2020 Tax Tips – by Gerard

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The coronavirus pandemic has had a significant effect into the way we live, including our personal finances. In this upcoming tax season, it may also change the way we claim our tax deductions.

Strict social distancing measures have forced millions of Australians to work from home in the later part of the financial year.

Here are some tax tips that you can use for the 2020 tax season:

I had to work from home since the pandemic started. What kind of tax deductions can I claim?

New: Shortcut rate for all costs, starting 2020

Initially for the period to 30 June 2020, claims for the period commencing 1 March 2020 can be calculated at the rate of 80 cents per hour.

The optional 80 cents rate method covers all costs associated with working from home, including heating and cooling, electricity, mobile phone, internet and depreciation of office equipment.

So opting to use the 80 cents method precludes any other home office costs being added to the claim.

By contrast the 52 cents per hour claim method covers electricity, gas and depreciation, requiring other costs to be separately claimed and verified.

Under the 80 cents method the only records required to be kept are time records, showing the hours worked from home, and there is no requirement for a dedicated work area.

52 cents per hour for the year to 30 June 2019 and for 2019-20.

If the diary basis of claim is used (i.e. the pattern of work-related usage has been established), the Tax Office accepts a fixed rate of 52 cents per hour to cover electricity and gas (for heating, lighting and cooling) and the depreciation of office furniture applicable for the year ending 30 June 2019.

The rate continues to be applicable for 2019-20 if the 80 cent short-cut method is not selected.

I have received payments from JobKeeper or JobSeeker scheme. How will this affect my tax return?

Both the $1500-a-fortnight JobKeeper wage subsidy and fortnightly $1100 JobSeeker payments are part of a person’s taxable income and need to be reported to the ATO.

For Australians on JobKeeper, their employer should have already noted those payments on their PAYG summary.

And Australians on JobSeeker should receive an income statement from Centrelink outlining how much they have received, which needs to be lodged when filling out their tax return.

My rental property income has reduced due to the pandemic. How does it affect my tax return?

Last year, the Australian Taxation Office singled out property investors for overzealous rent deductions, with roughly 90 per cent of rent reduction claims containing an error.

Landlords who retain tenants (regardless of the amount they pay) can claim expenses on loan interest and management fees, even if they incur a net rental loss.

According to the ATO, those property owners may claim the full amount of their expenses against your rental and other income – such as salary, wages or business income.

There should be an alarm for property owners who now live in their rental properties.

If you made your home your base in lockdown, you would not be able to claim deductions for that period, as it’s become a property for your own personal use.

Deceased Estates – by Aaron

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Guidance for managing the tax affairs of deceased estates:

When a person dies, their estate is considered as an asset and can pass directly to beneficiaries, directly to a legal representative such as an executor who will need to finalise the deceased tax obligations. The ATO will need to know if the deceased person had a Tax File Number (TFN), if they lodged a tax return and if they should have lodged a tax return.

Tax responsibilities for executors

Any tax liability that may be generated from your role as executor is separate from your own personal tax liability. As a result, as executor you may need to apply for a separate Tax File Number (TFN) to that of the deceased.

 As an executor, your tax responsibilities include:

  • Cancel GST and ABN registrations in regard to businesses;
  • Obtain tax file numbers for the estate or for the estate with a business, if it is to continue to be operated by the estate;
  • Notify the ATO of death, if there has not been a previous notification of ceasing of lodgement of tax return;
  • Lodge outstanding tax returns;
  • Lodge a date of death return;
  • Lodge an estate tax return for the years of the estate operating if same is required;
  • Pay tax liabilities, as and when they fall due;
  • Notify the ATO of any events coming to an Executor’s knowledge that would trigger a review of the deceased’s tax affairs by the ATO.

Failure to any of the above is to leave an Executor exposed to actions by the ATO going forward.

Estate Tax Returns

An Executor needs to decide whether they are required to lodge a return for the deceased estate. Where the Executor has applied for and obtained a tax file number for the deceased estate the return should be lodged.         

The return to be lodged by the Executor is a Trust Income Tax Return for the estate. Where the estate is administered completely in the same income year as the death of the deceased it may be that an income tax return is not required. This can apply where no person has received any of the estate’s income and the taxable income of the estate is below the tax-free threshold. That exemption only applies in those limited circumstances with all the events occurring within the income tax year.

