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Medicare levy reduction for low-income earners


Your Medicare levy is reduced if your taxable income is below a certain threshold. In some cases, you may not have to pay the levy at all.


The thresholds are higher for low-income earners, seniors, and pensioners. If your taxable income is above the thresholds, you may still qualify for a reduction based on your family taxable income.


In 2019–20, you do not have to pay the Medicare levy if you are single and your taxable income is equal to or less than $22,801 ($36,056 for seniors and pensioners entitled to the seniors and pensioners tax offset).


You will pay only part of the Medicare levy if you are single and your taxable income is between $22,801 and $28,501 ($36,056 and $45,069 for seniors and pensioners entitled to the seniors and pensioners tax offset).


You may still qualify for a reduction based on your family taxable income.


If you do not qualify for a reduction in the Medicare levy, you may still qualify for a Medicare levy exemption.


Contact Expert Tax on 0449 952 855 or 1300 869 829 for assistance on tax related matters.



Don’t let these Tax Time myths slow down your return

At a time when many people want the tax refund that they are expecting to arrive quickly, the Australian Taxation Office (ATO) is warning people not to get tripped up by tax time myths that slow down returns.

Usually, tax returns lodged electronically are processed in less than 2 weeks.


Top tax time myths for 2020


Bank details don’t update themselves


While ATO receive information from banks, this doesn’t extend to updating details for the bank account you nominate to have your refund deposited into. Last year many people in their rush to lodge early forgot to update bank details and delayed their refund.


It’s not okay to double dip


ATO is concerned that some taxpayers may either accidentally or deliberately double dip by claiming their working from home expenses using the all-inclusive shortcut method while also claiming for specific items such as laptops or desks.


It’s important to remember that if you’re claiming under the shortcut method, you cannot claim a separate additional deduction for any expenses you incur as a result of working from home.


Home to work travel is not claimable


Generally, most people cannot claim the cost of travelling from home to work unless you are required by your employer to transport bulky tools or equipment and there is not a safe place to store these at your workplace.


If you are working from home due to COVID-19, but need to travel to your regular office sometimes, you still cannot claim the cost of travel from home to work as these are still private expenses. Even though you are working from home, your home is still a private residence – it is not a ‘place of business.


You can’t just claim $300 or $299 if you had no expenses!


ATO often see people claiming a deduction despite not purchasing anything. When ATO question them, they often find it’s because they thought everyone is entitled to claim $300.


“While you don’t need receipts for claims of expenses up to $300 but you must have actually spent the money and be able to show us how you worked out your claim.”


Work-related expenses need to be work related!


Each year people claim personal expenses under the guise of work-related expenses, but you can only claim for expenses that are directly related to earning your income.


ATO have been reminding taxpayers recently that if they are in jobs that require physical contact or close proximity to customers and they had to buy their own hand sanitiser, gloves or masks for use at work, that they can claim these items.


“However, people who aren’t in jobs that aren’t in close proximity to the public or people who have purchased these items for their general use, cannot claim these items.


“For example, people who are working from home can’t claim these items and so a high work from home claim together with a large claim for protective items may trigger a red flag and slow down your return.


“People also cannot claim for the costs of setting their children up for home schooling. These costs are private expenses.”


Lodging earlier doesn’t always mean getting your refund earlier


Each year the ATO automatically includes information from employers, banks, private health insurers (and this year JobKeeper for employees and JobSeeker amounts) in people’s returns. For most people this information is ready by the end of July.


Since leaving out income can slow your return down, if you are lodging before we have automatically included this information for you, it’s really important that you ensure you include all of the information.


Contact Expert Tax on 0449 952 855 or 1300 869 829 for lodgement of your personal and business tax returns.



2020 Income Types and treatment


JobSeeker: how to treat in tax return


JobSeeker payments are taxed.


The ATO will automatically load this information into the ‘government payments and allowances’ section in your tax return, but it will not necessarily be there from July 1.


This means if the information is missing when you do your tax return, you will have to provide this information to your tax agent or wait until the data is available on ATO portal.


“Leaving out income can slow down your return or result in a bill later so it’s definitely best avoided.


JobKeeper: how to treat in tax return


JobKeeper payments are taxed as regular income.


If you have received JobKeeper payments from your employer do not need to do anything different to other “normal” years.


The payments will be included as salary and wages and/or allowances, in your regular income statement, which your employer provides directly to the ATO.


The income statement sent to the ATO can be viewed by your tax agent.


Sole traders that have received the payments need to include them as income for the business.


Stand down payments: how to treat in tax return


Some Australians in the past three months have received a one-off or multiple payment from their employer for being temporarily stood down from work.


These payments are also taxable and appear in their income statement and in their return.


If people aren’t sure whether these amounts have been included in their income statement, they should check with their employer.


Early superannuation withdrawal: how to treat in tax return


There is good news for those who took advantage of the relaxed rules around emergency withdrawal of superannuation funds.


If you received early access to your super this year under the special arrangements due to Covid-19, any amounts you’ve withdrawn from super under this program are tax-free and you do not need to declare them in your tax return.


Contact Expert Tax on 0449 952 855 or 1300 869 829 for further assistance.


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