, the ATO may be able to set up a payment plan to help pay by instalments. It is important taxpayers lodge all their tax obligations (for example, tax return, activity statements and annual reports) on time even if they can’t pay by the due date.

    Taxpayers can use the payment plan estimator online or in the ATO app to work out a plan that suits their circumstances.

    Individuals and sole traders can propose a payment plan in the following ways:

    • using ATO online services for debts $100,000 or less – they will need a myGov account linked to the ATO
    • by automated phone service for debts of $100,000 or less on 13 28 65
    • by phone for debts over $100,000 on 13 11 42
    • by contacting their registered tax agent or BAS agent who can set up a payment plan for them.

    Businesses can propose a payment plan:

    • online through Online services for business (via myGovID if they have connected their ABN)
    • through their registered tax agent or BAS agent by automated phone service for debts $100,000 or less on 13 72 26
    • by phone for debts over $100,000 on 13 11 42.

    Taxpayers can phone the ATO's Debt and Lodgment Info Line on 13 11 42 to discuss their circumstances with a customer service representative.

    Individuals

    In this section

    Lodging a tax return

    There are a number of ways taxpayers can lodge their tax return:

    For some taxpayers they will receive asn automated refund of franking credits.

    See also

    myTax

    This is for anyone who wants to prepare their own tax return, including sole traders. It is easy, safe and secure.

    With myTax, taxpayers can lodge online when and where they want. They can use it on a computer, smartphone or tablet. For self-preparers their return is required to be lodged by 31 October.

    The ATO makes it easier to lodge by automatically adding (pre-filling) information from employers, banks, health funds and other government agencies. For most people this information will be available by late July.

    To access ATO online service and lodge a tax return online, taxpayers will need a myGov account linked to the ATO.

    Web chat is also available in myTax. It allows taxpayers to ‘chat’ with ATO staff. If taxpayers need extra assistance, they can even share their screen with staff to enable them to provide even more guidance.

    See also

    Registered tax agent

    Registered tax agents are the only people that can charge a fee to prepare and lodge a tax return. Tax agents must be registered with the Tax Practitioners Board (TPB). You can find a registered tax agentExternal Link or check whether a person is registered by visiting the TPB website.

    A registered agent will not ask a client to provide their MyGov log-in username or password to lodge their return. 

    Your constituents' tax agent should be able to provide their registered agent number on request. If they find out they have used an unregistered preparer, they should contact the Tax Practitioner Board via their website.

    Tax Help program

    The Tax Help program is a network of ATO-trained and accredited community volunteers who provide a free and confidential service to help taxpayers complete their tax returns online using myTax.

    Tax Help is available from July to October to people who earn around $60,000 or less and who have with simple tax affairs. It is available face to face from Tax Help centres across Australia as well as over the phone and online. Tax Help is not available for taxpayers who:

    • work as contractors, for example, a contract cleaner or taxi driver
    • run a business, including as a sole trader
    • have partnership or trust matters
    • sell shares or an investment property
    • own a rental property
    • have capital gains tax (CGT)
    • receive royalties
    • receive distributions from a trust, other than a managed fund
    • receive foreign income, other than a foreign pension or annuity.

    Taxpayers can phone 13 28 61 to work out their eligibility.

    Paper tax returns

    Taxpayers can use the paper Tax return for individuals and the Individual tax return instructions to lodge their paper tax return by mail. Most refunds are issued within 50 business days of lodgment.

    How to order a paper return

    Taxpayers can order a copy to be delivered by mail in the following ways:

    Automated refund of franking credits service

    Since 2017, the ATO has implemented an automated refund service which removes the need for certain people to apply for the refund. A group of self-preparers are automatically issued a refund of their franking credits, based on information that is reported to the ATO by share registries. People who use a tax agent are not eligible.

    Letters or emails are sent in mid-June to those people selected for the automated refund. You can find out more information at Automatic assessments – refund of franking credits.

    Where this hasn't been automated, taxpayers can either submit an:

    Focus areas this tax time

    The focus areas this tax time for the ATO in relation to individuals are work-related expenses, rental income and deductions, and capital gains from cryptocurrency, property and shares.

    The ATO is supporting the Australian community by expanding their suite of educational advice and guidance products, with a focus on practical examples to help taxpayers claim what they are entitled to. They are also reminding taxpayers to double check what they would ordinarily claim, particularly where their working circumstances have changed as a result of COVID-19.

