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How COVID has changed your tax return

Sponsored by EY
·3-min read

If you’re used to lodging the same tax return year upon year, then 2020 is the time to re-evaluate what you’re lodging. A global pandemic has meant changes to landlord’s situations, investor’s portfolios and many sole trader’s incomes. Here’s how to navigate the COVID-19 tax waters, and ensure you’re maximising your claim.

1. More than two million Australians have rental properties, and this year many will have had tenants who paid a reduced rate, deferred their rental payments, or moved out. If you didn’t receive a rental income for part of this year, then you don’t have to pay tax on it until the tenants pay it. However, you’re still able to claim the interest on loan repayments as a deduction if it continues to accrue even if you have deferred your own loan repayments to the bank. There are concessions for landlords of short-term rentals and holiday homes too; if bookings were cancelled and the property was empty, deductions are still available.

2. Although many people have taken an income hit due to COVID, some businesses and investors have been able to take advantage of a change in markets, and are turning more of a profit than ever. If this is the case, it’s worth considering thinking ahead to next tax year, and pre-paying up to 12 months’ interest on your rental property loan. This allows you reduce your taxable income this year, while you’re earning a higher amount. You can do this up to 12 months in advance and it must be done before the end of the financial year.

3. If you sold non-performing shares or managed funds in the last year that you’d held for a while, this could add some tax value. You may be able to use capital loss from those sales to offset the capital gains in your portfolio.

4. Taken a hit to your finances during COVID-19? You’re able to vary your PAYG instalments without being penalised, or being charged interest on these instalments. In order to reduce the possibility of a large bill at the end of the year, you can make multiple variations throughout the year as your situation changes.

5. If you have business investments, be aware of the increases to the instant asset write-off eligibility between March and December 2020. Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used, and the threshold has now been raised so you can claim up to $150,000, instead of the previous $30,000.

6. Ensure your claim has taken in to account all the recent changes by using EY TaxChat. The app gives personalised advice from a tax professional, who is matched to you depending on your situation. All you need to do is answer a series of easy to understand questions, share your documents, and your personal tax specialist will submit your claim and ensure you’re getting the best deal possible. You can access the app whenever suits you, ask questions along the way, and be safe in the knowledge you’ve got someone who understands exactly what you need.

Learn more about EY TaxChat now.