Acc Ramji | ETAX/MyTax, Tax Return Information: Learn Tax Tips and Tax Advice Australia

Rental income for Tax Purposes

If you have investment property which is more than once, the rental income from investment property is considered as assessable taxable income. Which means that you must pay tax to Australian Taxation Office (ATO). The tax is counted as the marginal tax rate. So you must disclose the rental income and need to pay tax when you do a tax return.

There is a certain income threshold for tax break. If your income is $18,200 or below, you no need to pay tax to ATO. On the other hand, if your income is more than $37,000, you need to pay 19 cents for every single dollar. The rate will change for higher income.

For Example, Ray has income $80,000 annually and has rental income $20,000. So we can add up ($80,000 + $20,000 =$100,000 before tax). Let’s assume that there were no changes and Ray will pay $24,497 in tax for 2020-21. This is because Ray’s income fell in the $90,001 to $180,000 group and taxed is around $20,797 plus 37 cents for every single dollar.

You have to disclose all sources of income in your return. This is because this income is considered as taxable income and you need to pay tax. If you have disposed of the property and made gain that you need to disclose in your return. In addition, if you earn dividend and interest from shares that you need to include in your return. The interest that you earned from a savings account or term deposit from your bank.

It does not matter how much you earn for a particular financial year, but accountants also consider deduction according to your rental income.

For more information on online tax return 2021, Tax Return 2021, myGov 2021, myTax 2021 or any other tax related matter, please call our professional accountant on 1300 768 284 or you can email us at enquiry@taxrefundonspot.com.au

Rental income and Tax deduction

If you have investment property and you have rental income from your tenant. Taxpayers should know about their deduction. So, it means that you can save your tax according to your property expenses. If you have investment property, you may be entitled to claim your investment property expenses and put a deduction when you lodge your tax return. According to ATO guidelines there are certain rules needed to follow. There are some expenses you can claim such as Maintenance cost, Management cost, depreciation and borrowing expenses.

Please keep in mind that as property owner, if you did not pay any expense from your pocket as taxpayer you are not entitled to claim expenses as deduction in your return. For example, if you rented out property to Jay(tenant), so utility bills, repairs or renovation paid by Jay. It means that property owners are not entitled to claim for any renovation or repair expenses and cannot claim as deduction in their income tax return.

As property owner, you can claim a deduction for the following expenses:

Advertising for tenant
Body corporates Fees
Borrowing expense
Cleaning
Council rates
Depreciation schedule
Gardening/ Lawn mowing
Insurance
Interest on loans
Land tax
Legal Fees
Pest control
Property agent fees/ commission
Repairs and maintenance
Stationary, telephone and postage
Travel expenses
Water charges
Sundry rental expenses

You can also claim any repair cost. As a borrowing expense, you can only claim interest on your investment property.

Please keep in mind that you can only claim interest amount rather than loan principal amount. This means that when you calculate your dedication you cannot consider the principal amount of investment loan. There are some other borrowing fees also considered as dedication in tax return. These expenses include Title search, Loan establishment, Lender mortgage insurance (LMI), if stamp duty charge on mortgage and payment to mortgage broker.

Losses in depreciation can be claimed as deduction in tax return. Deduction is counted on newly purchased items whose value will be declined over the time. For example, blinds, carpets, water system and appliances.

When you have investment property then you can see, as a taxpayer you can save a lot of money by claiming a different type of deduction. Please keep in mind that you need to remember all these expenses when you do your tax return to claim your deduction in your return.

Loyalty Tax

As we discussed about loyalty tax before, the concern about how much tax should be paid by taxpayers as loyalty tax.

The client who has an owner-occupied property and took a loan as a customer and has been with the bank for at least 4 years can pay average 3.64% on average which is found by Australian Prudential Regulation Authority (APRA). On the other hand, new customers need to pay 3.23% to the bank.

For example, Nadim took a loan from CBA bank which is around $400,000 home loan, so if the bank adds 0.41% difference which is added to $1,634 amount in first year of loan interest. Please keep in mind that the bank calculated the sample rate. If you get a difference between existing and new customer rates it is called sample rate. Banks put amounts together like principal and interest payment for the term of 30 years.

The huge difference in price is common. As we can see not only in financial organisation but almost everywhere in the world. For example, you must sit on a plane and pay a huge amount for a reservation. On the other hand, someone who sits beside you paid the lowest amount than yours. Banks and other customers provide profit to their internal system.

When you make a mind to get some loan to buy property, you can negotiate with your lender and you have the best option to wait for a positive response from your current lender. On the other side, it is totally worth it to shop around and you can know that different banks have different rates and some banks provide better rates as well as cash back offers to $4000 or more as well. In addition, some banks provide initial year interest free loans. Due to this, you will get more options to choose a better lender from the right bank as well. You need to understand all options as well as conditions of the product. So, product will give you more benefits with certain conditions. The credit card and offset account features that you do not even need by basic home loan.

