Yahoo Finance Do I pay tax on early super withdrawals?
More than 4.5 million Australians accessed their superannuation early as part of the Government’s COVID-19 response, but widespread confusion has some concerned about the tax implications.
Australians are confused about whether they need to pay tax on their superannuation withdrawals and JobKeeper, managing director of Platinum Accounting Australia Coco Hou said.
However, those concerned about paying tax on their superannuation needn’t be, she added.
“Those people do not have to pay tax on it or declare it in their tax return,” she said.
The Australian Tax Office (ATO) has said it will, however, scrutinise those who withdrew super without meeting the eligibility requirements.
An applicant needed to be unemployed, in receipt of income support or had their working hours or turnover cut by at least 20 per cent on or after 1 January 2020.
The ATO revealed in December that it was examining more than 1,900 early super withdrawals, amid concerns that between 2 and 4 per cent of the scheme’s recipients didn’t meet the criteria.
However, the ATO also said it would only apply financial penalties in serious instances.
JobKeeper tax questions
It’s a different story for workers who received JobKeeper payments, with the wage subsidy attracting tax.
“Your JobKeeper payments were deducted under the same legislation that your normal take-home pay packet is,” she said.
“If you’re an employee, you do not need to do anything different come tax time because your employer should have included your tax in your income statement, either as part of a salary, wage or an allowance.”
Avalanche of questions
Hou said her office has been overrun with questions in the last month, and that most taxpayers will have a different experience filing their tax returns this year.
“Whether you are a business or an individual, navigating your tax return this year will look a little different if you were at all involved with the Australian Government’s JobKeeper subsidy,” she said.
“Your eligibility and claims processing will also be changed if you had to work from home between 1 July 2020 and 30 June this year as a result of the pandemic.”
She reminded Australians who work from home that they can claim 80 cents per hour on tax through the ATO’s shortcut method.
This covers phone and internet, heating and lighting, and depreciation.
“This new method is a lot easier to comply with, however it is critical that you kept a record of your hours, like a diary or a timesheet, to prove your work from home status.”
Taxpayers have from 1 July to 31 October to submit their tax return.
