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Income Information When Lodging Taxes Online

By H&R Block 2 min read
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Employer lump sum Payments

This question is about lump sum payments you received from your employer for unused annual leave or unused long service leave.These amounts are shown on your Income Statement or PAYG Payment Summary as Lump Sum A, B, D or E.

Allowances

Allowances are payments made to employees for job qualifications, uniforms, tools, overtime meals, working conditions, or travel between work sites. Job qualifications such as first-aid certificates and working conditions that can be safety hazards are recognised as allowances. You will generally find these allowance amounts on your income Statement or PAYG Payment Summary.

Union/Professional association fees

Any union fees and or professional association fees are considered tax deductions. However, worker entitlement funds like welfare fund contributions cannot be deducted. Most unions and associations send members statements of the fees or subscriptions paid, or the amount appears on your Income Statement/PAYG Payment Summary.

Workplace giving

Workplace Giving is when employees make donations to charities directly through payroll. This is taken out from their income pre-tax. This figure will be reported on your Income Statement/PAYG Summary.

Payer's ABN

Enter the employer’s 11-digit Australian Business Number (ABN). This ABN will be listed on your Income Statement/PAYG Summary near your Employer's name. If your payer is not entitled to an ABN, enter a "00" followed by the payer's Withholding Payer Number (WPN).

Exempt Payments

  • Partner service pension where the partner and the veteran are under age-pension age and the veteran receives an invalidity service pension, or the partner is under age-pension age and the veteran has died and was receiving an invalidity service pension at the time of death.

  • Special needs wife pension: taxpayer and partner under pension age (or partner deceased)

  • Wife pension: taxpayer and partner under pension age (or partner deceased)

  • Remote Area Allowance

  • Advance pharmaceutical supplement

  • Apprenticeship Early Completion Bonus: applies to first $1,000 received

  • Assistance for Isolated Children Scheme: supplementary allowances

  • Australian-American Educational Foundation (Fullbright Commission) grant

  • Australian Government Disaster Recovery Payment

  • Australian Victim of Terrorism Overseas Payment

  • Abstudy: student under 16 years

  • Better start for children with disability initiative: Outer Regional and Remote Payment

  • Carer adjustment payment (CAP)

  • Carer allowance and one-off payments

  • Carer supplement

  • Child care benefit or rebate

  • Child disability assistance

  • Commonwealth scholarships or bursaries provided to foreign students

  • Commonwealth secondary education assistance

  • Crisis payment

  • Defence Force Income Support Allowance, Bonus and Bonus Bereavement Payment

  • Double orphan pension

  • Economic security strategy payment

  • Energy Supplement

  • Family Tax Benefit

  • Fares allowance

  • Farmers hardship bonus

  • Helping Children with Autism package: Outer Regional and Remote payment

  • Household assistance package (includes clean energy advance, energy supplement payments, essential medical equipment payment, low income supplement and single income family supplement).

  • Income support bonus paid under Part VII of the Veterans’ Entitlement Act 1986

  • Job commitments bonus

  • Language, literacy and numeracy supplement

  • Loss of earnings allowance paid under the Veteran’s Entitlements Act 1986

  • Military Rehabilitation and Compensation Act Education and Training Scheme (MRCAETS) for eligible young persons.

  • Mobility allowance

  • National Disability Insurance Scheme (NDIS): amounts the taxpayer received directly or was paid on their behalf funded under their plan

  • Pensioner education supplement and fares

  • Pharmaceutical allowances

  • Prisoner of War Recognition Supplement

  • Quarterly pension supplement

  • Rent assistance

  • Schoolkids bonus

  • Seniors supplement

  • Stillborn baby payment paid by Centrelink

  • Special needs disability support pension: under pension age

  • Telephone allowance

  • Training and learning bonus

  • Utilities allowance

  • Veterans' Affairs disability pension and allowances, war widow's and war widower's pension.

