Tax time and Covid-19 income support payments

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This tax time taxpayers need to be aware of changes in circumstances that may affect what needs to be included as income or what can be claimed as a deduction. File picture: Yanchep News Online

AS tax time looms some of the changes due to Covid-19 taxpayers need to be aware of include receiving an income support payment and what can be claimed as a work-related expense.

Some income support payments made during Covid-19 will be treated differently when it comes to tax and also as to whether the information will be prefilled in a taxpayer’s return.

Australian Taxation Office (ATO) assistant Tim Loh said Jobseeker payments were taxable with the information to be automatically pre-filled in tax returns at the government allowances and payments label once it was ready.

If taxpayers chose to lodge before this information was pre-filled, it would need to be added manually.

Leaving out income would delay the tax return being processed.

The Australian Government’s Covid-19 disaster payment (delivered through Services Australia) is not taxable and does not need to be included in tax returns.

But the pandemic leave disaster payment is taxable.

This payment needs to be included in tax returns for the income year the amounts were received.

Services Australia provided recipients with a letter each time they received a payment.

Those who received the pandemic leave disaster payment will need to manually add up all the amounts received and include the total amount received in their tax return.

This payment won’t be prefilled into the return.

Mr Loh said while those who received pandemic leave disaster payments would not have them prefilled, not adding the payments to their tax return would delay the processing of their return and potential refund.

Taxpayers who chose to use a registered tax agent should remember to let their registered tax agent know they received the pandemic leave disaster payment.

The ATO website has a quick guide to the tax treatment of the various COVID-19 payments

There are some Covid-19 work-related expenses available.

From July 1, 2021 taxpayers who paid for a Covid-19 test for work-related purposes (such as to determine if they can attend or remain at work) can now claim a deduction for the test.

Mr Loh said taxpayers must have a record to demonstrate that they paid for the test – a receipt or invoice was usually best.

If there isn’t a receipt or invoice, reasonable evidence is documentation that shows the cost of the test and the requirement to take it for work purposes.

For example, a bank or credit card statement or evidence from an employer can be provided.

Taxpayers cannot claim for a test that their employer provided or if their employer reimbursed them for the cost.

Only tests that are required for work-related purposes can be claimed.

Taxpayers may be able to claim a deduction for the cost of protective items that protect against risk of illness or injury while performing work duties.

“If you’re spending your working day in close proximity to customers and at risk of contracting Covid-19, you may be able to claim a deduction for protective items such as gloves, face masks, or sanitiser.

This will be most common in industries such as retail, cleaning and hospitality.”

Visit Protective items, equipment and products for more information.

Taxpayers and their registered tax agents affected by Covid-19 or financial hardship can access support at: ato.gov.au/coronavirus

The information lists support for different groups including for individuals and employees, businesses and employers as well as not-for-profits.

The ATO said it anticipated that Covid-19 would continue to affect the income and deductions Australian taxpayers would be reporting this tax time.

Meanwhile, the World Health Organization said up to June 3 there had been more than 528.8 million confirmed cases of Covid-19 with more than 6.2m confirmed deaths.

WA Health reported 4849 new cases up to 8pm last night with 41,244 active cases in Western Australia.

To 8pm last night, there were 279 people with Covid-19 in hospital, 16 in ICU.

Today’s report included one historical death – a man in his 80s – dating back to May 30, which was reported to WA Health yesterday.