Decline in value of depreciating assets

A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. Tools, equipment and other items such as computers and books are depreciating assets.

You can claim a deduction for the decline in value of depreciating assets you buy and use to help earn your income as an employee. The amount you can claim as a decline in value deduction depends on all of the following:

You will also need to choose how to calculate decline in value.

We also have specific advice for calculating Home office expenses and decline in value when you either change or combine methods for claiming a deduction for these expenses.

Cost of depreciating asset

The cost of a depreciating asset will help you to determine if you can claim either:

Immediate deduction

You can claim an immediate deduction for a depreciating asset you buy and use for work purposes, if the asset:

  • cost $300 or less
  • is used by you more than half the time for work purposes
  • is not part of a set costing more than $300
  • isn’t one of a number of identical or substantially identical assets that together cost more than $300.

You need to meet the conditions of all four tests set out above in order to claim an immediate deduction. These four tests are set out in more detail in $300 immediate deduction tests.

See also:

Decline in value of assets costing $300 or more

You can claim a deduction for the decline in value of a depreciating asset over the effective life of the asset where the asset:

  • cost more than $300
  • forms part of a set that together cost more than $300.

Depreciating assets that form part of a set that cost more than $300 aren’t eligible for an immediate deduction. The set must be written off over its effective life. Items are generally considered to be part of a set if they are:

  • interdependent
  • marketed as a set
  • designed and intended to be used together.

A set needs to have more than one depreciating asset. In some cases, a single depreciating asset may be made up of more than one item. You must decide on a case by case basis whether items form a set. Examples include books and tools.

For assets that are identical or substantially identical, you need to work out whether their total cost is more than $300. Factors to consider include colour, shape, function, texture, composition, brand and design.

Example – set of books

Anh works as a lawyer at a suburban firm. She discovers a series of three books about conveyancing that would greatly help in her work. The series is marketed as a set, and each volume builds on the knowledge of the previous one. The three books are a set.

The three books cost $600 together but can be bought separately for $200 each. Anh buys one book each month for three consecutive months in the same income year for a total cost of $600.

Although the cost of each book is less than $300, Anh can’t claim an immediate deduction for the books, because they are a set and the cost of the set is over $300.

End of example

 

Example – set of items part of a larger set

Paula, a primary school teacher, hears about a series of twelve progressive reading books. The books are designed to develop children’s reading skills in stages. Pupils move on to the next book only when they have successfully completed the previous book. The first six books are at a basic level while the second six are at an advanced level.

Paula buys one book a month beginning in January and by 30 June she holds the first six books (the basic readers) at a total cost of $240. Because of the interdependency of the books, these six books are a set even though they can be purchased individually and form part of a larger set.

An immediate deduction is available for each book because the cost of the set Paula acquired during the income year was not more than $300.

If Paula acquires the other six books (the advanced readers) in the following income year, they would be regarded as a set acquired in that year.

End of example

 

Example – identical or substantially identical items

Tahir is employed as a cabinet maker and he supplies his own tools for work. He buys 10, 300 mm F-clamps for $40 each. They are all from the same manufacturer.

Each clamp is sold separately and comes in its own packaging. They have a total cost of $400.

Tahir’s 300 mm F-clamps are all identical as they are all from the same brand and have the same design, manufacturer and use. Tahir can’t claim an immediate deduction.

End of example

 

Example – items not forming part of a set

Mary buys some new tools for her work as a carpenter. She buys a shifting spanner, a boxed set of screwdrivers and a hammer for her toolkit. Each item costs $300 or less.

While these tools may comprise or add to Mary’s toolkit, they’re not a set because they are not interdependent or designed to be used together. It would make no difference if Mary purchased the items at the same time and from the same supplier or manufacturer.

An immediate deduction is available for all the items, including the screwdrivers. The screwdrivers are a set, as they are marketed as a set. However, as the cost is $300 or less the deduction is available.

End of example

Effective life of a depreciating asset

The effective life of a depreciating asset is how long it can be expected to last from its start time. This involves consideration of how the asset will be used. We publish the effective life of most assets, that you may use to calculate the decline in value. These are updated and published annually. Alternatively, you can use your own estimate based on your expected usage pattern.

See also:

Start time of a depreciating asset

The start time of a depreciating asset is when you first use it, or install it to use for any purpose, including a private purpose. Assets decline in value from their start time, but you can only claim a deduction for the decline in value when you start using it to earn employment income. If you first buy an asset for private use, then later use it to earn employment income, you need to work out the decline in value from the start time.

This means that if you start using a depreciating asset for work purposes after its effective life has ended and it has fully declined in value, you can’t claim any deduction in relation to the asset.

Amount of use for a work-related purpose

If you use a depreciating asset for both work and private purposes, you need to keep records (for example, a diary for a representative four-week period) to determine your work and private use.

You can only claim a deduction for your work use of a depreciating asset, so you need to reduce your deduction for the decline in value to account for your private use.

Example – work out the decline in value deduction adjusted to remove private use

Julian is an employed as a gardener. During the 2019–20 year of income, he buys an electric hedge trimmer for $280. Julian also uses the hedge trimmer at home when he is working in his own garden.

Based on his records, he works out that he used the hedge trimmer 20% of the time for private purposes and 80% of the time for work purposes.

As the hedge trimmer cost less than $300 and he uses more than 50% for work purposes, Julian can claim an immediate deduction for the cost it.

However, he can only claim a deduction for his work-related use of the hedge trimmer. He calculates his deduction as:

$280 × 80% = $224.

End of example

How to calculate decline in value

The decline in value of a depreciating asset is calculated using either the:

  • prime cost method
  • diminishing value method.

You can choose whichever method you prefer however, once you have made a choice, you can’t change the method in future years.

See also:

Home office expenses and decline in value

If you use either the shortcut or fixed rate methods to work out your deduction for home office expenses, the rate per hour includes your additional running expenses and some or all of the decline in value for depreciating assets.

If you use a combination of methods or change the method you use calculate your deduction, you will need these records to work out the decline in value of your depreciating assets in future years.

