Another financial year done and dusted, and now is the time to start thinking about lodging your 2021 Income Tax Return. For some of you, this year meant staying at home or at least part of your time was spent in and out of lockdowns. It is important to understand what changes are happening this year in relation to deductions you may be entitled to claim and other general changes which may affect you.  

This year we have a new face as our experienced personal tax return specialist, Janine Roberts. Janine has been a great addition so our firm and is already providing an outstanding level of service to clients. If you want to know a little more about Janine, see our Q & A article here. 

What are some of the things to be aware of this year?

Payment Summaries 

This year, most employers will be registered for and reporting through Single Touch Payroll (STP). For those who do not know, STP is the requirement for employers to lodge payroll data electronically with the ATO every time you are paid.  

Therefore, it is likely you won’t have received a traditional payment summary from your employer (or employers). Not to worry though, as we will have access to this payroll information from the 15th of July 2021.  

JobKeeper payments 

You may have received the JobKeeper payment through your employer during the 2021 financial year. If you are an employee, there isn’t anything further you need to report in your 2021 income tax return as your employer will have already reported any additional salary & wages you have received.  If you are a Sole Trader and received the JobKeeper payment on behalf of your business, you will need to include the payments as assessable income in your 2021 tax return. 

Early access to superannuation payments 

If you were eligible to meet the condition of release allowed under the COVID-19 support measures, you may have withdrawn money from your personal superannuation fund. The ATO have advised that any amount received as part of meeting this condition of release is non-assessable income.  

Changes in the 2021 income tax rates for individuals 

As part of the 2020-21 Federal Budget, the Federal Government has brought forward tax cuts in Stage 2 of the personal income tax plan from 1 July 2022 now to 1 July 2020. By raising the tax brackets, a greater amount of your taxable income will be taxed at a lower rate of tax than in the previous financial year. The changes specifically include: 

  • Increase in the 19% personal income tax bracket from $37,000 to $45,000 
  • Increase in the 32.5% personal income tax bracket from $90,000 to $120,000  

Lower income tax offset 

A further change as part of Stage 2 of the personal income tax plan is to increase the low-income tax offset from $445 to $700.  

Lower and Middle income tax offset (LMITO) 

The LMITO will continue to be available in the 2021 financial year. The offset is available to taxpayers with a taxable income between $37,001 and $126,000. Taxpayers will receive a benefit depending on their level of income ranging from $255 to $1,080. 

Working From Home  

The ATO has extended the temporary Short Cut Method to calculate deductions relating to the costs incurred as part of employees working from home due to COVID-19 restrictions. The Short Cut method is an all-inclusive rate available for employees who worked from home during the 2021 financial year. The method allows a deduction of 80 cents for every hour worked from home. Other methods, including the Fixed Rate and Actual Expense methods also remain available for employees to claim a deduction for expenses related to working from home.  

At Davidsons, we want to make your tax return experience as convenient and hassle free as possible. To help with your preparation you can use our Tax Return Checklist and Investment Property Checklist which has a list of things to consider. 

To book in a time with Janine, or if you have any questions in relation to your 2021 Income Tax Return, please contact our office on 03 5221 6399 or email us at info@davidsons.com.au. 

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.