Loyalty Tax Paid by Taxpayers

There are some changes to access your payment summaries for 2020-2021 year so you may not receive manually payment summaries from your employer.

From this year 2020-2021, most employers should be required to notify their employees’ income to ATO. So employees can find all details under one roof. Employers have not only notified assessable income but also super and tax as well.

If you want to do a tax return and the taxpayer would like to lodge through a registered tax agent. So, you don’t need to worry about it. This is because registered tax agents have access to the tax agent portal and they can see all taxpayers’ details and payment summaries as well. So, there is no hassle for lodgments for the 2020-2021 year.

With the help of myGov account, you can access your own payment summary information and due lodgments as well. So, you can lodge your return on your own. If you don’t have myGov account, you can create and put your basic details so you can link to the other ATO services as well.

If you need more information about myGov account, just visit www.ato.com.au or www.my.gov.au.

If you are unable to access your myGov account, you just need to call ATO for the copy of the income statement.

By the end of July, the income statement has been finalized by your employer for the year 2020-2021. Taxpayer and Tax agent will be notified by ATO once it’s been finalized. Tax agents can access the pre-filled by ATO tax agent portal and taxpayers can do tax returns through a registered tax agent.

For more information regarding your income statement for 2020-2021, please contact your employer and if you are unable to access payment summary through your employer as well as through registered tax agent. Please contact ATO on 137 286.

Tax Returns and Investments

People have owner occupied property for their residence. Over two million Australians have at least one investment property to give on rent and earn revenue. Many people choose different platforms for their investment property. For example, like Airbnb where you can see more than 137,000 actives on the list. So, taxpayers can figure out how much they need to pay tax when you lodge your return.

If you have stressed about how to declare rental income or you buy new property, or you would like to dispose of the property. We are here to help you. Our expertise is ready to answer all your queries. Investment in property offers a huge amount of benefits as well as being less risky for investors. Shares have more volatility rather than other investments. If your tenant is quite good financially and has a steady job, your rental income always comes in your account on a regular basis. In the near future, your investment property’s selling price will be increased so taxpayers can get capital gain benefits.

When you rent out your house and earn income besides, the taxpayer can save expenses against income. This expense includes a loan of interest when you purchase the investment property.

In Australia, one third of loans are contributed for investment home loans. If you get rental income it is counted as assessable income and you need to pay tax to Australian Taxation Office. Investment properties have different rules, so you need full information about what is taxable and what is non-taxable. So, in tax time, you can save your time as well as money.

Update your details for the year 2020-2021

Loyalty Tax refers to a tax which is paid to bank, insurance company and service provider company who provide good services. Loyalty tax does not belong to ATO (Australian Taxation Office).

People naturally like to get offers from companies, so we always try to stick with one company to get advantage of different offers as well as products. Unfortunately, it’s not related to the mortgage and banking sector. You can see, banks always give discounts to new clients and existing clients who are long term have to pay higher fees.
RBA cut the rate to 0.25 per cent for their customers in 2019. On the other hand, the big four banks (CBA, ANZ, NAB and WESTPAC) did not cut the rate and pass the same rate to their customers.

Australian Competition and Consumer Commission (ACCC) is always concerned about loyalty tax. The big financial institutes as well as banks give higher interest rates to their loyal clients and not being grateful to their clients. Despite having a high interest rate, clients would not prefer to change to another bank, this is because they don’t have enough time to switch the bank.

Please note that loyalty tax is always not considered by the big four banks but small firms and organisations charge the lowest interest rate to existing clients. In addition, small and medium lenders are increased, when loyalty tax is imposed on existing customers with lower rates.

Eventually, the big four banks (CBA, ANZ, NAB and WESTPAC) earn more profit than other lenders. In addition, they have like more than 75% market share as home loan customers. This is because banks did not pass the cut rate in full and delayed their tactic decision and banks can earn $570 million in their revenue.

Changes to Payment summaries 2020-2021

There are many ways to change your details but you need to update details in case the change of address details might be given incorrectly.

If your details have changed

If taxpayers want to change or update their details, taxpayers can use ATO online services and update their details there and it’s the quickest way to update the details. Taxpayers just need to link a myGov account to the ATO.

By linking you myGov account to ATO services, you can update number of details below:

Contact details
Full name
Date of birth
Residential address
Financial institution details

It is necessary to keep your records correctly and whenever you lodge your returns you can check your details as well as update your details for the future lodgments 2020-2021.

If your details are incorrect, you need to update it for 2020-2021

If you feel like you’re one of the details are incorrect by ATO, you can call ATO and provide your identity over the phone, ATO will be able to update your records.