The shortcut method (80 cents per work hour) introduced due to COVID-19, covers all additional running expenses you incur as a result of working from home, including the decline in value of home office furniture and furnishings, phones, computers, laptops and other similar devices. This means there is no need to separately calculate the decline in value of these depreciating assets. However, this rate is only available for period from 1 March to 30 September 2020.

Under the fixed rate method (52 cents per hour worked) the decline in value of home office furniture and furnishings is included in the rate. However, you need to separately calculate the decline in value of depreciating assets such as a phone, computer, laptop or other similar device you use for work purposes.

If you use the actual expenses method, you can claim the decline in value of depreciating assets you use while working from home.

Regardless of the method you choose to use, depreciating assets continue to decline in value so it is important to keep records such as:

  • receipts of any depreciating assets you use while working from home
  • how you calculated your work-related use of the asset
  • your decline in value calculations.

This will ensure you can calculate the decline in value of your depreciating asset and claim a deduction for it in future income years if you change methods or you start using the assets for a work-related purpose when you work from home.

See also:

Combination of methods for home office expense

The method you choose to use doesn’t affect an asset’s cost, start time, effective life or decline in value. For example, a $2,000 computer with an effective life of two years will decline in value over the two years regardless of how much:

  • you use the asset for a work-related purpose
  • you claim as a deduction.

The method you choose to use does however, affect the amount you claim as a deduction.

Example – Change in method

Colin is employed as a solicitor. He purchases a new desktop computer for his home office on 1 July 2019 at a cost of $1,970.

From 1 July 2019 to 28 February 2020 he works from home one day per week excluding Christmas when he takes two weeks off.

Using his records, Colin works out that he works at home an average of eight hours each week and he uses his computer for work purposes 30% of the time.

From 2 March to 30 June 2020, Colin works from home full-time due to the COVID-19 situation. Over this period he averages 38 hours of work each week.

Using the fixed rate method for the period 1 July 2019 to 28 February 2020, Colin works out his claim for additional running expenses using the fixed rate method.

Total hours worked × fixed rate (52 cents)

8 hours × (34 weeks − 2 weeks leave) =256 hours (total hours worked)

256 hours × 52 cents = $133.12

To work out the decline in value of his desktop computer, Colin elects to calculate the decline in value of his computer using the diminishing value method.

Base value × days held(see note) ÷ 365 × 200% ÷ effective life in years

$1,970 × 366 ÷ 365 days × 200% ÷ 4 years = $987.70

Colin needs to account for the days that he used the shortcut method as he can’t claim for the decline in value for that period. He must also account for the fact he only used the computer for work purposes 30% of the time.

Days shortcut method claimed = 121 days

Deduction for decline in value − days the shortcut method used

$987.70 × (366 − 121 days) ÷ 366 days = $661.17

$661.17 × 30% work-related use = $198.35

Total deduction for fixed rate method: $133.12 + 198.35 = $331.47

Using the shortcut method for the period 1 March to 30 June 2020, Colin calculates his additional running expenses as:

Total hours worked × 80 cents per hour

7.6 hours × 87 working days = 661.2 hours × 80 cents = $528.96

Total deduction for 2019–20 year of income: $331.47 + 528.96 = $860.43

Although Colin can’t claim the decline in value for the period from 1 March to 30 June 2020, Colin must calculate the opening adjustable value (base value) of the desktop computer for the 2020–21 income year if he intends to work from home and claim it as a deduction in that income year. He uses the depreciation and capital allowances tool to work out the decline in value of his desktop computer, including the base value for each year.

Diminishing value – desktop computer

Income year

Opening adjustable value

Decline in value

Adjustable value at the end of year

2019 – 2020

$1,970.00

$987.70

$982.30

2020 – 2021

$982.30

$491.16

$491.15

2021 – 2022

$491.15

$245.58

$245.57

2022 – 2023

$245.57

$122.79

$122.78

2023 – 2024

$122.78

$61.56

$61.22

2024 – 2025

$61.22

$30.61

$30.61

2025 – 2026

$30.61

$15.31

$15.30

2026 – 2027

$15.30

$7.65

$7.65

2027 – 2028

$7.65

$3.84

$3.81

2028 – 2029

$3.81

$1.91

$1.90

2029 – 2030

$1.90

$1.90

$0.00

If he works from home for one day per week in the 2020–21 year and continues to use his computer for work 30% of the time, his decline in value deduction will be:

Base value × days held ÷ 365 days × 200% ÷ effective life in years

$982.30 × 365÷365 days × 200% ÷ 4 years = $491.15

$491.15 × 30% work-related use = $147.34

Colin must also keep the receipt for the purchase of his desktop computer along with records that show how he calculated his work-related use and his decline in value deduction.

If Colin’s work at home pattern changes in the 2020-21 year of income, he will have to keep a new record of his work-related use of his desktop computer.

Note: In a leap year the days held is 366.

End of example

 

Example – Decline in value and the shortcut method

Mithra works as an industrial designer and as part of her work she is required to purchase her own laptop. On 1 July 2019 she purchases a laptop for $4,000 and uses it immediately for work.

On the 1 March 2020 her employer directs her to work from home, which she does until 1 June 2020 when she returns to working in the office.

Prior to this Mithra had never worked from home and since working from home she has kept a diary record of her hours worked. Based on her diary she works out the percentage use of laptop for work purposes is 65%.

Mithra intended to claim the decline in value of her laptop using the prime cost method when she purchased the laptop. However, Mirtha also wanted to use the shortcut method for the three months she worked from home. As the shortcut method includes the depreciation of her laptop, Mirtha needs to exclude it from her decline in value claim for the period she claims a deduction using the shortcut method.

To work out the decline in value of the laptop, Mirtha looks up the effective life for a laptop. The laptop has an effective life of two years and starts depreciating from when the asset is first purchased.

To calculate her claim, Mirtha works out the value of the depreciation for the days she is not using the shortcut method. This is 274 days, as she worked from home for 92 days.