    In this section

    Work-related expenses

    The ATO continues to use sophisticated data and analytics to identify high-risk claims. Where this analysis identifies an unusual claim, they may ask taxpayers to:

    • explain how they calculated their deduction
    • provide evidence that they incurred the expense and that it related to their income-producing activities.

    There are three golden rules for claiming work-related expenses:

    • you must have spent the money and you weren't reimbursed
    • the expenses must directly relate to earning your income and must not be private in nature
    • you must have a record to prove it (the best record is a receipt).

    The ATO is concerned about people over-claiming work-related expenses. Most Australians want to do the right thing, but the ATO often sees mistakes. While the amounts are relatively small at an individual level, collectively the overall impact is significant. Incorrect work-related expense claims are the primary contributor to the $8.3 billion income tax gap for individuals-not-in-business.

    See also

    Declaring income

    When your constituents do their tax return, they must include all the income they received during the income year. This includes salary, wages, gig economy income, payments from Centrelink, business income, bank interest, capital gains and many other types of income.

    If they have more than one employer, they may receive several income statements, or both a payment summary and an income statement. They will need to check that income from their employers is included in their return.

    Most mistakes occur when taxpayers complete their tax return before information is automatically added (pre-filled) into their return.

    If taxpayers lodge electronically or via a tax agent, information provided to the ATO by their employers, banks, government agencies and other third parties is automatically included (pre-filled) into their tax return. For most people, their information will be automatically included by late July.

    Taxpayers shouldn’t just rely on pre-filling. If they have earned other income, they need to declare it. This could include income from the sharing economy, foreign source income and jobs where they have been paid in cash.

    Termination, temporary stand-down payments and insurance payments

    Individuals who were temporarily stood down but maintained a connection with their employer may have received a one-off payment. Some employers call this a 'stand-down' payment but it may also be called other names. These types of payments are treated the same as salary and wages and will be included in the employee's income statement and automatically included in the employee's tax return once the employer finalises the income statement.

    Individuals whose employment ceased permanently may have received employment termination payments (ETP). The taxation treatment of these payments depends upon the circumstances. However, the taxable amounts will be included in the employee's income statement or an ETP payment summary and automatically included in returns once the employer reports that information to the ATO.

    Individuals who have received payments from income protection insurance policies for loss of income will need to include these amounts in their return as 'other income'.

    Sharing economy

    The sharing economy is economic activity through a digital platform (such as a website or an app) where people share assets or services for a fee.

    If people provide services or assets through a platform for a fee, they need to consider how income tax and goods and services tax (GST) applies to their earnings.

    Popular sharing economy activities include:

    • providing ride-sourcing (sometimes also known as ride-sharing) services for a fare
    • renting out all or part of their house or unit on a short-term basis
    • sharing assets, including cars, caravans/RVs, car parking spaces, storage space or personal belongings
    • providing personal services, including creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly.

    Any income your constituents earn from the sharing economy is assessable and needs to be reported in their tax return.

    Personal services income

    If a taxpayer works for themselves and is paid mainly for their personal efforts, skills or expertise, they may be earning personal services income (PSI), which can affect the deductions they can claim and how they report their income.

    The ATO's PSI tool will help people work out if their income is PSI and if the special tax rules apply to them.

    All PSI needs to be declared in the tax return.

    Rental property expenses

    The ATO is paying particular attention to:

    • Taxpayers not including all income from rental properties, including short term accommodation.
    • Expenses not being apportioned between private use and generating rent including:  
      • where borrowed money or redraws on the investment loan are used for private expenses
      • where the property was rented out for part of the year or only part of the property was rented out
      • where the property is used by the owners or friends and family for no cost or rented it below market rates
      • only claiming deductions in line with ownership interest.
       
    • Not calculating capital gains correctly or not including the gain when a rental property is sold.
    • Incorrect claims for newly purchased rental properties.
    • Initial repairs for damage that existed when the rental property was purchased, such as replacing broken light fittings or repairing damaged floorboards, can't be claimed as an immediate deduction but may be claimed over a number of years as a capital works deduction.

    If rental property owners have reduced their rent to allow their tenant to stay in the property or their tenant has stopped paying rent due to COVID-19, as long as the rental property owner continues to incur normal expenses on their property, they will still be able to claim these expenses in their tax return.

    Watch: The ATO encourages taxpayers to watch its Rental property video series

    Cryptocurrency

    The ATO is concerned that many taxpayers believe their cryptocurrency gains are tax free or only taxable when the holdings are cashed back into Australian dollars.