On the administration of the estate, completed in a year outside the year of death an income tax return would be required for each year the estate is administered and where the following may occur:

  • The estate has a net income greater than the individual tax-free threshold;
  • The estate received income from franked dividends and from capital gain;
  • Income was received from sources where tax was withheld;
  • The estate carried on a business;
  • A beneficiary (such as a minor) was presently entitled to a share of the income of the estate.

Normally the Commissioner assesses the income for an estate in those circumstances under Section 99 of the ‘Income Tax Assessment Act’ 1936. This will continue to be the position for an estate for a period of three years from the deceased’s date of death. Should an estate remain unfinalised and earning income for a period greater than three years after the date of death, then the estate will lose the tax-free threshold and will pay tax on all income.

First three income years

For the first three income years, the deceased estate income is taxed at the individual income tax rates, with the benefit of the full tax-free threshold, but without the tax offsets (concessional rebates), such as the low-income tax offset. No Medicare levy is payable.

Fourth income year and later

For deceased estates that continue to be administered beyond the third year, the following tax rates apply

Deceased estate taxable income (no present entitlement)Tax rates
$0 – $416Nil
$417 – $67050% of the excess over $416
$671 – $37,000$127.30 plus 19% of the excess over $670 If the deceased estate taxable income exceeds $670, the entire amount from $0 will be taxed at the rate of 19%
$37,001 – $90,000$7,030 plus 32.5% of the excess over $37,000
$90,001 – $180,000$24,255 plus 37% of the excess over $90,000
$180,001 and over$57,555 plus 45% of the excess over $180,000

Capital gains tax (CGT) implications

When the assets of a deceased estate are distributed, a special rule applies that allows any capital gain or loss made on a CGT asset to be disregarded if the asset passes:

  • to the executor
    • to a beneficiary, or
    • from the executor to a beneficiary.

However, if an executor sells an asset of the deceased estate and then distributes the proceeds to the beneficiaries, the sale is subject to the normal rules and CGT applies.

Basically this means, in most cases, the transfer of CGT assets into a deceased estate and then out to their beneficiaries will not incur an income tax liability.

There are many tax implications of deceased estates. Our professional tax agents are well-versed in working with deceased estates. We can help you with the information you’ll need or can handle the process for you if it’s too much. We will also work with the legal representatives of the deceased estate to help ease the process through such trying times. Please do contact us at 0481 309 696 or admin@simprotax.com.au for any enquiries or to book an appointment with us for consultation.

Capital Gains Tax for Foreign Residents – by Sam

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As a foreign resident, you must lodge a tax return in Australia. You must pay tax on all Australian-sourced income, except for income that has already been correctly taxed (such as interest, unfranked dividends and royalties).

Australia has tax treaties with other countries and this may affect the amount of tax you need to pay. Ensure your Australian financial institutions have your updated overseas address and residency status so they deduct the correct amount of tax. This will reduce follow-up actions by Australia or a treaty country when discrepancies are found.

Non-tax residents are only subject to CGT on Taxable Australian Properties (TAP). Generally, you must include capital gains you make on assets that are considered taxable Australian property in your Australian tax return and pay tax on that amount.

TAP includes:

  • A direct interest in real property situated in Australia
  • A mining, quarrying or prospecting right to minerals, petroleum or quarry materials situated in Australia
  • A CGT asset that has been used for carrying on a business through a permanent establishment in Australia
  • Holding 10% or more of an entity

No tax on franked dividends

Non-tax residents who are authorised to franked dividends will not be able to utilise franking credits as it is intended to eliminate double taxation for Australian tax residents.

Non-resident withholding tax

Unfranked dividends paid out by Australian shares are subject to a non-resident withholding tax of 15% – 30%, depending on your country of residence.

No capital gains tax

Non-tax residents are not subject to CGT on Australian share investments. However, if you hold more than 10% of shares for the company or the company invested in principally invests in property, then CGT will apply.

Once you acquire Australian residency for tax purpose, the shares held will be considered to have been obtained at the market on that date.

Tax return obligations

One perk of being a non-tax resident is there is no obligation to lodge a tax return IF you only receive interest, franked dividends, or royalties where the withholding tax has already been withheld. Similarly, if you receive unfranked dividends and non-resident withholding tax has been withheld, then they won’t be required to be included in your tax return.

