Show download pdf controls
  • Tax time essentials 2020

    We know that 2020 has been difficult. Lodging your tax return doesn’t need to be.

    Whether you use a tax agent, run a small business or lodge your own return, we have information to help you at every stage:

    If you lodge your own tax return using myTax, you need to do so by 31 October.

    If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October.

    If you’re running a small business or you are a sole trader, we have a range of information which can assist you during tax time.

    See also:

    Before you lodge

    Set up a myGov account

    If you are lodging your own return and you don't already have a myGov account, you will need to set one up. A myGov account lets you link to a range of Australian Government services, including the ATO, with one username and password.

    Keep your login details safe and don’t share them with anyone, including family members or your tax agent. Avoid using your myGov account over public Wi-Fi. These unsecured networks make it easier for cybercriminals to intercept your information.

    See also:

    Link to the ATO through myGov

    You will need to link your myGov account to the ATO before you can lodge your tax return through myTax. To link your account, you will need to confirm your identity by answering two questions specific to you, using information from two of the following:

    • a notice of assessment from the last five years
    • a PAYG payment summary from the last two years
    • a superannuation account statement from the last five years
    • a dividends statement from the last two years
    • a Centrelink payment summary from the last two years
    • your bank account details.

    If you don’t have this information, you will need to call us to get a linking code. When you call, you'll need to provide additional information to identify your ATO record, including given name, family name, tax file number and date of birth.

    See also:

    Watch:

    This video shows how to create a myGov account and link to the ATO:

    Media: How to create a myGov account and link to the ATO
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfo8e4mExternal Link (Duration: 03:57)

    Talk to your registered agent

    You can also lodge your tax return through a registered tax agent. Tax agents must be registered with the Tax Practitioners Board (TPB). You can find a registered tax agent or check whether a person is registered by visiting the TPB website.

    If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October. Contact a tax agent before 31 October to arrange this.

    See also:

    Ready to lodge

    Once you have linked your myGov account to the ATO, you can access a range of services in one place, including lodging your tax return and keeping track of your super. myTax is web-based, so there's no need to download anything. You can lodge your tax return on any device – computer, smartphone or tablet.

    Watch:

    This video shows how easy it is to lodge with myTax:

    Media: A quick demonstration of lodging with myTax
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubo71uumExternal Link (Duration: 02:36)

    Check your bank details

    Check the bank details included in your return are correct before you lodge your tax return. If those details are missing or incorrect, be sure to update them so that your refund is paid directly to you.

    If your bank details are incorrect when you lodge your return, this can cause delays in you receiving your tax refund if you are owed one.

    See also:

    Include all your income

    When you do your tax return, you must include all the income you received during the financial year. This includes salary, wages, payments from Centrelink, business income, bank interest and some other types of income.

    If you have received access to your superannuation due to COVID-19, you do not need to pay tax on these amounts and do not need to include these amounts in your tax return.

    Income from your job

    You need to report your salary and wages as shown in your income statement. Your income statement is available by clicking through to the ATO from myGov and we will automatically include information from it in your return for you. Wait for your employer to mark your statement as ‘tax ready’. This should be done by 31 July.

    If you have more than one employer you may receive several income statements, or both a payment summary and an income statement. You will need to check that income from your payment summaries is included in your return.

    If you lodge your tax return before your income statement is marked 'tax ready', your employer might make changes and you may need to lodge an amendment to make these changes to your return.

    See also:

    If you take leave, are temporarily stood down or lose your job and receive a payment from your employer, there are different tax rules that may apply for the different payments.

    See also:

    JobKeeper payment

    JobKeeper payments are treated the same as your usual salary or wages from your employer. If you receive JobKeeper as an employee, it will be included in your income statement as either salary and wages or as an allowance, depending on your circumstances. We will automatically include this information from your income statement in your tax return for you. For most people this will occur by the end of July.

    If you’re a sole trader who has received JobKeeper payments, you need to include the payments as business income in your individual tax return. If your business is a partnership, trust or company, and you received JobKeeper payments, you don’t need to include it as assessable income in your individual tax return – but you need to report it as part of your business income.

