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  • What's new for individuals

    Before you complete your tax return for 2020–21, there are some changes you should be aware of in case they affect you.

    2020–21 has been difficult, but your tax return doesn’t need to be. We have a range of different approaches to help you through this tax time with specific measures and support available for individuals.

    On this page

    JobKeeper payment

    You will need to declare JobKeeper payment amounts you received as either an Employee or Sole trader in your tax return.

    Employees

    You need to include any JobKeeper payments you received in your tax return. Your employer will report these payments as either salary and wages or an allowance on your income statement. If you lodge your tax return online this information will automatically pre-fill for you when your employer finalises your income statement. Tax agents will also have access to this information.

    Sole traders

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

    You will be able to see the total amount of JobKeeper payments you 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.

    See also

    JobSeeker payment

    From 20 March 2020, the new JobSeeker payment replaced certain Government payments and allowances you might receive from Services Australia.

    From 20 March 2020 there were no new grants of Sickness Allowance.

    On 20 September 2020 JobSeeker welfare payment replaced Sickness Allowance.

    As a result of this change, your Centrelink payment summary for 2020–21 may detail two types of payments, for both Sickness Allowance and new JobSeeker payments. We pre-fill this information in to 'Australian Government allowances and payments' in your tax return when Services Australia reports it to us. This information is usually available by the end of the first week in July each year.

    A Medicare levy exemption for Sickness Allowance recipients is only allowed from 1 July 2020 to 19 September 2020.

    JobSeeker payment is not an eligible payment for claiming a Medicare levy exemption.

    See also

    COVID-19 Disaster Payments for people affected by restrictions

    The Australian Government is providing COVID-19 Disaster Payments to eligible individuals. These payments provide support to individuals who are unable to earn their income because state or territory health orders prevent them working in their usual employment.

    The COVID-19 Disaster Payment is non-assessable non-exempt (NANE) income. This means it is a non-taxable payment and you don’t need to include it in your tax return.

    See Government grants, payments and stimulus during COVID-19 for more information.

    Pandemic Leave Disaster Payment

    The Australian Government is providing support for 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.

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

    You will receive advice from Services Australia confirming the amounts you received.

    Enter the amounts you received at either:

    • 'Australian Government special payments' if you lodge online using myTax
    • 'Question 24 Other income' if you lodge by paper
    • 'Question 24V' or add the 'Income Details schedule' at field 'Australian government benefit taxable amount' (INCDTLS128), with field 'Australian government benefit type' (INCDTLS126) set to 'Special' if you’re a registered tax professional.

    See Government grants, payments and stimulus during COVID-19 for more information.

    JobMaker Plan and the low and middle income tax offset

    The low and middle income tax offset (LMITO) announced in the 2018–19 federal Budget continues to be available for 2020–21. Stage two of the Personal Income Tax Plan was brought forward from 1 July 2022 to 1 July 2020.

    A tax offset is not a refund and can only reduce the amount of tax you need to pay. The amount of the offset you may be entitled to will vary depending on your individual circumstances, such as your income level and how much tax you have paid throughout the year. The maximum offset amount is $1,080 per year.

    You don't need to complete a section in your tax return to get this tax offset. We work out your tax offset for you once you lodge your tax return. If using myTax, the amount will be displayed in the estimate calculation.

    From the 2020–21 income year, the changes:

    • increase the low income tax offset (LITO) from $445 to $700 and adjusted the phase out rules
    • increases the top threshold of the 19% personal income tax bracket from $37,000 to $45,000
    • increases the top threshold of the 32.5% personal income tax bracket from $90,000 to $120,000
    • retains the low and middle income tax offset (LMITO) for the 2020–21 income year
    • amounts withheld under the old schedules will be taken into account once returns are lodged.

    Exempting granny flat arrangements from capital gains tax

    From 1 July 2021, a capital gains tax (CGT) exemption is available 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.

    Under the changes, 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

    We understand that the Australian community is continuing to adapt to the ongoing impacts of COVID-19 on their working arrangements. To help, we've extended the all-inclusive shortcut method of 80 cents per hour worked from home until 30 June 2022. This means that you can now also use this method to calculate your working from home expenses for the 2021–22 income year.

    This method is an all-inclusive rate that requires simple record keeping and a single calculation step.

