Tax time is just around the corner and this year promises to be madder and more chaotic than ever what with the addition of JobSeeker, JobKeeper, and various COVID subsidies and payouts to consider.
The Australian Taxation Office will open its online portal on July 7, 2021, this year and close it again on October 31, 2021. so you’ve got a bit of time to get your papers in order.
It is however worth jumping on your tax return early this year. These things have a tendency to be left until the last minute and you don’t want to be hit with any penalties for late submission because you’re not sure what percentage of internet bills to claim for as ‘work purposes’.
The ATO recognise that this year is going to be harder than others for many of us and have expressed their willingness to help, saying in a statement:
“Whether you’ve received JobKeeper, JobSeeker, COVID support or disaster assistance payments, accessed your super early, or had your records damaged, destroyed or lost, the ATO is here to give you the tools you need to get it right this tax time.”
Here’s our quick guide to how to work around any JobKeeper and JobSeeker payments you might have received over the past 12 months.
The good news here is that JobKeeper is pretty much already taken care of – unless you’re a sole trader.
The ATO has said that any JobKeeper payments you might have received as an employee will be automatically included in your income statement as either salary and wages or as an allowance.
ATO Assistant Commissioner Tim Loh has said that “If you’ve received JobKeeper payments from your employer, you don’t need to do anything different”.
“We will automatically include this information from your income statement in your online tax return for you.”
JobKeeper payments from your employer will be treated the same as salary or wages for tax purposes. This means that tax will already have been withheld from the payments at your marginal tax rate.
Sole traders who have received JobKeeper payment on behalf of their business however will need to include the payment as assessable income for the business.
Your income statement can be accessed in ATO online services through your myGov account and should be finalised by July 14, 2021. If you use a tax agent, they also have access to this information.
The rules are different here for JobSeeker.
If you’ve received JobSeeker payments, this information will also automatically be included in your tax return at the Government Payments and Allowances question.
Tax will not have automatically taken out of JobSeeker payments unless you opted for that at the time.
JobSeekers were offered the choice of having tax deducted from their payments over the previous year, so if this was you, you’ve already paid tax and you won’t have to worry about this.
If you didn’t opt to pay tax on the JobSeeker payments, you will have to pay tax on these in a lump sum when you file your tax return at your marginal tax rate.
Stand down payments
If you received a one-off or regular payment from your employer after being temporarily stood down due to COVID-19, you’ll have to pay tax on that.
They should automatically appear in your income statement and will be included in your tax return.
If you’re not sure whether these amounts have already been included, it’s best to check with your employer.
COVID-19 disaster payments
The Australian Government, through Services Australia, has made several COVID-19 disaster payments to people affected by the restrictions. This is considered income and is taxable but it won’t be added automatically.
When lodging your return, you’ll have to manually include that information yourself as income.
Early access superannuation
At the start of the pandemic, the government allowed people early access to their superannuation funds. If you took that option, you don’t need to declare it on your tax return.
“Any eligible amounts withdrawn under this program are tax-free,” Mr Loh said.
What to do if you’ve lost your tax records
Many Aussies this year will have had their tax records lost, damaged, or destroyed. Fires, floods, plagues (of the viral and rodent varieties), we’ve seen it all.
A lot of that information will already be backed up by the ATO. If you have a myGov account linked to the ATO, you’ll be able to view some of your records including income tax returns, income statements and previous notices of assessments. A registered tax agent will also be able to access those records.
Government agencies, private health funds, financial institutions and businesses provide information to the ATO which is available to your tax agents and automatically included in returns by the end of July.
If you’ve lost receipts, the ATO has stated that they will accept reasonable claims without evidence, as long as it’s “not reasonably possible” to access the original documents. You might need to show your working here as to how you arrived at the figures you’re claiming.
This more lax approach is not for everyone though and will only be taken with those who have been affected by natural disasters.
Other ATO support
The ATO says it “understands” that things can make it hard to pay tax.
Even if you can’t pay, it’s still important to lodge on time. Once you lodge and have up-to-date records, the ATO says it will assist people to find the best solution for tax payments.
The ATO offer payment plans which might be useful to you if you’ve got a particularly difficult bill to deal with this year.
In most cases, you can set your own payment plan up on the ATO website, depending on how much you owe.