Below is a summary of the changes to be aware of and announcements that will potentially affect you for the year ending 30th June 2020, or will come into effect as of 1st July 2020.
2019/2020 Financial Year
Taxable Income Tax Rate %
$0 - $18,200 0%
$18,201 - $37,000 19%
$37,001 - $90,000 32.5%
$87,001 – $180,000 37%
$180,001 plus 45%
(plus 2% Medicare levy where applicable)
2020/2021 Financial Year
Taxable Income Tax Rate %
$0 - $18,200 0%
$18,201 - $37,000 19%
$37,001 - $90,000 32.5%
$90,001 – $180,000 37%
$180,001 plus 45%
(plus 2% Medicare levy where applicable)
*It is proposed from 1st July 2022 that there will be an increase in the tax thresholds to reduce the tax paid by taxpayers.
Note: The low income offset is $445. This offset will reduce by 1.5 cents for every $1 of taxable income over $37,000. It phases out when the taxable income is $66,667
For the 2019/2020 income year, Medicare Levy will be incurred when the incomes are above:
Plus $4,339 for each dependent child.
The Medicare levy will now stay the same at 2.0% from 1st July 2020.
a. FBT for Business
The Statutory Formula method to calculate the taxable value of the private use (Fringe Benefit) of a vehicle is a flat 20% statutory rate of the cost of the car. It is no longer based on kms travelled per year.
Important Note: Keeping a valid 3 month logbook is extremely important to be able to claim the actual cost method!
b. Cents per KM for Individuals
The Motor Vehicle Statutory Formula claim for the cents per kilometre for individuals is 68 cents per kilometre for 30th June 2020. There is only one single rate for all engine sizes. Individuals will only be able to claim cents per kilometre method or logbook method. You can no longer claim 12% of original value method or one third of actual expenses method. It is proposed that the rate will increase to 72 cents per km from 1st July 2020.
The maximum amount that taxpayers can contribute into superannuation as concessional contributions are:
Year ending 30th June 2020 is $25,000
Year ending 30th June 2021 is $25,000
Important Notes:
The non-concessional contribution cap (contributions for which you do not claim an income tax deduction) is:
2019 – 2020 Income Year $100,000
2020 - 2021 Income Year $100,000
People aged under 65 years may be able to make lump sum non-concessional contributions of up to three times their non-concessional cap over a 3 year period (lump sum $300,000)
Important Notes:
The two methods for claiming a home office deduction for employees on their tax return are:
Important: Due to Covid-19, the ATO will allow you to claim 80 cents per hour for working from home from 1st March 2020 to 30th June 2020. This however covers all expenses for working from home.
Families distributing money to children from Family Trust’s will need to be aware that they can only distribute $416 tax free for 30th June 2020 year.
In the 30th June 2020 year, Individuals with income greater than $250,000 will have their super contributions taxed at 30% and not 15% (this has been in place since 1st July 2012).
Note:
The SG rate will stay at to 9.5 per cent. This will remain until 2021/2022 and then increases will be by 0.5 per cent each financial year until 12 per cent is reached. The proposed future increases each year are:
Financial Year Minimum Superannuation Guarantee Rate
2019/20 9.50%
2020/21 9.50%
2021/22 10.00%
2022/23 10.50%
2023/24 11.00%
2024/25 11.50%
2025/26 12.00%
For individuals to claim a deduction for personal contributions, you must have a valid written notice (deduction notice) advising you intend to claim a tax deduction and a written acknowledgement from the superfund.
Trustees must ensure that trust income is distributed by an income distribution resolution/minute by the 30th June 2020. These resolutions must show what trust income each beneficiary is entitled to, and the streaming of franked dividends and capital gains if applicable.
Trusts with older deeds should have these reviewed to ensure the definition of income complies with current legal definitions in the tax act and that the deed allows for streaming of capital gains and franked dividends. The trust deed must also state all required beneficiaries.
a. Since 1st July 2017, travel expenses will be disallowed for inspecting, maintaining or collecting rent for residential rental properties.
b. Since 9th May 2017, investors who purchase residential investment properties will only be able to claim depreciation on plant and equipment on new acquisitions of plant and equipment
c. From 1st July 2019, the government will deny deductions for expenses associated with holding vacant residential or commercial land, including interest on finance for the acquisition of the land. Deductions for expenses associated with holding land will be available once a property has been constructed, it has received approval to be occupied and is available for rent. Denied deductions will not be able to be carried forward for use in later income, however, denied deductions can be included in the cost base of the land.