    See also:

    Insurance payouts

    You need to include income protection, sickness and accident insurance payments, in your tax return. The instructions in myTax explain how to include these amounts.

    See also:

    Insurance payouts for damaged or destroyed personal items are not taxed. For example, any insurance payout you receive for your family home is not taxed. Insurance payouts for businesses or income-producing assets may be taxed.

    See also:

    Government payments

    It is important to include any government payments that you receive in your tax return.

    JobSeeker is a taxable payment and it needs to be included in your tax return.

    We will automatically include JobSeeker payments in your tax return at the 'Australian Government allowances and payments' section by early July. If you lodge your tax return before this information is included, you will need to include the amount of JobSeeker you received at the ‘Australian Government allowances and payments’ section of your tax return. Your JobSeeker payments will be included in your Centrelink payment summary.

    See also:

    COVID-19 support payments

    If you received any of the following grants or payments, it is counted as assessable income and you need to declare it:

    • New South Wales Government Small Business COVID-19 Support Grant
    • South Australian Government $10,000 Emergency Cash Grants for Small Businesses
    • South Australian Government Job Accelerator Grant Scheme
    • Victorian Government Business Support Fund
    • Payments under the Northern Territory Government Small Business Survival Fund
    • Northern Territory Government Business Improvement Grant
    • Western Australian Government Small Business Grant Scheme.

    You don't have to pay goods and services tax (GST) on grant funding unless you provided something of value in return for the payment.

    Disaster assistance payments

    If you're experiencing financial hardship as a result of a disaster, you may receive a relief payment from:

    • local, state or federal government agencies
    • a charity or community group
    • your employer.

    If you receive a Disaster Recovery Payment (DRP), it will be treated as exempt income. You don't pay tax on the DRP amount, but you need to include it in your tax return when you work out your tax loss.

    Disaster Recovery Allowance (DRA) and Natural Disaster Relief and Recovery Arrangements (NDRRA) payments are generally taxable. However, the government may declare that, for some natural disasters, DRA and NDRRA payments are exempt income. You don't pay tax on exempt income but you need to include the amount in your tax return when you work out your tax loss.

    You are not required to pay tax on the following payments made in relation to the 2019–20 bushfires (these amounts do not need to be included in your tax return):

    • a payment made on or after 1 January 2020 by a State or Territory for loss of income as a result of you performing volunteer work with a fire service of a State or Territory during 2019–20
    • Disaster Recovery Allowance
    • Ex-gratia disaster income support allowance for special category visa (subclass 444) holders
    • payments by a State or Territory under the Disaster Recovery Funding Arrangements 2018External Link

    Emergency assistance in the form of gifts from family and friends is not taxable.

    See also:

    Pre-fill information

    To make lodging your tax return easy, we can automatically include (pre-fill) your income and other information into your return for you. This information comes from organisations such as employers, banks, health funds and government agencies.

    Most information is sent to us by late July, but many organisations send us their information much earlier. If you usually do your own return, we will send you a message through myGov when that information is available.

    We recommend lodging when all your information is ready. That way, you can be sure the information is complete and up to date. If you submit incorrect information, it may delay processing your return or you may need to repay amounts later.

    You can also upload your records from the myDeductions tool to pre-fill your tax return in myTax.

    See also:

    Rental income

    You need to report all the rental income you have received; this includes a back payment of rent or an amount of insurance for lost rent. If you need to reduce the rental amount to enable your tenants to remain in the property, your deductions will not be reduced if you continue to incur normal expenses on your property, you will still be able to claim these expenses in your tax return.

    Insurance payouts for businesses or income-producing assets may be taxed.

    See also:

    Sharing economy income

    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. Income you earn from the sharing economy is assessable and needs to be reported in your tax return. Popular sharing economy activities include:

    • providing ride-sourcing (also known as ride-sharing) services for a fare, through platforms such as Uber, Hi Oscar, Shebah or GoCatch
    • renting out a room or a whole house or unit on a short-term basis, through platforms such as Airbnb, HomeAway or Flipkey
    • sharing assets, including cars, caravans/RVs, car parking spaces, storage space or personal belongings, through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo
    • providing personal services, including creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly, through platforms such as OneFlare, Mad Paws or Hark Hark.