Asset’s cost × (days held ÷ 365) × (100% ÷ asset’s effective life)

$4,000 × (366 ÷ 365) × (100% ÷ 2) = $2,005.48

$2,005.48 × 92 ÷ 366 = $504.10

$2,005.48 − $504.10 = $1,501.38

Mithra would then need to account for her personal use of the laptop.

$1,501.38 × 65% work use = $975.90

To work out her claim using the shortcut method, Mirtha uses her diary records to calculate that she worked 530 hours from home from 1 March to 31 May 2020.

530 hours × 80 cents = $424.00

Total for 2019–20 income year

Shortcut method + Prime cost decline in value of laptop (period prior to 1 March 2020) = Home office expense total

$424.00 + $975.60 = $1399.60

If the 2020–21 financial year went back to normal Mirtha would still have 1 year of effective life left to calculate her decline in value under the prime cost method. She has $1,994.52 (that is, $4,000 − $2,005.48 = $1,994.52) left to claim as a deduction for the decline in value of the computer.

Mithra would then need to account for her personal use of the laptop (assuming it remains the same as the previous year).

$1,994.52 × 65% work use = $1,296.44

End of example

See also:

You may need to work out the decline in value of for tools, equipment and other depreciating assets you use for work. You may also need to apportion your expenses for personal use.

Division 293 tax – information for individuals

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Early access to your super

You can only have early access to your super in very limited circumstances.

Be aware that some promoters claim to offer early access to your super by transferring your super into a self-managed super fund. These schemes are illegal and heavy penalties apply if you get involved. For more information, refer to Illegal early release of super.

On this page:

COVID-19 early release of superannuation

If you’re adversely financially affected by COVID-19, you may be eligible to access some of your superannuation early.

Eligible citizens and permanent residents of Australia and New Zealand can submit an application between 1 July 2020 and 24 September 2020 through ATO online services in myGov.

Applications for the 2019–20 financial year closed on 30 June 2020.

If you are eligible and applied for your COVID-19 early release of super in late June 2020, you may receive your money from your fund in the 2020–21 financial year. This will not affect your eligibility to apply this financial year.

Temporary residents are not eligible to apply for COVID-19 early release of super in the 2020–21 financial year.

It is important that you assess your eligibility accurately and honestly. We’re here to help people in our community who are doing the right thing and we’ll assist you if you make a genuine mistake.

Our role is also to ensure the integrity of the program and that payments get to those who need them. We’re managing the eligibility criteria with strict guidelines, and will take action when we uncover fraud or people seeking to exploit the program.

Individuals will not need to pay tax on amounts released and will not need to include it in their tax return.

Temporary residents are not eligible to apply in the 2020–21 financial year.

Be aware of scams and schemes

We’re concerned about scams or schemes where people:

  • impersonate the ATO, or a trusted organisation like your super fund, to steal your money or personal identifying information
  • contact you and charge for services that are free, like gaining early access to your superannuation.

If you receive a phone call, text message or email offering to help you release your super early, do not:

  • provide your personal information
  • click on any links.

You can contact us to confirm if an interaction is genuine.

See also:

Access on compassionate grounds

You may be allowed to withdraw some of your super on compassionate grounds. Compassionate grounds include needing money to pay for:

  • medical treatment and medical transport for you or your dependant
  • palliative care for you or your dependant
  • making a payment on a home loan or council rates so you don’t lose your home
  • accommodating a disability for you or your dependant
  • expenses associated with the death, funeral or burial of your dependant.

See also:

Access due to severe financial hardship

Severe financial hardship is not administered by the ATO. You need to contact your super provider to request access to your super due to severe financial hardship.

You may be able to withdraw some of your super if you meet both these conditions:

  • You have received eligible government income support payments continuously for 26 weeks.
  • You are not able to meet reasonable and immediate family living expenses.

If you withdraw super due to severe financial hardship it is taxed as a super lump sum.

The minimum amount that can be withdrawn is $1,000 and the maximum amount is $10,000. If your super balance is less than $1,000 you can withdraw up to your remaining balance after tax.

You can only make one withdrawal in any 12-month period.

If you have reached your preservation ageplus 39 weeks and you were not gainfully employed when you apply, there are no cashing restrictions.

If your super provider requests evidence, contact the Services Australia to ask them to provide a letter confirming you have received eligible government income support payments continuously for 26 weeks or more.

There are no special tax rates for a super withdrawal because of severe financial hardship. It is paid and taxed as a normal super lump sum. If you are under 60 years old, this is generally taxed between 17% and 22%. If you are older than 60 years old, you will not be taxed.

See also:

Access due to a terminal medical condition

You may be able to access your super if you have a terminal medical condition.

A terminal medical condition exists if all these conditions are met:

  • Two registered medical practitioners have certified, jointly or separately, that you suffer from an illness or injury that is likely to result in death within 24 months of the date of signing the certificate.
  • At least one of the registered medical practitioners is a specialist practising in an area related to your illness or injury.
  • The 24-month certification period has not ended.

Contact your super fund to request access to your super due to a terminal medical condition.

Your fund must pay your super as a lump sum. The payment is tax-free if you withdraw it within 24 months of certification.

If your fund does not allow access due to a terminal medical condition, you may be able to move your super to a different fund.

If you are suffering from a terminal medical condition and you have super held by us you can either:

  • ask your provider to claim this on your behalf
  • claim it directly from us yourself.

Next steps:

See also:

Access due to temporary incapacity

You may be able to access your super if you are temporarily unable to work, or need to work less hours, because of a physical or mental medical condition.

This condition of release is generally used to access insurance benefits linked to your super account.

You will receive the super in regular payments (income stream) over the time you are unable to work. A super withdrawal due to temporary incapacity is taxed as a super income stream.

Contact your super provider to request access to your super due to temporary incapacity and to ask about insurance implications attached to your account.

There are no special tax rates for a super withdrawal due to temporary incapacity.

If you do not have access to insurance benefits as part of your super account, consider whether you would be eligible for access due to severe financial hardship.

