After two months into the Corona Virus predicament, a great deal has changed in the landscape of personal situations and the tax environment.
Over this time, I spoke to many people. There has been a varied response in terms of how this situation is affecting people both personally and financially.
The main concern has been financial, being able to get access to various stimulus packages but also preserving what people have at present. The result has led to me thinking about personal tax positions and what individuals can do to help their financial situation. Although some of the tips are not exclusive to individuals, it can apply to businesses as well.
- GET PREPARED
If you have reduced work hours or ceased working, there is a chance that you will be entitled to a tax refund for 2020 due to a lower income level to what you have been taxed throughout the early part of the year.
Getting your tax return information ready now to ensure a quick lodgement of your tax return will enable early access to a tax refund that could be due.
- TAX RE-ORGANISATION
It could be a perfect opportunity, while asset prices are low to take advantage of moving assets to different structures or people within a family group. Minimising capital gains or creating losses now for possible future gains. Transferring of income from a high earner to a low earner, action should be taken prior to 30 June to effect such transactions.
If advice is required to take advantage of such measures, please contact one of the MCA staff to discuss your particular circumstance.
- REVIEW OF TAX INSTALMENTS
Future income from certain investments such as dividends from shares or Trust distributions from managed funds will be affected in the short term. Varying tax installments assessed going forward may be a way of preserving cash in the short term.
By lodging your 2020 income tax return early, this will also assist the ATO of revising future income tax installments for the 2021 tax year.
- WORKING FROM HOME
Due to the lockdown, many people are working from home. As many people know, a deduction can is claimable for hours worked from home using a predetermined set rate by the ATO. This rate has been increased from 1 March, coinciding with the start of the lockdown period. A logbook for hours worked from home should be maintained to ensure a record can support the deduction claimed for home office expenses.
- MINIMUM PENSION REQUIREMENTS
As many retirees would know, there is a minimum pension that is required to be withdrawn from your super fund annually. The percentage to be used has been reduced by 50% for 2020 and 2021, enabling people that are not reliant on the pension to keep funds within a tax-free or reduced tax environment.
Should you or anyone you know can benefit from the above, please call Mark Calleja or staff of MCA on 02 9923 2959 to discuss any of the above items mentioned or any other questions you may have regarding your 2020 income tax return.