    To calculate your working from home expenses you can use the method that will give the best outcome, so long as you meet the criteria and record keeping requirements. The other available methods are the:

    • Fixed rate method – 52 cents per work hour (instead of calculating your actual expenses for heating, cooling, lighting, cleaning, and the decline in value of home office furniture). 
      • You will need to separately calculate your phone and internet usage, computer consumables, stationery, and the decline in value of your computer (apportioning for private use).
      • You need a dedicated work area and a diary for either the entire income year or a four-week period that represents your pattern of home office use over the income year.
    • Actual cost method – claim the actual costs of the work-related portion of all your running expenses, which need to be calculated on a reasonable basis.

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

    Early release of superannuation due to COVID-19

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

    If you accessed your super early under the COVID-19 early release of super program you do not need to include the amount released in your tax return. Amounts released under other compassionate grounds must be included in your tax return.

    Services Australia income compliance program refunds

    If you receive a refund from the Services Australia income compliance program, you or your tax agent do not need to take any action for tax purposes. That is, you:

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

    Submitting an amendment may affect your assessable tax income and any repayment amounts. If you need to lodge an amendment for other purposes, contact us or your tax agent for assistance.

    For further information about this program visit Services Australia – information about refunds for the income compliance programExternal Link.

    Information about the Services Australia income compliance program refunds is also available in other languages

    Reducing superannuation minimum drawdown rates

    To assist retirees with account-based pensions and similar products, the minimum superannuation drawdown rates were reduced by 50% for the 2019–20 and 2020–21 income years.

    For those who have paid more than the minimum drawdown amount, their member can only recontribute these amounts if they are eligible to make super contributions, subject to other rules or limits such as contributions caps.

    The reduction is optional and there is no maximum amount other than the balance of your super account, unless it is a transition to retirement pension which is not in the retirement phase. In this case, the annual maximum amount is 10% of the account balance.

    See also

    Changes to payment summaries

    You may not receive a payment summary from your employer this year.

    Most employers now report their employees’ income, tax and super information directly to us each payday. You can access your payment summary information – now called an income statement – at any time by going to ATO online services through your myGov account.

    If you can't access your information through your myGov account, you can contact us for a copy of your income statement.

    If you use a registered tax agent to prepare your tax return, you don’t need to do anything. We provide your registered tax agents with your income statement information as well as other information third parties report to us, such as banks and government agencies.

    Wait for your employer to mark your income statement as ‘tax ready’ before you prepare and lodge your tax return. Your employer should mark your income statement as ‘tax ready’ by 14 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 all your payment summaries is included in your tax return.

    See also

    Tax incentives for investment in affordable housing

    An additional affordable housing capital gains discount of up to 10% is available to Australian resident individuals who provide affordable rental housing to people earning low to moderate income. To qualify for this additional discount, you must have provided qualifying affordable rental housing through a registered Community Housing Provider:

    • on or after 1 January 2018 for a period, or periods, totalling at least three years (1,095 days), which may be aggregate usage over different periods, and
    • either directly, or through an interposed entity from a trust or managed investment trust. The interposed entity or trust may be a trust or partnership, other than a public unit trust or superannuation fund.

    Dependants covered by private health insurance

    The government has changed the Private Health Insurance Act 2007. Since these changes only passed into law on 29 June 2021, they should not affect how you complete the private health insurance details in your 2020–21 tax return.

    The changes:

    • increase the maximum age for children to be covered as a dependent person under a family, single parent or dependent person-only private health insurance policy from under 25 years old to under 32 years old
    • allow children with a disability, regardless of their age and marital status, to be covered as a dependent person under a family, single parent or dependent person-only private health insurance policy.

    You should talk to your health insurer if you want to change your policy or add other dependants to your family policy.

    See also

    Amounts you do and do not need to include in your tax return

    There have been a range of new assistance and support payments made available to individuals in response to the natural disasters and other circumstances that have impacted us during the 2019–20 and 2020–21 income years.

    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 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 paid directly as a result of a bushfire which started in 2019–20
    • Ex-gratia disaster income support allowance for special category visa (subclass 444) holders paid directly as a result of a bushfire which started in 2019–20
    • payments by a State or Territory relating to the 2019–20 bushfires under the Disaster Recovery Funding Arrangements 2018External Link

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

    See also

    Next steps

    Last modified: 15 Oct 2021QC 32093