  • Defence Force Income Support Allowance where the payment to which it relates is exempt
  • Income support supplement (ISS) - under DVA or Military Rehabilitation and Compensation Act
  • Youth disability supplement as a component of disability support pension
  • Age service pension supplementary amount
  • Bereavement payment – lump sum payment
  • Coronavirus Economic Support Payment ($750 lump sum payments)
  • Disaster income support allowance for special category visa (subclass 444) holders (in relation to 2019-20 bushfires)
  • Disaster recovery allowance (in relation to 2019-20 bushfires)
  • Education entry payment supplement
  • Endeavour awards research fellowship or Endeavour Executive Award
  • Essential Medical Equipment Payment
  • Invalidity service pension and the taxpayer has reached age pension age – supplementary amount
  • Newborn upfront payment and newborn supplement
  • Pension bonus – Centrelink closed to new applicants 1 July 2014
  • Pension bonus – DVA
  • Single income family supplement
  • Student start-up loan
  • Australian Volunteers Program - allowance received as a volunteer in the Australian government funded Australian Volunteers Program

Departing Australia Superannuation Payments

Departing Australia Superannuation Payments - A final DASP withholding tax has been applied to your super balance by the fund before the payment is issued to you. Because of this you MUST NOT include details of the payment or the tax withheld from the payment in your tax return

Tax withheld

This is the amount withheld by your bank if you didn't provide them your Tax file number (TFN). TFN withheld amounts are shown on your bank statements.

Active asset

An “active asset” is an asset that is used or held ready for use in the course of carrying on the business, and can include goodwill. However, an asset which is used to derive passive income, such as rent, does not qualify as an active asset. The asset must have been an ‘active asset’ for at least half the time you have owned it, or 7½ years, whichever is less. A Non Active Asset is an asset not being used in current business operations.

Property exemption

Capital gain from the sale of property may be subject to capital gains tax (CGT). Sale of property is not subject to CGT if: The dwelling was your residence for the whole period you owned it and the dwelling was not used to produce assessable income and the dwelling was situated on 2 hectares or less.You can qualify for only a partial exemption if the dwelling was your main residence during part of the period you owned it, you used your home to produce assessable income or the land on which your home is situated is more than two hectares.

Active asset - 50% reduction

This concession allows you to reduce the capital gain arising from a business asset (an active asset) by 50%. Individuals and small businesses can generally discount a capital gain by 50% if they hold the asset for more than one year.To qualify for the 50% active asset reduction, you need to satisfy only the basic conditions that apply to all the small business capital gains tax (CGT) concessions.

  1. A capital gain must arise on disposal of the asset.
  2. Either your business turnover is less than $2 million, or the net value of your assets and the assets of entities connected with you is less than $6 million (this excludes personal use assets).
  3. The asset disposed must be anactive asset

If the asset being disposed is a share in a company or an interest in a trust, you must be a significant individual or the spouse of a significant individual and have some ownership interest. Basically, a significant individual is a person who owns at least 20 percent of the company or trust.

Active asset - Rollover relief

If you sell a small business asset, you can defer your capital gain until a later year. This means you don’t include the gain in your income until a change in circumstances causes a CGT event to happen that crystallises the gain – for example, you don’t acquire a replacement asset within the required period, or you later sell that replacement asset or stop using it in your business. When a CGT event crystallises the gain you have previously deferred, all or part of the gain that you deferred becomes assessable. Again, the basic conditions for the small business concessions must be met first. The replacement asset can be acquired one year before or up to two years after the last CGT event in the income year for which you choose the rollover.

Active Asset - CGT retirement exemption

If you are not eligible for the 15 year exemption rule, the capital gain on your small business asset, after applying the general 50 per cent discount and the optional 50 per cent active asset reduction, can sometimes be eliminated by applying the CGT retirement exemption. There is a lifetime limit of $500,000 per person available under this concession. If you are under age 55 when the capital gain occurs, you must contribute an amount equal to the remaining capital gain into superannuation. This amount will be preserved in super until you meet a condition of release. If you are over age 55 when you apply the exemption, there is no requirement to contribute the gain into superannuation. You simply elect to disregard the gain, up to a maximum of $500,000 when you complete your tax return.

