The COVID-19 pandemic has affected everyone’s lives but hopefully the worst is now behind us. As the end of the financial year approaches, there are some important things to consider before 1st of July rolls around. Please contact our office if you would like to discuss any of the following articles in more detail…
END OF FINANCIAL YEAR “SUPER” CHECKLIST
Contributions
- Consider topping up your concessional (before-tax) contributions (annual cap of $25,000) but ensure you complete the required documentation to validate your claim. You may also be eligible to take advantage of the “unused concessional cap carry forward” option if your Total Superannuation Balance is less than $500,000.
- Consider making additional non-concessional (after-tax) contributions, subject to limits. If eligible, an additional after-tax contribution may qualify you for a Government Co-Contribution of up to $500.
- Consider making a contribution on behalf of your non-working or low income spouse which may qualify you for a tax offset of up to $540.
Super Pension Payments
To help manage the economic impact of COVID-19, the Government has reduced the minimum drawdown requirements by 50% for the 2019-20 and 2020-21 financial years for certain pensions (including Account Based Pensions and Market Linked Pensions). Ensure all minimum pension payments have been withdrawn from your SMSF or other pension super fund by 30th June 2020.
| AGE | CURRENT MINIMUM % | NEW REDUCED MINIMUM % FOR 2019-20 AND 2020-21 |
| UNDER 65 | 4 | 2 |
| 65-74 | 5 | 2.5 |
| 75-79 | 6 | 3 |
| 80-84 | 7 | 3.5 |
| 85-89 | 9 | 4.5 |
| 90-94 | 11 | 5.5 |
| 95 AND OVER | 14 | 7 |
BEWARE: Some super funds have a cut-off date for accepting contributions and processing pension payment requests to be counted towards the 2020 financial year, so check with your individual fund for their specific requirements.
TAX TIME – COMMON QUESTIONS
I HAVE BEEN WORKING FROM HOME FOR THE PAST 12 WEEKS – WHAT CAN I CLAIM?
During the pandemic, many of us are now working from home full time. To claim a deduction, you generally must have satisfied the following three requirements:
- You must have spent the money
- The expense must be directly related to earning your income
- You must have a record to prove it
This means you can’t claim a deduction for items provided or reimbursed by your employer. If you have received an allowance to cover expenses then you must declare the allowance as income and then you can claim a deduction for any expenses you incurred.
Expenses you can claim include:
- Electricity associated with heating, cooling or lighting the area you are using as a work space
- Cleaning costs
- Phone and internet expenses
- Computer consumables such as toner and paper
- Office expenses such as stationery or equipment (subject to certain limits)
Calculation Methods
- Shortcut Method – only available from 1 March 2020 to 30 June 2020 due to COVID-19. You are able to claim 80 cents for each hour of work from home. You do not have to have a separate dedicated area of your home set aside to work from but you will need to keep a record of the number of hours you have worked from home during that period. This deduction includes all working from home expenses and you cannot claim a separate deduction for other expenses incurred.
- Fixed Rate Method – this is a simplified method that allows you to claim 52 cents for each hour of work from home. Keeping a record for 4 weeks of the number of hours worked can be used as representative for longer periods. In addition to the hourly rate, you are also able to claim expenses incurred for phone, internet, computer consumables and office supplies.
- Actual Cost Method – this method uses the actual expenses incurred apportioned over the time you spend at home working and the area of space you work in. This method requires a lot more detailed record keeping than the other methods.
WHAT EXPENSES CAN I CLAIM FOR MY INVESTMENT PROPERTY?
Expenses you can immediately claim include:
- Agent Fees
- Cleaning
- Council and Water Rates
- Gardening
- Insurance – Landlord, Building, Contents, Public Liability
- Interest on Loans
- Land Tax
- Owner’s Corporation Fees
- Pest Control
- Repairs & Maintenance
You can also claim depreciation on larger assets that you can’t immediately write-off, for example a hot water service or an air conditioner.
The areas that the ATO tend to focus on are:
- Whether the property is genuinely available for rent
- Checking that the interest claimed is for a loan taken out for the sole purpose of purchasing or doing repairs to the investment property
- Whether the repairs & maintenance claimed are for genuine repairs and not for capital works which are deductible over the life of the asset
- Whether a rental property is actually a holiday house used for private purposes
- Ensuring that for vacant land, no deductions are claimed unless the land is used for carrying on a business
HOT TIP!!
With most businesses now using Single Touch Payroll, you may not receive a PAYG Payment Summary from your employer this year.
As your tax agent we can access it for you once it is finalised, or you can access it through your MyGov account if you have one.
STOP PRESS
INSTANT ASSET WRITE-OFF $150,000 THRESHOLD EXTENDED TO 31 DECEMBER 2020
From Thursday 12 March 2020, the instant asset write-off threshold was increased to $150,000 (up from $30,000) for businesses with an aggregated annual turnover of less than $500 million (up from $50 million). To make a claim in the 2020 financial year, the new or second hand asset must be first used or installed ready for use before the 30th June 2020.
At the time of writing this Newsletter, the threshold will drop back to $1,000 from 1 January 2021 and will only apply to businesses with an aggregated annual turnover of less than $10 million.
NEW STAFF MEMBER – WELCOME DANIEL!!
We are pleased to welcome Daniel Chellew into Nutwood Partners. Daniel is currently studying Commerce and in particular Financial Planning and will be working part time with us while he finishes his studies. He is looking forward to meeting many of our fantastic clients while learning at the same time.
KEY DATES
| 14 JUNE | Last day to lodge JobKeeper declarations for the month of May |
| 21 JUNE | Due date for lodgement of May 2020 Activity Statement |
| 30 JUNE | Due date for lodgement of 2019 SMSF annual returns Last day to deposit contributions into your super fund (check with your fund) Last day to withdraw your minimum pension from your super fund (check with your fund) |
| 14 JULY | Last day to finalise 2020 STP reporting for businesses with 20 or more employees Last day to lodge JobKeeper declarations for the month of June |
| 28 JULY | Due date for Super Guarantee Contributions for the quarter ended 30/6/2020 |
| 31 JULY | Last day to finalise 2020 STP reporting for businesses with 19 or less employees |
NUTWOOD PARTNERS OFFICE
As part of the Victorian Government’s COVID-19 restrictions we are still working remotely from our home offices for the time being.
We are still able to work with you via phone, email, video or post to ensure that all your questions are answered and your lodgement obligations continue to be met.
If you have any questions in relation to the current impact on your business and finances. please feel free to contact us at anytime.