See also:

Access due to permanent incapacity

You may be able to access your super if you are permanently incapacitated. This type of super withdrawal is sometimes called a ‘disability super benefit’.

Your fund must be satisfied that you have a permanent physical or mental medical condition that is likely to stop you from ever working again in a job you were qualified to do by education, training or experience.

You can receive the super as either a lump sum or as regular payments (income stream).

A super withdrawal due to permanent incapacity is subject to different tax components. For you to receive concessional tax treatment, your permanent incapacity must be certified by at least two medical practitioners.

Contact your provider to request access to your super because of permanent incapacity.

To work out how your super payment will be taxed you need to know how much of the money in your super account is a:

  • tax-free component
  • taxable component the super provider has paid tax on (taxed element)
  • taxable component the super provider has not paid tax on (untaxed element).

If you’re under your preservation ageand receive a disability benefit as an income stream, you will get tax offsets that reduce the tax rate on the taxed element of your taxable component by 15%.

If you have reached your preservation age or if you get a lump sum, your disability benefit will be taxed at the rates described in How tax applies to your super.

See also:

Super less than $200

You may be able to access your super if:

  • your employment is terminated and the balance of your super account is less than $200
  • you have found a ‘lost super’ account with a balance less than $200.

Contact your provider to request access. Check the eligibility criteria for withdrawing super from ATO-held accounts.

No tax is payable when accessing super accounts with a balance less than $200.

See also:

First home super saver scheme

To help you save for your first home, you can apply to release voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions you have made to your super fund since 1 July 2017. You must meet the eligibility requirements to apply for the release of these amounts.

You can apply to have a maximum of $15,000 of your voluntary contributions from any one financial year included in your eligible contributions to be released under the FHSS scheme, up to a total of $30,000 contributions across all years. You will also receive an amount of earnings that relate to those contributions.

See also:

You can only have early access to your super in very limited circumstances. These are mostly related to specific expenses.

COVID-19 early release of super

If you have been adversely financially affected by COVID-19, you may be able to access some of your superannuation early.

Eligible citizens and permanent residents of Australia or New Zealand can apply to access up to $10,000 of their super in the 2020–21 financial year.

Applications for the 2019–20 financial year closed on 30 June 2020.

If you are eligible and you applied for your COVID-19 early release of super in late June 2020, you may receive your money from your fund in the 2020–21 financial year. This will not affect your eligibility to apply this financial year.

Temporary residents are not eligible to apply in the 2020–21 financial year.

Submit your application online through myGov between 1 July 2020 and 24 September 2020. Applications close at 11.59pm Australian Eastern Standard Time (AEST) on 24 September 2020.

You will not need to pay tax on amounts released under COVID-19 early release of super and will not need to include these amounts in your tax return. Amounts released under other compassionate grounds must be included.

On this page:

See also:

Eligibility

To be eligible, a citizen or permanent resident of Australia and New Zealand must require the COVID-19 early release of super to assist them to deal with the adverse economic effects of COVID-19.

In addition, one of the following circumstances must apply:

  • you are unemployed
  • you are eligible to receive one of the following
    • JobSeeker Payment
    • Youth Allowance for job seekers (unless you are undertaking full-time study or are a new apprentice)
    • Parenting Payment (which includes the single and partnered payments)
    • Special Benefit
    • Farm Household Allowance
  • on or after 1 January 2020 either
    • you were made redundant
    • your working hours were reduced by 20% or more (including to zero)
    • you were a sole trader and your business was suspended or there was a reduction in turnover of 20% or more (partners in a partnership are not eligible unless the partner satisfies any other of the eligibility).

Temporary residents are not eligible to apply for a COVID-19 early release of super in 2020–21. If your visa has expired and you have left Australia, you may be eligible for the Departing Australia superannuation payment (DASP).

Assessing your eligibility

You do not need to attach evidence to support your application. However, you should keep records and documents to confirm your eligibility as we may ask you for this information. Examples of evidence to confirm eligibility may include your:

  • payslips
  • letters, emails or rosters from your employer
  • bank statements
  • business cash flow and turnover records
  • website or other public notice confirming your business closed
  • documents confirming eligibility for relevant government allowances or benefits (above)
  • separation certificate.

You can only submit one application for COVID-19 early release of super this financial year.

If you’re eligible and want to access COVID-19 early release of super in the 2020–21 financial year, you need to submit an application between 1 July and 24 September- even if you have applied in 2019–20. Applications cannot be submitted after 11.59pm 24 September 2020 Australian Eastern Standard Time (AEST).

You can apply for COVID-19 early release of super even if you have previously accessed your super early in other circumstances.

You can’t access your super early for a dependant. If your dependant is financially affected by COVD-19, they must apply themselves.

Eligibility examples

Example 1

Edward’s employer temporarily closes her shop in late March 2020 following a downturn in trade due to COVID-19. Edward is stood down and applies for and receives $8,000 of his superannuation under COVID-19 early release of super in May 2020.

By mid-June shops have reopened and Edward recommences work. We contact Edward, and he uses his payslips to show his work hours decreased by at least 20% from March to May. Edward’s eligibility is confirmed, and no further action is taken.

End of example

 

Example 2

Audrey runs her own business as a sole trader in the fitness industry. Due to COVID-19, Audrey has a lot less work and she decides to temporarily shut down her business. Due to the financial impact, Audrey decides to apply for $7,000 from her super to help with immediate living expenses.

We contact Audrey to confirm her eligibility, and she provides a link to her website and business bank records to show that her business had temporarily been suspended. Audrey is eligible for COVID-19 early release of super because her business temporarily ceased operating and she suffered a financial impact due to COVID-19.

End of example

Supporting our community – integrity and compliance

It is important that you assess your eligibility accurately and honestly.

The intent of the measure is to support people who are adversely financially affected by COVID-19 and need help to meet expenses. While you do not need to tell us how you spend the money you should carefully consider the impact of accessing your super now.

We are administering the COVID-19 early release of super measure on behalf of all Australians. We are managing the eligibility criteria with strict guidelines. We are here to help people in our community who are doing the right thing, and we will assist you if you have made a genuine mistake. However, where people deliberately exploit the system, we will take action.