Attributed Personal Services Income

Attributed personal services income involves having your PSI paid to you as an employee, through your personal services entity (i.e. the company you manage your personal services through).

If your PSI is paid to a personal services entity, the income (minus the expenses incurred while producing that income) is attributed to you unless:

* the personal services entity gained the income in the course of conducting a Personal Services Business; or
* the income was immediately paid to you by the entity as salary.

Primary vs non-primary production

Your business is in primary production if it is related to plant or animal cultivation, fishing or pearling, tree farming or felling

Cost of sales

Only complete this Cost of Sales section if you have trading stocks. All other business expenses should be entered under the relevant headings further down on this Business schedule. Please note that the Cost of Sales cannot be a negative figure and the formula is as follows: Cost of Sales = Opening Stock + Purchases of Stock - Closing Stock.

Business income

If you are registered or required to be registered for GST, the following apply:

* Consider your assessable income, exempt income and amounts received or receivable. For tax purposes you should exclude GST from them when you calculate your income and deductions.
* You should reduce deductible losses and outgoings by the amount of input tax credit entitlement. In certain circumstances you could make an adjustment for GST purposes. This could alter your assessable income or deductibles. For example, a change in how much you use an asset for business purposes could increase or decrease your GST component.
* You should also exclude GST under rules such as capital gains tax and capital allowances.

If you are not registered for GST or required to be, you do not need to adjust your income and deductions for GST. You can claim the GST-inclusive amount incurred on deductible outgoings.

Other business income

Other business income includes:

  • Assessable government payments
  • gross sales of trading stock
  • gross sales from produce
  • goods taken from stock for your own use
  • value of livestock killed for rations
  • value of livestock exchanged for other goods or services
  • gross earnings from services
  • rent derived from carrying on a business of renting property
  • income earned through the sharing economy, or other marketplace, where you're carrying on a business
  • taxi driver and ride-sourcing earnings (income you earned as a non-employee taxi driver if it is not shown at Personal services income)
  • amounts received as recoupment of expenses
  • bad debts recovered
  • profit on sale of depreciating assets
  • royalties
  • insurance recoveries
  • subsidies
  • employee contributions for fringe benefits
  • assessable non-government assistance from all sources
  • foreign exchange (forex) gains
  • payments and grants reported in a Taxable payments annual report where tax has not been withheld and they relate to business income
  • business-related income statements/payment summaries where no tax has been withheld.

Simpler depreciation for small business

You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover of less than 10 million dollars for the 2020 financial a year.
Aggregated turnover is based on the income of your business and that of any associated businesses.

Simplified depreciation rules for small businesses include:

* an instant asset write-off for assets that cost less than the relevant threshold
* a general small business pool for assets that cost the same or more than the relevant threshold, which has simplified calculations to work out the depreciation deduction.

If you are eligible and choose to use the simplified depreciation tools you must use the rules to work out deductions for all your assets except those that are excluded (ie, assets that are leased out, assets previously allocated to a low-value pool prior to the rules being brought in, horticultural plants, software allocated to a software development pool, assets used in research & development and capital works including buildings.) You can only claim a deduction for the taxable/business use of the asset.

Instant asset write-off

By using Instant Asset Write-off, you can immediately write off the cost of each asset your business bought and uses that costs less than the relevant threshold amount. You can only write off the business/taxable use portion. The entire cost of the asset must be less than the relevant threshold, not including any trade-in amount. The amount you can write-off will also depend on when the asset was purchased and the associated threshold amount:

* 2nd April 2019 - 11th March 2020 - $30,000 threshold
* 12th March 2020 to 30th June 2021 - $150,000 threshold

A car limit applies to the cost of passenger vehicles (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than 9 passengers. The car limit is $57,581 for the 2019–20 income year . The car limit does not apply to vehicles modified for use by people with disability. You cannot claim the excess cost over the car limit under any other depreciation rules.