In saying that, if you are a non-resident working in Australia, then the Australian sourced income will most likely be subject to income tax at the end of the financial year.


At Simpro Taxation Services, we understand the challenges and complexity being faced in Australia. If you are considering on making tax-free capital gains on Australian shares whilst working as a non-tax resident, please contact us today for more information!

CGT Implications on Inherited Dwellings – by Gerard

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Inherited dwellings

If you inherit a dwelling and later sell or otherwise dispose of it, you may be exempt from capital gains tax (CGT), depending on:

  • when the deceased acquired the property
  • when they died
  • whether the property has been used to produce income (such as rent)
  • whether the deceased was an Australian resident at the time of death.

If you’re not exempt, or only partly exempt, you need to know the cost base of the dwelling to work out your capital gain. The cost base may be the value of the dwelling when the deceased acquired it or the value when they died, depending on the circumstances above.

The same exemptions apply if a CGT event happens to a deceased estate of which you’re the trustee.

These rules don’t apply to land or a structure you sell separately from the dwelling – they are subject to CGT.

Cost base of an inherited dwelling

If you inherit a dwelling there are special rules for calculating your cost base.

The first element of the cost base or reduced cost base of a dwelling – its acquisition cost – is its market value at the date of death if any of the following apply:

  • the dwelling was acquired by the deceased before 20 September 1985
  • the dwelling passed to you after 20 August 1996 (but not as a joint tenant), and just before the deceased died it was their main residence and was not being used to produce income, or
  • the dwelling passed to you as the trustee of a special disability trust.

In any other case, the acquisition cost is the deceased’s cost base or reduced cost base on the day they died. You may need to contact the trustee or the deceased’s tax adviser to obtain the details. If that cost base includes indexation, you must recalculate it to exclude the indexation component if you prefer to use the discount method to work out your capital gain from the property.

If you’re a beneficiary, the cost base or reduced cost base also includes amounts that the trustee of the deceased’s estate would have been able to include in the cost base or reduced cost base.

CGT exemptions for inherited dwellings

If you inherit a dwelling and later sell or otherwise dispose of it, you may be fully or partly exempt from capital gains tax (CGT).

Deceased died before 20 September 1985

If you inherited the dwelling before 20 September 1985, any capital gain you make when you dispose of it is exempt.

Any major capital improvements you make to the dwelling on or after 20 September 1985 may be taxable.

Deceased acquired the dwelling before 20 September 1985 and died on or after 20 September 1985

In this situation, the dwelling need not have been the main residence (home) of the deceased person.

CGT does not apply to the dwelling if either of the following conditions is met:

  1. Condition 1 (disposal within two years):

You dispose of your ownership interest within two years of the person’s death – that is, if the dwelling is sold under a contract and settlement occurs within two years. This exemption applies whether or not you use the dwelling as your main residence or to produce income during the two-year period.

  • Condition 2 (main residence while you own it)

From the deceased’s death until you dispose of your ownership interest, the dwelling is not used to produce income and is the main residence of one or more of:    

  • a person who was the spouse of the deceased immediately before the deceased’s death (but not a spouse who was permanently separated from the deceased)
  • an individual who had a right to occupy the dwelling under the deceased’s will
  • you, as a beneficiary, if you dispose of the dwelling as a beneficiary.

The dwelling can be the main residence of one of the above people, even though they may have stopped living in it, if they choose to continue treating it as their main residence.

A dwelling is considered to be your main residence from the time you acquire your ownership interest in it if you move in as soon as practicable after that time.

Deceased acquired the dwelling on or after 20 September 1985

You disregard any capital gain or loss you make when a CGT event happens to the dwelling (such as selling it) if either of the following applies:

  • the dwelling passed to you on or before 20 August 1996, and:    
    • Condition 2 (main residence while you own it) above is met, and
    • the deceased used the dwelling as their main residence from the date they acquired it until their death and did not use it to produce income
  • the dwelling passed to you after 20 August 1996, and:    
    • Condition 1 (disposal within two years) or Condition 2 (main residence while you own it) above is met, and
    • just before the deceased died it was their main residence and was not being used to produce income.

A dwelling passes to you when you became its owner or, if you became absolutely entitled to it before or without becoming its owner, at that time. (The trustee or executor should be able to tell you whether or not you became absolutely entitled to it and, if so, when).

*source from ATO