The private health insurance rebate is now income tested and the Medicare levy surcharge will be increased based on your income if there is no appropriate private hospital cover for the year. The following table summarises the changes to the private health insurance (PHI) rebate and the Medicare levy surcharge (if you do NOT have the required hospital cover)based on the income levels from the 1st April 2020 (the rebate % has decreased from last year):
(For families with more than one dependent child, the relevant threshold is increased by $1,500 for each child after the first)
Small businesses with aggregate annual turnover of less than $50 million can immediately deduct assets they start to use or install ready for use, provided the asset costs less than $30,000 (GST excl). This will apply for assets acquired and installed ready for use at 30 June 2020.
From the 12th March 2020 the instant asset write-off threshold has been increased to $150,000 (from $30,000) It is proposed that this concession is to extend until 31st December 2020.
Note: this is for small business entities, not employees or rental properties
For 2019/2020 the threshold and repayment rate to pay back debt is:
Repayment Income Repayment Rate
Below $45,881 Nil
$45,881 – $52,973 1.00%
$52,974 - $56,151 2.00%
$56,152 - $59,521 2.50%
$59,522 - $63,092 3.00%
$63,093 - $66,877 3.50%
$66,878 - $70,890 4.00%
$70,891 - $75,144 4.50%
$75,145 - $79,652 5.00%
$79,653 - $84,432 5.50%
$84,433 - $89,498 6.00%
$89,499 - $94,868 6.50%
$94,869 - $100,560 7.00%
$100,561 - $106,593 7.50%
$106,594 - $112,989 8.00%
$112,990 - $119,769 8.50%
$119,770- $126,955 9.00%
$126,956 - $134,572 9.50%
$134,573 and above 10.00%
Australians who have a HELP or TSL and are residing overseas, will be required from 1st July 2017 to make repayments against their debt based on their 2019/2020 worldwide income. Overseas debtors are required to update their contact details via MyGov within 7 days of leaving Australia.
Individuals will receive a 8% tax discount as a non-refundable tax offset on business income. This includes Sole Traders, Partners in Partnership and Trust Distributions where the entity carries on a business. The entity must be a small business entity with a turnover of under $5million. The tax discount will be capped at $1,000 per individual for each income year.
From 2020/2021 the tax offset increases to 13% and 16% in 2021/2022. However the cap is still $1000.
For the 30th June 2020 financial year, the company tax rate is 30%. However companies that are a “base rate entity” must apply the 27.5% company tax rate.
A base rate entity is a company that both:
Note: the current maximum franking credit rate for distribution will be 27.5% for these Base Rate Companies in 2019/2020.
For 2020/2021 the company tax rate for base rate entities will be 26% and then 25% for 2021/2022 and later income years.
Since 1st July 2015, all FIFO (Fly In, Fly Out) and DIDO (Drive In, Drive Out) workers will not be able to claim the zone rebate for the zone they work in. The zone rebate entitlement will only relate to the zone of their normal place of residence. Taxpayers who actually reside in a zone can continue to claim the zone rebate.
All Employers from 1st July 2019 must be setup for Single Touch Payroll (STP). With STP you report all employee’s payroll information such as wages, PAYG withholding and superannuation to the Tax Office each time you pay staff through your software.
A concession starting date of 1st July 2021 has been given to closely held employees in businesses were the closely held employees are family members.
If your income is less than $126,000, you will get some of the low and middle income offset. The maximum offset is $1,080. The rebate is based on your taxable income.
If your taxable income:
Families that choose to wait until the end of the financial year to claim their FTB entitlement or child care benefit will have a grace period of one year. Therefore, all 2019 tax returns must be lodged by 30th June 2020 and all 2020 tax returns must be lodged by 30th June 2021.
As part of the federal and state government response to COVID 19 the following help is available:
Important: Remember you must complete and lodge the monthly jobkeeper declaration within 7 days at the end of each month.
1. First Cashflow Boost payment is based on your PAYGW on March 2020 BAS for Quarterly lodges and the March 2020 BAS and April and May 2020 IAS’s for monthly lodgers. It is a minimum of $10,000 and a maximum of $50,000
2. The second boost payments for eligible employers are equal to the amount received in the first cashflow boost. Again a minimum of $10,000 and max of $50,000. It will be paid in two instalments for quarterly lodgers on the March and September 2020 BAS lodgements. For monthly lodgers it will be paid in 4 instalments on the March 2020 BAS, the July and August IAS and finally on the September 2020 BAS