Small business pool

If you use the simplified depreciation rules and the cost of the asset is the same as or more than the relevant instant asset write-off threshold, the asset must be placed into the small business pool. You are then able to claim a 15% deduction for these assets in the year they are allocated to the pool in this financial year and a 30% deduction on any pool balance already in existence. If the total balance of the pool is below the current threshold of $150,000 the pool balance will be written off.

Motor vehicle expenses

You may be able to claim for use of your vehicle if it is necessary for business use. Keep a diary record of trips you make which are necessarily incurred in earning your income. This cents per kilometre method of substantiation is only available if your business travel is less than 5000km per year and is a 68c per km deduction for this financial year. Note that this 5000km limit is per car across your entire tax return. If you intend to claim more that 5000km you need to keep a Motor Vehicle log book. Vehicle depreciation (for log book/actual expenses claims) is completed in the Instant Asset Write-Off or Pooled Assets section for businesses.

Date of first rental income

Enter the actual date the property was first rented or available for rent which. This may be in a previous year other than this one.

Rental losses carried forward from a prior year

Only enter the rental loss which has not been offset against your other income from prior year

Borrowing expenses

These are expenses directly incurred in taking out a loan for the property. They include:

  • Loan establishment fees
  • Title search fees charged by your lender
  • Costs for preparing and filing mortgage documents
  • Mortgage broker fees
  • Stamp duty charged on the mortgage
  • Fees for a valuation required for loan approval
  • Lender’s mortgage insurance

The following are not borrowing expenses:

  • Insurance policy premiums on a policy that provides for your loan on the property to be paid out in the event that you die or become disabled or unemployed
  • Interest expenses
  • Stamp duty charged on the transfer of the property
  • Stamp duty incurred to acquire a leasehold interest in property (such as an ACT 99-year Crown lease).

If your total borrowing expenses are more than $100, the deduction is spread over five years or the term of the loan, whichever is less. If the total deductible borrowing expenses are $100 or less, they are fully deductible in the income year they are incurred.

If you obtained the loan part way through the income year, the deduction for the first year will be apportioned according to the number of days in the year that you had the loan.

Legal fees

Some legal expenses incurred in producing your rental income are deductible. These include the costs of:

  • evicting a non-paying tenant
  • taking court action for loss of rental income
  • defending damages claims for injuries suffered by a third party on your rental property.

The following legal expenses, however, are of a capital nature and therefore not deductible:

  • purchasing or selling your property
  • resisting land resumption and defending your title to the property.

Interest on loans

You can claim the interest charged on the investment loan, or a portion of the interest. However, the property must be rented or available for rent. If you start to use the property for private purposes, you cannot claim the interest expenses you incur after you start using the property for private purposes. If only part of the loan was for the rental property, you can only claim the interest for that part of the loan.

Repairs/maintenance

Generally, the repairs must relate directly to wear and tear or other damage that occurred as a result of your renting out the property. Maintenance generally involves keeping the property in a tenantable condition, for example repainting faded or damaged interior walls.

However, the following expenses are capital and not deductible:

  • Replacement of an entire structure or unit of property, such as a complete fence or building, a stove, kitchen cupboards
  • Improvements, renovations, extensions and alterations,
  • Initial repairs, for example, in remedying defects, damage or deterioration that existed at the date you acquired the property.

You may be able to claim a deduction for these costs as Capital Works (Special Building Write-Off) deductions.

Sundry rental expenses

This may include electricity or gas charges, bookkeeping fees and bank charges on any account used to receive rental income or pay deductible rental expenses, mortgage discharge expenses, and lease document expenses.

Income received including taxes paid

Taxable foreign income is the total income earned plus any taxes withheld or paid to the foreign entity.