If we find that you have applied for COVID-19 early release of super when you do not qualify, or mainly for the purpose of obtaining a tax benefit (for example as part of a recontribution strategy involving the claiming of a personal super contribution deduction), we will consider taking further action.

See also:

Implications of accessing your super early

Accessing your super early will affect your super balance and may affect your future retirement income.

Withdrawing super may also affect your:

  • income protection insurance
  • life and total permanent disability insurance cover.

Insurance may not be available on accounts that have a low balance.

You should consider whether you need to seek financial advice before submitting your application for early release of super. Services Australia’s Financial Information Service OfficersExternal Link can give you free, confidential financial information

See also:

Before you apply

Before you start the application process, you should:

  • set up your myGov accountExternal Link and link it to the ATO
  • have your Australian bank account information available – you will need this to complete your application. Only Australian bank accounts are accepted
  • check your super balance – your actual account balance may be higher or lower than that shown in ATO online or in the early release application form.

There are several ways you can check your super balance:

Check your total superannuation balance in ATO online services. There will be an ‘as at’ or ‘effective’ date for the balance. In most cases, the balance date in ATO online will not be the same as the date you apply, as super funds are only required to report to us once a year. This means your account balance may have changed since it was last reported to us. It may be higher or lower than the balance shown on ATO online services or in the early release application form.

If you have access to your super fund’s online member portal, you can log in and check your current account balance there. It might be a good time to establish a login to your fund portal if you haven’t already.

Check the last statement that your fund issued to you. This might be by paper or email.

Phone your fund but understand that they have had a large increase in members calling and there could be delays in having your call answered.

If your fund is a state-administered fund, or an exempt public sector super scheme (EPSSS), they need to follow the rules of their trust deed to determine if they’re allowed to release super due to COVID-19. You will need to get confirmation from your fund, before you submit an application, that they can release your super early and whether they require a letter of approval (determination) from us.

Current super balance

We encourage you to check your super fund’s online portal to confirm your current accurate balance. Your current super balance may be lower or higher than the amount shown in the application form. The amount shown in the form is the amount last reported to us and your fund does not need to report your current balance to us.

You can apply for an amount higher than the balance shown in the application form (up to $10,000), provided your current balance is sufficient. This includes if a ‘nil’ amount is showing in the application form. For example, if you’ve confirmed your fund balance is $8,000, but the amount showing in ATO online is $0.00 you can still apply for a release up to $8,000.

If you apply for an amount greater than your current balance, your fund will release the amount currently available (up to $10,000). For example, if you request $8,000, but your current balance is only $7,500 your fund will release $7,500.

ATO-held super and rollovers

ATO-held super cannot be accessed directly from us for a COVID-19 early release. If you wish to access super money we currently hold for you, you will need to transfer it to your super fund before you can apply for COVID-19 early release of super.

You can transfer ATO-held super to an eligible fund in our online services through myGov. You will need to wait for the transferred super to reach your nominated fund before you apply for COVID-19 early release.

If you want to apply for COVID-19 early release and consolidate your super into one fund, this can’t be done at the same time. You should either:

  • wait until the rollover to your super fund is complete before you apply for COVID-19 early release of super
  • wait until your application for COVID-19 early release of super has been approved and paid into your bank account, before you consolidate any accounts.

See also:

Application tips

You need to check the eligibility criteria carefully before you apply for COVID-19 early release of super and keep records that demonstrate your eligibility. If you apply and are not eligible there may be financial or other consequences.

To make the application process as smooth as possible, please check all your information is correct before you submit your application, including:

  • your contact details
  • the amount you request – check your current balance through your fund’s online portal to ensure your request is based on the latest available balance
  • your Australian bank account details – only Australian bank accounts are accepted.

You can only submit one application for COVID-19 early release of super per financial year. If you applied in 2019–20 and you’re still eligible, you need to re-apply to access up to a further $10,000 this financial year.

You can’t access your super early for a dependant. If your dependant is financially affected by COVD-19 they must apply themselves.

An application can’t be withdrawn or cancelled once it has been submitted. If you no longer want the release of your super, you will need to contact your fund. If the bank account you provided on your application form is incorrect, contact your super fund urgently to correct it.

If you notice another error in your application after you have submitted it, you need to contact us as soon as possible to see if we can fix the error.

If you are concerned that you have applied when you are not eligible and you are unsure how to proceed, you should seek the assistance of a tax professional or phone us on 13 10 20 to let us know.  We will help you to remedy your position. If you are ineligible and you do not take action to contact us, the amount may need to be included as assessable income in your tax return and we may apply penalties.

Submit an application

Applications for early release of superannuation are accepted through ATO online services via myGov.

You can only submit one application for COVID-19 early release of super in each financial year:

  • 2019–20, between 20 April and 30 June 2020 – this application period is now closed.
  • 2020–21, between 1 July and 24 September 2020 (Australian and New Zealand citizens and permanent residents only).

This is even if the total amount you request to be released, or the actual amount released by your fund, is less than $10,000. For example, if you request $8,000, you cannot make another application to request the additional $2,000.

The application form on myGov will display all your superannuation accounts, as reported to us by your super funds. You can request the release of your super from up to five super accounts. For example, if you want to receive a total of $10,000 you can request $5,000 from one fund and a second $5,000 from another fund. This must be done within one application form.

If you’re a member of a self-managed super fund (SMSF) and your super account is missing from your list of available funds in myGov, phone us on 13 10 20 and we’ll help with your application.

Next step:

After you apply

It will take us up to four business days to process your application and send your outcome letter to your myGov inbox. You may also receive an SMS notification.

If you receive a notification from us and haven’t applied to access your super early, you need to phone us or your super fund as soon as possible.

If you have an Australian Prudential Regulation Authority (APRA) fund and your application is approved, you do not need to contact us or your fund. Your fund will make the payment to you without you needing to apply to them directly.