    This year, we will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns. We also expect to prompt almost 550,000 taxpayers as they lodge their 2021 tax return to report their cryptocurrency capital gains or losses.

    Taxpayers must report a disposal of cryptocurrency for capital gains tax purposes if they either:

    • exchange one cryptocurrency for another cryptocurrency
    • trade, sell or gift cryptocurrency
    • convert cryptocurrency to a flat currency, for example to Australian dollars (AUD).

    It is important that taxpayers keep accurate records including dates of transactions, exchange records, the value in Australian dollars at the time of the transactions, what the transactions were for and who the other party was.

    See also

    Refund and processing times

    Each year, the ATO automatically include information from employers, banks, health funds and other government agencies to make it easier and smoother for taxpayers or their registered tax agents to lodge their tax returns. For most people this information will be available by late July.

    Most tax returns generally take two weeks to issue when lodged electronically, but some require manual review and may take longer. The ATO will contact taxpayers if a return is expected to take longer than 30 days to process.

    The ATO aims to finalise most paper returns within 50 business days.

    • Clients experiencing serious financial hardship can consider applying for priority processing.

    Checking the progress of a return

    Taxpayers can check the progress of their tax return:

    • in ATO online services through their myGov account
    • using the ATO app
    • by phone – using self-help anytime, they can check the progress of their current year return by phoning 13 28 65
    • through registered tax agents – agents can check the progress of current and previous years returns, on behalf of their clients, through Online services for agents.

    All individual taxpayers can use these services.

    Keeping taxpayers informed

    The ATO will send personalised emails, sms and letters to around four million taxpayers who prepare their own tax return, with information to help them get their returns right this tax time.

    The ATO will also contact more than 8.5 million taxpayers through myGov with advice that their income statements are ready and remind them of the benefits of waiting for pre-fill.

    Messages will be tailored to their circumstances with information to help them with:

    • income statements with pre-filling messages
    • lodging their first tax return
    • lodging online with myTax
    • claiming work-related expenses and other deductions based on occupation and past behaviour
    • claiming rental property deductions, including vacant land and CGT
    • income contingent loan repayments (ICL) and overseas HELP debt payment reminders
    • claiming super deductions
    • reporting cryptocurrency and shares disposal.

    Emails will also be sent to taxpayers about changes to foreign income and deductions, private health insurance and the Medicare levy exception.

    To help remind taxpayers who are yet to lodge, the ATO will send reminder emails in the last few weeks of tax time.

    For those who still lodge via paper, letters will be issued to them for the last time this year.

    Tax professionals

    In this section

    Lodgment program

    Registered tax agents and BAS agents play an important role in helping taxpayers meet their tax and superannuation lodgment obligations. To help them manage this workload, the ATO provides a tax agent lodgment program framework that accommodates progressive lodgment over a 12-month period.

    Taxpayers who choose to use a tax agent to prepare and lodge their tax return may be able to lodge later than 31 October, as long as they contact a registered tax agent before this date.

    Lodgment support

    Support is available to all tax professionals at any time, and the ATO is working hard to ensure that this help is tailored and personalised to their needs.

    If tax professionals need more time to meet specific due dates, there are a range of deferral options available. The type of deferral they can access will depend on how much extra time they require, and the kind of obligation they are lodging. Tax professionals can submit a deferral request by lodging a completed application form through Online services for agents.

    If tax professionals need more help to keep on top of lodgments across their practice, the ATO’s supported lodgment program could be suitable. This program is designed for tax professionals who have been affected by issues such as ill-health, the loss of a key staff member, COVID-19 or are generally overwhelmed. This program is designed to help agents and practices of all sizes.

    The ATO will work with tax professional to co-design a lodgment plan to help get them back on track. Tax professionals can request a supported lodgment program through Online services for agents, Practice mail by selecting 'Debt and Lodgement' topic and 'Supported lodgement program' subject.

    There are also support options available if tax professionals have complex issues that need to be resolved, are struggling due to their own wellbeing, or have been affected by natural disasters.

    See also

    Complex issue resolution service

    The ATO's complex issue resolution service is available to all registered agents, legal practitioners and other intermediaries who represent clients in a professional capacity.

    The service helps resolve complex issues that have been unable to be resolved online or by phone. Issues we can help with include:

    • administrative issues that are unusual and cannot be resolved by our standard processes
    • complex tax technical issues, for example, where there is an interaction between taxes or a variety of concessions or considerations within a tax.

