2020 End of Year Tax Planning: Personal Income Tax
With end of financial year quickly approaching, now is the time to consider some end of year personal income tax planning strategies. We have compiled a list of things you might want to consider.
Simplified shortcut method for deducting work from home expenses
Due to COVID-19 the ATO has introduced a simplified shortcut method for deducting working from home expenses to make it easier for people to claim deductions for working from home from 1 March 2020.
The new shortcut allows individuals to claim a rate of 80 cents per hour for all their running expenses based on a record of the hours worked from home. You may still claim under the old rate and claim deprecation on equipment and work related portion of running expenses if you prefer, however you would need to calculate these based on a reasonable apportionment and be able to substantiate expenses.
Personal superannuation contributions
The maximum amount you can contribute to super per financial year and claim a deduction for (known as “the concessional contributions cap”) is $25,000 for all individuals regardless of age.
To claim a tax deduction for personal superannuation contributions in the 2020 financial year, your super fund must receive the funds by 30 June 2020. You also need to provide a valid Notice of Intent to your super fund or retirement savings account provider in order to claim the deduction in your tax return.
Early access to your super
Individuals financially affected by COVID-19 may be eligible to withdraw up to $10,000 of their superannuation before 1 July 2020 and a further $10,000 from 1 July 2020 – 24 September 2020 .
For citizens or permanent residents of Australia or New Zealand, an individual may be eligible if they meet one or more of the following:
The individual is unemployed
The individual is receiving a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit, or farm household allowance
The individual (on or after 1 January 2020) has been made redundant, had their working hours reduced by 20% or more or is a sole trader whose business was suspended or there was a reduction in turnover of 20% or more.
Temporary residents who are unable to meet immediate living expenses are eligible to withdraw $10,000 by the 1st July 2020 if they hold one of the following visas:
A student visa that the individual has held for 12 months or more
A temporary skilled work visa
A temporary resident visa holder (excluding student or skilled worker visas)
Tax does not need to be paid on amounts released and it does not need to be included in the individual’s tax return. The application is available through ATO online services in myGov.
Changes to main residence exemption for non-residents
Foreign residents can no longer access the Capital Gains Tax main residence exemption for the sale of their home. This applies for CGT events happening on or after 7:30pm on 9 May 2017.
If you sell the property prior to 30th June 2020, you may still be eligible to apply for the main residence exemption, i.e not pay tax on the capital gain if you meet additional rules.
More information
Feel free to contact the office and arrange a phone meeting with our team on (02) 9529 4411.