The Australian Prudential Regulation Authority (APRA) have issued guidance to super funds and expect payment to be made to members within five business days once they have been notified by us. However, this time may increase where funds need to contact you to clarify information. You can find more information on APRA’s websiteExternal Link.

If your fund is a self-managed super fund(SMSF), you will need to let them know that you have received the letter of approval from us so they can make the payment to you.

Be aware of scams and schemes

Early access of your super is a free government service to help and support you during the impacts of COVID-19. Be aware of scams and schemes asking you to pay to release your super.

We’re concerned about scams or schemes where people:

  • impersonate the ATO, or a trusted organisation like your super fund, to steal your money or personal identifying information
  • approach you and charge you for services that are free, like gaining early access to your superannuation.

If you receive a phone call, text message or email offering to help you release your super early, do not:

  • provide your personal information
  • click on any links (we never include hyperlinks to a login page)
  • share your myGov sign in details with anyone, under any circumstances, including your tax agent.

You can phone us on 1800 008 540 to confirm if a contact you received is genuine.

Stolen or misused identity

If you are concerned that someone has accessed your super without your permission, you should check:

  • your myGov and ATO Online account and make sure your contact details are still correct
  • your superannuation account to make sure that your account details are also correct, and that there have been no unauthorised transactions.

If you receive a text message or email stating that your myGov details have been changed, or that you have applied for early release of super when you have not, do not click on any links, and consider whether your identity has been compromised.

If you think that someone has stolen or misused your identity, contact:

  • your super fund immediately if you identify unauthorised transactions or updates to your account, and
  • our Client Identity Support Centre on 1800 467 033 (between 8.00am and 6.00pm, Monday-Friday) to help you establish your tax identity.

See also:

Need support

We’re here to help. We can work with you when tough times happen, so you can focus on getting your life back on track.

Find out more:

Information about the eligibility and application process for the COVID-19 early release of super scheme if you have been adversely financially affected by COVID-19.

COVID-19 early release of super – integrity and compliance

We are here to help and assist those who are doing the right thing. We will make it as simple as possible for eligible people in our community who need to access their super early to deal with the adverse economic impact of COVID-19.

Compliance remains one of our priorities to ensure the integrity of the tax and super systems. We will take action where people deliberately exploit the system.

We have seen some COVID-19 early release of super examples where people are doing the wrong thing. In some cases, we have stopped applications and prevented super money from being released. In other cases, we review circumstances after an application has been processed to ensure the integrity of the program.

We have a variety of data sources that allow us to check for claims made incorrectly. This includes:

  • Single Touch Payroll (STP)
  • income tax returns
  • information reported to us by your super fund
  • third party data from agencies including
    • Services Australia
    • Home Affairs.

For example, through STP we have real time information to tell us whether people are employed and how much they are being paid. Our compliance approach is based on ensuring that people have not exploited the COVID-19 measures. Where we have concerns that claims are not genuine we will review them.

Behaviours that attract our attention include:

  • applying when there is no change to your regular salary and wage or employment information
  • artificially arranging your affairs to meet the eligibility criteria
  • making false statements or fraudulent attempts to meet the eligibility criteria
  • temporary resident applicants attempting to apply as a permanent resident or citizen after 1 July 2020
  • withdrawing and recontributing super for a tax advantage.

We are investigating some cases and may consider it appropriate to apply the general anti-avoidance rule for income tax (known as Part IVA) in relation to a COVID-19 early release of super arrangement if you (or a representative) enter into a scheme mainly for the purpose of obtaining a tax benefit.

On this page:

Applying when you are not eligible

You need to check the eligibility criteria carefully before you apply for COVID-19 early release of super and keep records that demonstrate your eligibility. If you apply and you’re not eligible at the time of submitting your application, we will take action.

If you are unable to demonstrate your eligibility when we ask for evidence, we may revoke the determination issued for your application. This means the amount paid to you under COVID-19 early release of super will:

  • become assessable income
  • need to be included in your tax return and you will pay tax on the released amount.

If you provide false or misleading information you could face penalties of more than $12,000 for each false and misleading statement.

Example 1: JobKeeper and no change to working hours

Harry works 40 hours per fortnight and his employer receives the JobKeeper payment to subsidise his income. He hears that if you receive a government benefit you can apply for COVID-19 early release of super. Harry applies in late May 2020 and receives $10,000 from his super fund.

We contact Harry and ask him to demonstrate his eligibility. Harry explains that he receives a government payment. We advise Harry that JobKeeper isn’t a qualifying government payment but rather is a subsidy to his employer to contribute to his income. After discussing Harry’s circumstances, we determine that he does not meet any of the other eligibility criteria as he has not had a reduction in his working hours.

We revoke the approval of Harry’s application. Harry needs to include the $10,000 he withdrew as assessable income in his income tax return and pay tax on the released super amount. In this case, we do not apply an administrative penalty as Harry genuinely thought he was eligible as a result of receiving JobKeeper.

End of example

 

Example 2: No change in circumstances, subsequently ignores advice

Tom studies full time and works most weekends as a casual employee at a takeaway shop. During COVID-19 lockdown the takeaway shop is able to remain open and Tom continues to work each weekend as he normally would. After hearing about the COVID-19 early release of super measure, Tom decides he could use some extra cash and applies for and receives $8,000 in May 2020.

When we review his application, we can see that the average amount he is paid from the takeaway shop hasn’t changed due to COVID-19. We ask Tom to demonstrate his eligibility and he explains that since he didn’t work full time he thought he was entitled to apply. We advise him that making a false or misleading statement can result in penalties and we help him understand the eligibility criteria. We revoke the approval of Tom’s application. Tom needs to include the $8,000 he withdrew as assessable income in his income tax return. As Tom didn’t intend to make a false or misleading statement, we don’t apply a penalty this time.

In August 2020, Tom makes a second application for COVID-19 early release of super, this time for $5,000, despite no change in his working hours or the average amount he is paid. Tom is aware that he is not eligible but knowingly makes a false and misleading statement when he makes the second application in August. We again revoke the determination we issue with respect to his application. As a result, Tom needs to include the $5,000 in his 2020–21 income tax return and pay tax on this amount. Tom also must pay $12,600 in penalties for making a false or misleading statement.

