Tax time information for agents

Content Summary

Key messages

  • The ATO will start processing 2020-21 tax returns from 5 July, with pre-fill information expected to be fully available in mid-August.
  • COVID-19 impacts and support measures may affect client tax returns. Ensure all assessable income is declared including taxable grants, additional income-earning activities or employment payments and JobSeeker. As well as checking work-related expense claims and rental deductions. 
  • Check clients correctly received cash flow boost and JobKeeper payments and amend incorrect claims. Also review the accounting and tax treatment of these amounts, especially in private companies and trusts.
  • Most employers are now reporting through Single Touch Payroll (STP) with finalisation declarations due by 14 July if they have 20 or more employees, or 31 July if they have 19 or fewer employees. Income statements will be available through the ATO's Online services for agents or myGov. 
  • There are changes to line entry deduction data for individual tax returns, with the introduction of income and multi-property rental schedules in addition to the deduction schedule introduced in 2019. 
  • The ATO is providing a shortcut method to calculate working from home expenses at 80 cents per hour between 1 July 2020 and 31 December 2020. 
  • Rental activities may have been impacted by COVID-19 with deferred or reduced rental income. Also changes to the private use of the property or changes to interest payments on loans. Make sure the correct tax treatment is applied and appropriate adjustments are made to claims if required.
  • COVID-19 has impacted many small businesses tax time conversations provide an opportunity to discuss business viability/options for clients. Consider tax issues such as bad or forgiven debts, GST adjustments, trading stock and losses, as well as advice on business recovery. Make sure clients are up-to-date on their employee obligations and activity statement lodgments. Encourage them to enter payment arrangements with the ATO for outstanding liabilities.
  • From 1 July 2020, there are limits on deductions able to be claimed for vacant land. The limits do not apply to corporate tax entities but affect individuals, partnerships, self-managed superannuation funds and certain trusts. Expenses of holding land remain deductible if they are incurred in carrying on a business such as farming or gaining or producing assessable income.
  • From 1 July 2020, anti-avoidance rules for circular trust distributions have been extended to family trusts. 
  • Cryptocurrency, sharing economy and crowdfunding come with tax implications. Check if your clients are involved in these activities as investors, contractors or contributors to ensure they correctly report income and gains and claim deductions and losses.
  • The taxable payments reporting system annual reports are due 28 August with road freight, information technology, security, investigation and surveillance services included from 1 July 2020.
  • COVID-19 may have affected the tax residency status of some individuals, with the ATO taking a pragmatic approach to short-term working arrangements.
  • Be mindful of the Tax Practitioners Board's guidance on reasonable care, online security, exercising supervision and control when working remotely. Get your clients’ permission if you’re using cloud computing services.  
  • See our 2020 year-end resources for checklists, guidance and workpapers.