ATO will ask basic questions like your full name, Date of birth and any security question.

If you are not able to talk with ATO over the phone, you can contact us as we are registered tax agents and we will help you to update your details as well.

Sometimes ATO will ask more security questions to verify that you are the same person to talk to ATO.

If you suspect your identity has been stolen

If you believe that your identity is stolen by someone else, you can report to ATO and ATO will do investigation through their end.

Early release of superannuation for 2020-2021

ATO provides facilities to Australian residents due to COVID situation. ATO provides early release of superannuation to individuals who are facing financial hardships because of COVID-19.

Please note that for these benefits, individuals can do application through on their own myGov account rather than done by a tax agent. But individuals can take help of a tax agent if they are stuck in the application process. The application will be available in myGov account.

If you are eligible, you can access up to $10,000 of superannuation before 30 June 2020. But the maximum limit was $10,000. Taxpayers can also access further super from their account and it’s from 1 July 2020 until 24 September 2020. The government also allows taxpayers that they can access up to $10,000 for the next financial year (2020-2021). Your super which is released early is tax free means that you don’t need to pay tax for next year 2020-2021 as well. So need to include in your 2020-2021 tax returns and no need to disclose you’re early released super in your return.

Please note that if you want to apply for early release of superannuation, you have to do it from your myGov account rather than through a tax agent, but you can get help on how to proceed for early superannuation.

You no need to pay tax on EARLY SUPERANNUATION, so no need to include the details in your return 2020-2021.

Capital gains tax changes for foreign investors 2020-2021

The Australian government announced that CGT for foreign investors will not be extended for temporary and foreign residence. It means that residents are not eligible for exemption. This was announced on 9 May 2017.

The bill was affected in the 2019 election. And changes will be introduced to Parliament. The changes would apply from the date of announcement. The government also does the changes of main residence exemption for only that Australian residence for tax purposes. Australian tax residents as temporary tax residents will not be affected by this change.

The new bill was introduced on 23 October 2019 and please notes this new bill will be revised to the original bill and also provided in certain circumstances. The new bill also extended from 30 June 2019 to 30 June 2020.

If you held property before 9 May 2017, you can claim an exemption until 30 June 2020 when you dispose of the property. For disposal, If CGT event happened and disposal was done on 1 July 2020. Residences are not entitled to get exemption unless the following life events are contentious to six years as a foreign resident.

As a foreign residence, dependant spouse or children who are under the age of 18 and has a terminal medical condition
Children who under age and spouse who had death, dies
If foreign residence or spouse are separated or divorced and CGT event involves that time

If the foreign resident dies, the changes also apply to:

legal personal representatives, trustees and beneficiaries of deceased estates
surviving joint tenants
Special disability trusts.

The royal assent on 12 December 2019 was received by The Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Bill 2019.

For more information on online tax return 2020, Tax Return 2020, myGov 2020, myTax 2020 or any other tax related matter, please call our professional accountant on 1300 768 284 or you can email us at enquiry@taxrefundonspot.com.au

Tax Rates 2020-2021 Year (Residents)

The financial year starts from 01 July 2020 and the year will finish on 30 June 2021. The resident for tax purposes in Australia starts on 1st July 2020 and ends on 30 June 2021.

There are a number of adjustments announced in the 2018 Budget for individual tax rates. These changes will apply from 1 July 2018 through to 1 July 2024.

The rates are changed and it will increase to 32.5%. The rates will apply form $87,000 to $90,000 in the 4 years. It will start from 1 July 2018 to 3 June 2022. The new changes will apply from 1 July 2022 to 2024.

The changes are announced on 6th October 2020 in Budget 2020.

The changes are under below:

– the income from $37,000 to $45000, the rate for this income increased by 19% rate

– the income from $90,000 to $120,000, the rate for this income increased by 32.5%

This tax table reflects new changes applied from 1 July 2020 (as at 6 October 2020).

Taxable Income	Tax On This Income
$0 to $18,200	Nil
$18,201 to $45,000	19c for each $1 over $18,200
$45,001 to $120,000	$5,092 plus 32.5c for each $1 over $45,000
$120,001 to $180,000	$29,467 plus 37c for each $1 over $120,000
$180,001 and over	$51,667 plus 45c for each $1 over $180,000

Medicare Levy and Low Income Tax Offset (“LITO”) or LMITO are not included on the above table. From 1 July 2020, the low income tax offset (up to $700) is outlined in Budget 2020.
Furthermore, the low and middle income tax offset is retained and it is upto $ 1080.

If taxpayers don’t have medicare cards and carry only private health insurance, the taxpayer has no need to pay the medicare levy surcharge. On the other hand, the low income and other full or partial Medicare exemptions available and if you don’t have private health insurance, taxpayers need to pay a Medicare levy surcharge.