    Businesses

    In this section

    Taxable payments reporting system

    Businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. These payments are reported on the taxable payments annual report. The report is due 28 August each year.

    Legislation is now in place that extends the taxable payment reporting systems to payments to certain contractors for:

    • cleaning and courier services from 1 July 2018
    • road freight, IT, security, investigation or surveillance services from 1 July 2019.

    The payment information reported to the ATO can be obtained by contractors who are sole traders and their tax agents through the ATO's online lodgment systems for business to help prepare correct tax returns. Taxable payments reporting in their data-matching processes helps to identify and deal with those who are not doing the right thing and help them get back on track (through education or compliance activity).

    Businesses in the building and construction industry that are unsure if they need to report should read, Taxable payments reporting – building and construction services

    Business income

    Whether your constituents are sole traders or their business is a partnership, trust or company, they need to include all of the business's assessable income they make in the relevant tax return. This includes income that they earn through:

    • payments made to them in cash and electronically
    • vouchers or coupons
    • personal services they provide (personal services income)
    • investments and bank interest
    • most government grants and payments
    • the sharing economy, including ride-sourcing.

    There is no threshold for business income, so they need to lodge an income tax return even if they only earn $1.

    Business deductions

    When claiming business deductions, the money must have been spent on the business and not a private expense.

    If the expense is used for a mix of business and private use, only claim the portion that is related to the business.

    There must be records to prove the expense and how they worked out the business portion.

    Protecting personal information and scams

    The ATO continues to provide information to help taxpayers protect their personal information and raise awareness about scams. It is particularly important Australians protect their personal information at tax time as this is a popular period for scammers to try and trick people into revealing personal information so they can commit fraud.

    The ATO will never ask taxpayers to provide personal identifying information via email or SMS in order to receive a refund or send taxpayers an email or text message with a hyperlink directing them to a log on page for myTax or myGov.

    The ATO may sometimes provide hyperlinks in their communications, however the links will only be to information on the ATO website and other relevant government websites. The ATO will never include hyperlinks in its communications requiring you to enter or disclose personal information.

    Taxpayers can minimise the possibility of fraud by:

    • never giving out their personal identifying information such as tax file number (TFN), date of birth or bank details unless they trust the person they're dealing with and they genuinely require these details
    • not giving their myGov login details to anyone – the ATO recommends a unique password for this platform and activating multifactor authentication or using the myGovID app to sign in securely
    • protecting their myGovID (digital identity) and not sharing it with others
    • only accessing online services from an independent web search, never via hyperlink in an email or SMS
    • being aware of what they share online and across social media
    • exercising caution when downloading attachments or clicking links in emails, text messages or social media posts, even if they appear to come from someone they know
    • reporting suspicious emails claiming to be from us by forwarding the entire email to ReportEmailFraud@ato.gov.au and delete the email from their account
    • reporting if their TFN or other personal identifying information has been stolen, disclosed to or used by an unauthorised person by phoning the ATO's Client Identity Support Centre on 1800 467 033.

    If taxpayers have any doubts that they are dealing with the ATO, they can phone 1800 008 540 to verify if an interaction is legitimate.

    Businesses can minimise the possibility of fraud by:

    • securing their systems by using strong and secure passwords, ensuring their devices have the latest security updates, using a spam filter on email accounts and securing their wireless network
    • ensuring they perform background checks on new employees and restrict their access to systems, be able to track the actions of employees who deal with sensitive and personal information
    • monitoring their accounts for unusual activity or transactions
    • never downloading programs, clicking on links or opening attachments if there is any doubt about their legitimacy
    • knowing their data breach reporting obligations as per the Notifiable Data Breaches Scheme (NDBS)External Link – business owners, including tax professionals should report data breaches to the ATO on 1800 467 033
    • staying in touch with the ATO – if their details have changed they can update them theough the ATO's online services, through their tax agent or by phoning 13 28 61.

    Watch

    See also

    Help for taxpayers from diverse backgrounds

    The ATO provides a range of tailored information and support including:

    Help completing a tax return

    The Tax Help program is a network of ATO-trained and accredited community volunteers who provide a free and confidential service to help taxpayers complete their tax returns online using myTax.

    Tax Help is available from July to October to people who earn around $60,000 or less with simple tax affairs. It is available face to face from Tax Help centres across Australia as well as over the phone and online.

    Taxpayers need to phone 13 28 61 to book a Tax Help appointment.