    See also:

    Work out your eligible deductions

    When completing your tax return, you are entitled to claim deductions for some expenses, most of which are directly related to earning your income.

    To claim a work-related deduction:

    • you must have spent the money yourself and weren't reimbursed
    • it must directly relate to earning your income
    • you must have a record to prove it.

    Working from home

    To make claiming a deduction easier this tax time, we have introduced a new temporary shortcut method.

    This means there are now three different ways to calculate your working from home deduction for the 2019–20 financial year. You can use the method or methods that give you the best outcome, as long as you meet the eligibility criteria and record keeping requirements for each method.

    Once you have calculated your deduction, enter the amount at 'Other work-related expenses' in your tax return.

    The calculation methods are outlined below.

    Shortcut method

    You can claim 80 cents for every hour you worked from home between 1 March 2020 to 30 June 2020. This rate covers all deductible expenses for that period, including utilities, phone, internet, technology (such as a laptop or desktop computer) and office equipment. This is a flat rate – you can’t claim any other working from home expenses on top (for example, the cost of buying equipment).

    To use this method you must meet the eligibility and record-keeping requirements. Specifically, you must:

    • have worked from home to fulfil your employment duties (not just doing minor tasks such as occasionally checking emails or taking calls)
    • have incurred additional expenses as a result of working from home
    • keep a record of the number of hours you worked from home (for example, with a timesheet, roster or diary).

    When completing your tax return, include ‘COVID-19 hourly rate’ in the label description field.

    Fixed rate method

    This is a fixed rate of 52 cents per hour. You must have a dedicated work area (like an office) to be eligible. This rate covers the cost of heating, cooling, lighting, cleaning and the decline in value of office furniture – you can't claim any of these expenses on top. However, this rate doesn’t include the following expenses, so you need to separately calculate your work-related use of:

    • phone expenses
    • internet expenses
    • computer consumables and stationery (such as ink)
    • decline in value of equipment (such as phones, computers and laptops).

    This method requires more complex calculations and record keeping. If you plan to use it, we encourage you to read our detailed home office expenses instructions and examples, or speak with your tax agent if you use one.

    Actual cost method

    This method requires more complex calculations and record keeping. If you are claiming your expenses using the actual cost method, we encourage you to read our detailed home office expenses instructions and examples, or speak with your tax agent if you use one.

    See also:

    Cost of travelling from home to work

    Generally, most people cannot claim a deduction for the cost of travel between home and work. If you are working from home due to COVID-19 and need to travel into your workplace, the travel still cannot be claimed as it is a private expense.

    Protective equipment

    If you have been working in an occupation that requires physical contact or close proximity with customers or clients during the COVID-19 period, you may be able to claim a deduction for items such as gloves, face masks, sanitiser or anti-bacterial spray if you have paid for the items and haven't been reimbursed. This includes industries like healthcare, retail and hospitality.

    Get your work-related expense claims right

    We have developed a range of occupation guides to help determine the work-related expenses you can claim at tax time.

    See also:

    Gifts and donations

    For a gift to be deductible, it must be given to an endorsed deductible gift recipient (DGR). A DGR is an organisation or fund that can receive tax deductible gifts and is registered with the Australian Charities and Not-for-profits Commission (ACNC). Not all charities or causes, such as crowdfunding campaigns to help needy individuals, are registered DGRs.

    You can check the DGR status of an organisation on business.gov.auExternal Link

    It is also important to keep receipts. The total value of charitable deductions you can claim without some form of written record is $10.

    You can't claim a tax deduction for donations made to social media, crowdfunding platforms or memberships (such as sporting club memberships) unless they are a registered DGR.

    See also:

    Residency

    If you are not an Australian resident and are staying in Australia for longer than expected due to COVID-19, you may need to lodge an Australian tax return if you earn any assessable income from an Australian source.

    Private health insurance

    You may have to pay the Medicare levy surcharge (MLS) if:

    • you suspended or stopped your private patient hospital cover for you or your family for any part of the year
    • your income for MLS purposes is above the MLS threshold – $90,000 for singles or $180,000 for families.

    We will determine whether you need to pay the MLS from the information you provide in your tax return and from information supplied to us by health insurance providers.