End of example

 

Example 3: Deliberately arranging affairs to appear eligible, false or misleading statement

David works for a freight company and hears about the COVID-19 early release of super measure. He continues to work his ordinary 37 hours each week. He still wants to apply even though he knows he doesn’t meet any of the eligibility criteria. He changes the bank account that his wage is paid into to a bank account in his wife’s name, so that it looks like he is unemployed and no longer getting paid. In May 2020 he applies for $10,000 in early release of super and declares on the application that he is unemployed.

We contact David and ask him to demonstrate his eligibility. David produces copies of his personal bank statement showing that his pay was not deposited into his account after April 2020. Through the Single Touch Payroll data David’s employer sends to us each fortnight, we can see that David has continued to be paid, regardless of the bank account the money is deposited into. It becomes evident that David’s deliberate intention is to deceive the ATO and exploit the COVID-19 early release of super measure.

We revoke the approval of David’s application. David needs to include the $10,000 he withdrew as assessable income in his income tax return. David also must pay $12,600 in penalties for making a false or misleading statement.

End of example

See also:

Withdrawing and recontributing your super

You should make sure you are fully informed and consider whether you need financial advice before you apply to access your super early.

Withdrawing your super early and then recontributing that amount back into your super fund and claiming a personal super contribution deduction, can result in a range of tax outcomes.

Depending on your individual circumstances, this practice could also result in tax and superannuation implications including:

  • Excess contributions tax – you may need to pay additional tax if you exceed your concessional or non-concessional contributions cap
  • Contributions tax – concessional contributions made to your super fund are taxed at the 15% rate by your fund
  • impacting your eligibility for a super co-contribution
  • Division 293 tax – you may need to pay additional tax due to your income and personal super contributions.

To be eligible to withdraw an amount under the COVID-19 early release of super, the money released must be to assist you to deal with the adverse economic effects of COVID-19. If you withdraw an amount for the main purpose of recontributing the released amount as a personal super contribution to claim a tax deduction, you may no longer be eligible and be subject to tax consequences.

Part IVA – the general anti-avoidance rule for income tax

If you enter into a scheme mainly for the purpose of obtaining a tax benefit, there may be tax consequences, including the potential application of Part IVA.

Schemes under COVID-19 early release of super that attract our attention include:

  • artificially arranging your affairs to meet the eligibility criteria
  • withdrawing and recontributing super to claim a tax deduction
  • contributing an amount of super to claim a deduction and then withdrawing that amount.

Where Part IVA applies to a scheme, the tax benefit obtained may be cancelled. In addition, administrative penalties and interest charges can also apply.

You should ensure that you comply with the eligibility rules to access your super early and your broader obligations under the taxation legislation.

We understand that these are uncertain times and people’s circumstances change, so it is important that you keep records demonstrating your eligibility in case we need to see them.

Example: Withdrawing super to recontribute and gain a tax advantage

Jess, an airline pilot, is stood down by her employer when COVID-19 travel restrictions are put in place. Jess decides to apply for a COVID-19 early release of super, mainly for the purpose of recontributing the amount into her super fund in order to be entitled to personal super contribution tax deduction. Jess’ financial situation is such that she does not need any additional financial support throughout COVID-19.

In May 2020 Jess applies for $10,000 in COVID-19 early release of super. When she receives the money, she recontributes it into her super fund within a short period of time and notifies her fund that she intends to claim a personal super contribution tax deduction. In July 2020, Jess submits her tax return claiming a $10,000 personal super contribution deduction which reduces her taxable income.

We determine that Part IVA applies as Jess entered into a scheme mainly for the purpose of obtaining a tax benefit. We issue Jess with a new notice of assessment reflecting the cancellation of the tax benefit and impose a penalty and interest charges.

End of example

See also:

During the COVID-19 crisis compliance is still a priority to ensure the integrity of the system and support people who do the right thing, including the early release of superannuation.

Tax essentials

We know that 2020 has been difficult. Your tax return doesn’t need to be.

Fast and easy with myTax

Information to help you at every stage:

If you lodge your own tax return using myTax, you need to do so by 31 October.

If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October.

If you’re running a small business or you are a sole trader, we have a range of information which can assist you during tax time.

See also:

Before you lodge

Set up a myGov account

If you are lodging your own return and you don’t already have a myGov account, you will need to set one up. A myGov account lets you link to a range of Australian Government services, including the ATO, with one username and password.

Keep your login details safe and don’t share them with anyone, including family members or your tax agent. Avoid using your myGov account over public Wi-Fi. These unsecured networks make it easier for cybercriminals to intercept your information.

See also:

Link to the ATO through myGov

You will need to link your myGov account to the ATO before you can lodge your tax return through myTax. To link your account, you will need to confirm your identity by answering two questions specific to you, using information from two of the following:

  • a notice of assessment from the last five years
  • a PAYG payment summary from the last two years
  • a superannuation account statement from the last five years
  • a dividends statement from the last two years
  • a Centrelink payment summary from the last two years
  • your bank account details.

If you don’t have this information, you will need to call us to get a linking code. When you call, you’ll need to provide additional information to identify your ATO record, including given name, family name, tax file number and date of birth.

See also:

Watch:

This video shows how to create a myGov account and link to the ATO:

Media: How to create a myGov account and link to the ATO

http://tv.ato.gov.au/ato-tv/media?v=bd1bdiubfo8e4mExternal Link (Duration: 03:57)

Talk to your registered agent

You can also lodge your tax return through a registered tax agent. Tax agents must be registered with the Tax Practitioners Board (TPB). You can find a registered tax agent or check whether a person is registered by visiting the TPB website.

If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October. Contact a tax agent before 31 October to arrange this.

See also:

Ready to lodge

Once you have linked your myGov account to the ATO, you can access a range of services in one place, including lodging your tax return and keeping track of your super. myTax is web-based, so there’s no need to download anything. You can lodge your tax return on any device – computer, smartphone or tablet.