    Support for culturally and linguistically diverse (CALD) audiences

    The ATO continues to implement bespoke approaches for culturally and linguistically diverse (CALD) audiences, emphasising that help and support is available.

    In 2021, their focus is on tailored communication approaches to suit the needs and preferences of different CALD audiences. They will communicate information in a friendly and helpful tone and will provide alternative formats (for example, Easy Reads and audio) where possible.

    Each year the ATO translates tax time information and products, such as media releases and web content, in emerging and established community languages and distribute them to multicultural media outlets, key intermediaries and leaders in CALD communities.

    Taxpayers who could benefit from language assistance can phone any of the ATO's phone services through the free Translating and Interpreting ServiceExternal Link (TIS National) on 13 14 50 and have a professional interpreter on the call.

    The ATO's Tax Help service is also available from July to October to people who earn around $60,000 or less with simple tax affairs. It is available face to face from Tax Help centres across Australia as well as over the phone and online.

    General tax and super information is available in up to 36 languages on our website at other languages.

    The ATO has Tax time resources in languages other than English these are available in portable document format (PDF) resources on our website in up to 19 languages.

    Support for Aboriginal and Torres Strait Islander peoples

    The ATO wants to make tax and super as easy as possible for Aboriginal and Torres Strait Islander peoples, businesses and not-for-profit organisations.

    Aboriginal and Torres Strait Islander taxpayers can phone the Indigenous Helpline on 13 10 30 or any of the ATO's other phone services. The Tax Help service is available from July to October to people who earn around $60,000 or less with simple tax affairs. It is available face to face from Tax Help centres across Australia as well as over the phone and online.

    The ATO has general tax and super information tailored for Aboriginal and Torres Strait Islander people available. Videos covering a range of tax and super topics are also available on atoTVExternal Link.

    Support for taxpayers with disability

    MyTax, the ATO's online lodgment channel, is compatible with screen-reader software that can be used by taxpayers with vision impairment. It can be used on any device, such as a tablet, smartphone or computer.

    MyTax is streamlined and personalised to people's tax affairs. It automatically adds information provided to the ATO by employers, banks, and other government agencies making it easier for people to complete their tax return.

    The Individual tax return instructions and Individual tax return instructions supplement are available in CD audio, DAISY (Digital Accessible Information System) and e-text. These publications are generally available from September.

    The ATO's Tax Help service is also available from July to October to people who earn around $60,000 or less with simple tax affairs. It is available face to face from Tax Help centres across Australia as well as over the phone and online.

    The ATO also provides services to help everyone in the community meet their tax obligations. This includes:

    Taxpayers who are deaf or have a hearing or speech impairment can contact the ATO on any of their phone services through the National Relay ServiceExternal Link.

    General tax and super information tailored for taxpayers with disability is available.

    New to tax and super

    The ATO has developed a product to help individuals new to the tax and superannuation system. In one location, individuals will be able to find everything they need to get them started on their tax and super journey. Information includes:

    • why we have a tax system
    • getting paid and paying tax
    • if you need to lodge a tax return
    • how to lodge
    • what superannuation is.

    For more information go to New to tax and super.

    Media at tax time

    Media releases, articles and speeches on a range of tax time topics are available to read in the Media Centre.

    The ATO's comprehensive program of media releases this year include:

    • What's new for tax time 2021
    • How (and when) to lodge for the fastest and easiest tax time lodgment
    • How to claim working from home expenses using the shortcut method
    • Information and advice for all work-related expenses
    • Information and advice for taxpayers that have invested in cryptocurrency
    • Emerging topics in response to feedback we receive from the community in the lead-up to and during tax time.

    They also regularly post information on their social media and online channels including information on a range of tax time topics.

    Find out about

    Contact us

    For questions that have not been covered by this kit, the following enquiry lines are are available for Members of Parliament and their staff to use for official purposes:

    • Small Business related enquiries: (02) 6216 2882
    • Individual and registered tax agent related enquiries: (02) 6216 1289
    • refunds or paying a tax debt – Service Delivery Government Liaison: (02) 6216 8825.

    The ATO also encourages taxpayers to access ATO CommunityExternal Link to ask questions, share their knowledge and discuss their experiences with us. Community taxpayers can also use the ATO's live chat service, which is accessible through myTax and the ATO's virtual assistant Alex, who is available and ready to help 24/7 on their website.

      Last modified: 15 Oct 2021QC 33900