Example: John received a net amount of $22,000 from a New Zealand rental property, and the expenses he incurred maintaining the property were $5,000. John lodged a New Zealand tax return and paid $3,000 in taxes. Therefore, John should enter $25,000 ($22,000 + $3,000) as Foreign income including taxes paid, $5,000 as deductible expenses, and $3,000 as foreign tax paid. Although income derived from overseas activity or investment is still taxable in Australia, a credit is given for taxes paid to the foreign government where the income was earned.

Foreign deductions

You may be able to claim deductions for expenses incurred in earning your foreign income. For example, work-related expenses incurred while performing your job as an employee overseas.
However, debt deductions (such as interest and borrowing costs) related to your overseas rental property are not reported in this section. These types of debt deductions should be entered in the "Other deductible expenses" page under the "Deduction" section.

Foreign tax credit

Although income derived from overseas activity or investment is still taxable in Australia, a credit is given for any taxes paid to the foreign government where the income was earned.

Other income

"Other Income includes:

  • an amount released by one or more of your superannuation funds greater than the liability stated on a release authority
  • an assessable First home super saver (FHSS) released amount
  • lump sum payments in arrears;
  • income you earned from the sharing economy or other marketplace, except income from rent (include this on the rental worksheet), or income from carrying on business (include this at the business section), or income from being an employee (include this at the Salary & Wages section)
  • jury attendance fees
  • foreign exchange gains
  • royalties
  • bonus amounts distributed from friendly society income bonds
  • taxable scholarships, bursaries, grants or other educational awards
  • benefits or prizes from investment-related lotteries and some game-show winnings
  • income from activities as a special professional (author of a literary, dramatic, musical or artistic work, inventor, performing artist, production associate or active sportsperson)
  • reimbursements of tax-related expenses (including amounts imposed by us as an interest charge) or election expenses which you have claimed as a deduction
  • any assessable balancing adjustment when you stop holding a depreciating asset (for example, because of its disposal, loss or destruction) for which you have claimed a deduction for depreciation or decline in value in previous years
  • payments made to you under an income protection, sickness or accident insurance policy where the premiums were deductible and the payments replaced income, except payments from which tax has been withheld and which you have already shown at the Salary & Wages section
  • gains derived on disposal or redemption of traditional securities that are assessable under section 26BB of the Income Tax Assessment Act 1936
  • allowances or payments you received as a member of a local government council that you have not shown at any other section
  • other taxable allowances or payments you received from Services Australia that you have not shown at the Government Payments section
  • work-in-progress amounts assessable under section 15-50 of the Income Tax Assessment Act 1997 that you received and have not included as income or loss from business."

Life insurance bonus

Please include as income:

  • Bonus received within 10 years from when the policy started.
  • The whole bonus amount you received if you received it during the first eight years of the policy
  • two-thirds of the bonus amount you received if you received it during the ninth year of the policy
  • one-third of the bonus amount you received if you received it during the 10th year of the policy.

Please do not include as income:

  • Any bonus amounts received after the 10th year of the policy
  • Any life insurance bonuses from policies that matured due to the death of the person insured
  • You surrendered due to an accident, illness or other disability of the person insured

Deductible amount of un-deducted purchase price

If you have income from a foreign pension or annuity you may be able to claim a deduction to reduce the taxable amount if your pension or annuity has an undeducted purchase price (UPP).
Only some foreign pensions and annuities have a UPP. The UPP is the amount you contributed towards the purchase price of your pension or annuity – your personal contributions.

Australian income tax withheld

Enter the total tax withheld as shown under section B - Payment details of your PAYG payment summary - foreign employment

Income derived from foreign investments

If you're an Australian resident for tax purposes, you are taxed on your worldwide income. You must declare any foreign income in your income tax return from pensions and annuities, business activities, employment and personal services, assets and investments, capital gains on overseas assets. If you have already paid tax in the country that you derived the income, you may be entitled to a foreign income tax offset credit. Our system will calculate this offset for you on the Tax Return Summary page. Please convert all your foreign income amounts into Australian dollars before you enter them here.

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