Some key checklist items for 2021-2022 tax time for individual taxpayers are as follows.
TIP: Check if you received the Pandemic leave disaster payment and/or the COVID-19 disaster payment and/or NSW grants as NSW was in COVID-19 lockdown from Jun 2021 to October 2021. These payments are taxed differently.
Summary
Individuals
- Low Income Tax Offset (LITO) calculated by ATO automatically
- Low and Middle Income Tax Offset (LMITO) calculated by ATO automatically ended on 30 June 2022
- Work-related working from home (WFH) expenses
- COVID-19 test deductible for work-related purposes only
- JobSeeker payments (taxable)
- COVID-19 disaster payment for people affected by lockdown/restrictions living or working in COVID-19 hotspots (non-taxable)
- Pandemic leave disaster payment for self-isolating, quarantine or caring for COVID-19 patient (taxable)
- 2021 NSW State COVID-19 grants such as the business grant, JobSaver payment and micro-business grant
ATO Focus Areas
- Shares and investments
- Digital assets including cryptocurrency and non-fungible tokens (NFTs)
Read further below for details.
The Details
- The Low Income Tax Offset (LITO) is a tax offset of up to $700 for taxable incomes to $66,666. The ATO will automatically calculate the offset for an eligible Australian resident taxpayer. The LITO is an offset which is non-refundable, cannot be carried forward or transferred. That is, if you do not have tax to pay, you do not receive a tax refund.
- In addition to LITO, the Low and Middle Income Tax Offset (LMITO) is a tax offset of up to $1,500 for taxable incomes to $126,000. The ATO will automatically calculate the offset for an eligible Australian resident taxpayer. Similar to the LITO, the LMITO is a non-refundable offset which was made available for the 2018-2019 to 2021-2022 income tax years. The 2021-2022 was the last year of LMITO.
- Work-related working from home (WFH) expenses have been a common deduction in recent COVID-19 times, to claim running expenses for employees who work from home. There are three methods: the fixed rate method, the actual method and the shortcut method. The 80 cents per hour is the shortcut method available only from 1 March 2020 to 30 June 2022.
Please provide:
- Dates and days of WFH eg. formatted per week
- Hours worked each day
- Hours NOT worked each day eg. annual leave, sick leave, days in the office.
For more details, the ATO provides a link here.
- From 1 July 2021, if you purchase COVID-19 tests for work-related purposes to determine if you can attend or remain at work, these expenses are tax deductible. Note, if you or your family members use the COVID-19 tests or you WFH or do not attend a place of work, you are unlikely to satisfy the requirements of tax deductibility. For more details, the ATO provides a link here.
- The JobSeeker payment is taxable as an income support payment. Gross payment and tax withheld should be available on the ATO Pre-Fill Report.
- The Australian Government provided COVID-19 disaster payments through Services Australia to individuals who were unable to earn income because state or territory health orders prevented them working in their usual employment. This type of payment is classified as non-assessable non-exempt (NANE) income which means it is a non-taxable payment and does not need to be included in your tax return.
- The Australian Government provided the Pandemic leave disaster payment through Services Australia to individuals who were unable to work as a result of having COVID-19 or being a close contact of someone with COVID-19. The $750 payment was for a 7-day period. A separate claim was required if beyond 7 days. These payments are taxable as “Australian Government special payments” in the tax return. The ATO will not be including these payments in the ATO Pre-Fill Report.
- In NSW, the COVID-19 lockdown period affecting various local government areas (LGAs) occurred from June 2021 to October 2021. The NSW Statement Government provided various individual and business support measures including the NSW Business Grant, JobSaver and Micro-Business Grant. Some grants are NANE income, some are taxable, please check ATO updates here.
- For your shares and units bought, sold and held during the year, it is important for you to keep share and investment records (and provide the information to us) such as:
- the date of purchase
- the purchase amount
- details of any non-assessable payments made to you
- the date and amount of any calls (if shares were partly paid)
- the sale price (if you sell them)
- any commissions paid to brokers when you buy or sell
- details of events such as share splits, share consolidations, returns of capital, takeovers, mergers, demergers and bonus share issues.
The ATO Pre-Fill Report will show sales information that we can use to cross-check your primary data.
- Cryptocurrency assets and NFTs are now an increasingly popular investment asset. For TaxTime2022 the ATO has indicated it will focus on Cryptocurrency and NFTs. For more details, there is an ATO link here.
Important Note
This guide was prepared by TFW See & Lee adapted from Australian Taxation Office (ATO) and Tax Institute materials, subject to updates.
Disclaimer: The enclosed is prepared as general information only and subject to tax law updates. The contents of this tax update does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.
For us to prepare your tax return as soon as we can, please have your documents ready. For example, for WFH expenses, we need the record of hours you worked from home, a timesheet, roster or diary. Please respond to our missing information requests promptly. Thank you