    If you (and your dependents, if you have them) were in an exemption category, then you don't have to pay the surcharge.

    See also:

    Next steps:

    After you lodge

    Progress of your return

    You can keep track of where your tax return is up to by clicking through to the ATO from myGov, or if you use a registered tax professional they can also check the progress of your return on your behalf.

    Returns lodged through myGov are normally processed within two weeks. There is no need to call us to check the progress of your return. If we need more information about your return while it is being processed, we will contact you.

    See also:

    If your refund is more than you expect

    Last year the Australian Government announced the low and middle income tax offset. If your taxable income is less than $126,000, you may get some of the low and middle income tax offset.

    The amount of the offset you are entitled to will depend on your individual circumstances, such as your income level. The maximum offset is $1,080 per annum and the base amount is $255 per annum.

    An offset is not a refund and can only reduce the amount of tax you need to pay. The offset may cause a refund of tax that has already been withheld throughout the year. There is nothing you need to do differently to claim the offset, just lodge your return as usual and we’ll work out what you’re entitled to. Any offset amount will be included in your notice of assessment

    See also:

    If your refund is less than you expect

    You may find your tax assessment is different from what you were expecting to receive. The most common reasons are:

    • the refund amount has been offset against another debt, either another tax debt (previous income tax bill, or activity statement debt), or another government agency debt (Centrelink, or Child Support Agency)
    • compulsory payments, such as: Higher Education Loan Program (HELP); Trade Support Loan (TSL); VET Student Loan (VSL); or Student Financial Supplement Scheme (SFSS) repayments
    • you need to pay Medicare levy surcharge because you stopped paying private patient hospital cover and your income is above a certain threshold
    • new or amended income tests
    • excess concessional contributions to a super fund
    • the return has been reviewed as part of our compliance checking and adjustments have been made
    • your employer incorrectly reporting reportable employer superannuation contributions on your payment summary
    • tax was not withheld from a taxable payment (such as JobSeeker payments) and your total income for the year was more than the tax-free threshold
    • you incorrectly claimed the tax-free threshold.

    If you believe you have made a mistake you can either amend you return online (if lodged using myTax) or contact your tax agent.

    If you owe tax

    You may receive a tax bill if you:

    • are an employee and enough tax hasn't been withheld from the payments made to you by your employer
    • are a sole trader and haven't paid enough tax to the ATO throughout the year
    • receive other income where no tax was withheld.

    You can check your outstanding balance and when your payment is due by clicking through to the ATO from your myGov account.

    We understand that people sometimes have cash flow issues meaning they can’t pay their whole tax bill on time.

    In the case that a tax bill isn’t paid by the due date, engage with us early so we can help you deal with your debt while it’s still manageable. We have a number of tools and services available to support you including:

    • payment plans
    • interest deferrals
    • payment and lodgment deferrals.

    Phone us so on 13 11 42 so we can work with you to make sure the options we provide are suitable for your situation.

    See also:

    Protect yourself at tax time

    Be aware that there are scams that may try to trick you into paying money or giving out your personal information. Scammers impersonating the ATO may call you or send you an SMS or an email telling you that you have a refund or a tax debt to pay.

    It can be difficult to tell the difference between legitimate ATO interactions and those of scammers. There are some signs to help you verify that you're not dealing with the ATO.

    We will never:

    • send unsolicited pre-recorded messages to your phone
    • ask you to provide your personal identifying information in order to receive a refund
    • send you an email or text message with a hyperlink directing you to a log on page to access myGov or myTax
    • threaten you with immediate arrest over a debt, or insist you stay on the line until a debt is paid.

    If you are ever unsure whether an ATO interaction is real, don't reply. You can contact us directly to check.

    See also:

    Get help and assistance

    If you’ve read through the information on our website and still have a question, why not try the ATO's:

    • online forum ATO CommunityExternal Link, available 24 hours a day. Your questions are answered by community members and many responses are ATO-endorsed. If your question has not previously been posted by another user, we will respond to you as quickly as we can
    • live chat service, which is accessible through myTax
    • virtual assistant Alex, who is available and ready to help 24/7 on our website
    • information in Other languages.
      Last modified: 14 Jul 2020QC 62802