Watch:

This video shows how easy it is to lodge with myTax:

Check your bank details

Check the bank details included in your return are correct before you lodge your tax return. If those details are missing or incorrect, be sure to update them so that your refund is paid directly to you.

If your bank details are incorrect when you lodge your return, this can cause delays in you receiving your tax refund if you are owed one.

See also:

Include all your income

When you do your tax return, you must include all the income you received during the financial year. This includes salary, wages, payments from Centrelink, business income, bank interest and some other types of income.

If you have received access to your superannuation due to COVID-19, you do not need to pay tax on these amounts and do not need to include these amounts in your tax return.

Income from your job

You need to report your salary and wages as shown in your income statement. Your income statement is available by clicking through to the ATO from myGov and we will automatically include information from it in your return for you. Wait for your employer to mark your statement as ‘tax ready’. This should be done by 31 July.

If you have more than one employer you may receive several income statements, or both a payment summary and an income statement. You will need to check that income from your payment summaries is included in your return.

If you lodge your tax return before your income statement is marked ‘tax ready’, your employer might make changes and you may need to lodge an amendment to make these changes to your return.

See also:

If you take leave, are temporarily stood down or lose your job and receive a payment from your employer, there are different tax rules that may apply for the different payments.

See also:

JobKeeper payment

JobKeeper payments are treated the same as your usual salary or wages from your employer. If you receive JobKeeper as an employee, it will be included in your income statement as either salary and wages or as an allowance, depending on your circumstances. We will automatically include this information from your income statement in your tax return for you. For most people this will occur by the end of July.

If you’re a sole trader who has received JobKeeper payments, you need to include the payments as business income in your individual tax return. If your business is a partnership, trust or company, and you received JobKeeper payments, you don’t need to include it as assessable income in your individual tax return – but you need to report it as part of your business income.

See also:

Insurance payouts

You need to include income protection, sickness and accident insurance payments, in your tax return. The instructions in myTax explain how to include these amounts.

See also:

Insurance payouts for damaged or destroyed personal items are not taxed. For example, any insurance payout you receive for your family home is not taxed. Insurance payouts for businesses or income-producing assets may be taxed.

See also:

Government payments

It is important to include any government payments that you receive in your tax return.

JobSeeker is a taxable payment and it needs to be included in your tax return.

We will automatically include JobSeeker payments in your tax return at the ‘Australian Government allowances and payments’ section by early July. If you lodge your tax return before this information is included, you will need to include the amount of JobSeeker you received at the ‘Australian Government allowances and payments’ section of your tax return. Your JobSeeker payments will be included in your Centrelink payment summary.

See also:

Disaster assistance payments

If you’re experiencing financial hardship as a result of a disaster, you may receive a relief payment from:

  • local, state or federal government agencies
  • a charity or community group
  • your employer.

If you receive a Disaster Recovery Payment (DRP), it will be treated as exempt income. You don’t pay tax on the DRP amount, but you need to include it in your tax return when you work out your tax loss.

Disaster Recovery Allowance (DRA) and Natural Disaster Relief and Recovery Arrangements (NDRRA) payments are generally taxable. However, the government may declare that, for some natural disasters, DRA and NDRRA payments are exempt income. You don’t pay tax on exempt income but you need to include the amount in your tax return when you work out your tax loss.

You are not required to pay tax on the following payments made in relation to the 2019-20 bushfires (these amounts do not need to be included in your tax return):

Emergency assistance in the form of gifts from family and friends is not taxable.

See also:

Pre-fill information

To make lodging your tax return easy, we can automatically include (pre-fill) your income and other information into your return for you. This information comes from organisations such as employers, banks, health funds and government agencies.

Most information is sent to us by late July, but many organisations send us their information much earlier. If you usually do your own return, we will send you a message through myGov when that information is available.

We recommend lodging when all your information is ready. That way, you can be sure the information is complete and up to date. If you submit incorrect information, it may delay processing your return or you may need to repay amounts later.

You can also upload your records from the myDeductions tool to pre-fill your tax return in myTax.

See also:

Rental income

You need to report all the rental income you have received; this includes a back payment of rent or an amount of insurance for lost rent. If you need to reduce the rental amount to enable your tenants to remain in the property, your deductions will not be reduced if you continue to incur normal expenses on your property, you will still be able to claim these expenses in your tax return.

Insurance payouts for businesses or income-producing assets may be taxed.

See also:

Sharing economy income

The sharing economy is economic activity through a digital platform (such as a website or an app) where people share assets or services for a fee. Income you earn from the sharing economy is assessable and needs to be reported in your tax return. Popular sharing economy activities include:

  • providing ride-sourcing (also known as ride-sharing) services for a fare, through platforms such as Uber, Hi Oscar, Shebah or GoCatch
  • renting out a room or a whole house or unit on a short-term basis, through platforms such as Airbnb, HomeAway or Flipkey
  • sharing assets, including cars, caravans/RVs, car parking spaces, storage space or personal belongings, through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo
  • providing personal services, including creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly, through platforms such as OneFlare, Mad Paws or Hark Hark.

See also:

Work out your eligible deductions

When completing your tax return, you are entitled to claim deductions for some expenses, most of which are directly related to earning your income.

To claim a work-related deduction:

Working from home

The ATO has introduced a temporary ‘shortcut method’ to simplify how you calculate your working from home deduction. If you had some work-related expenses as a result of working from home due to COVID-19, you can claim 80 cents per hour for every hour you worked from home between 1 March and 30 June 2020.

The shortcut method covers all deductible expenses and can be used by multiple people working from home in the same house. Anyone working from home between 1 March 2020 and 30 June 2020 can use the shortcut method to calculate the costs for this period.

If you claim your working from home expenses using the shortcut method, include the amount at the ‘other work-related expenses’ question in your tax return and include ‘COVID-hourly rate’ as the description. This rate includes all expenses so if you use this method you do not claim for any other items as a result of working from home.

If you use the shortcut method, you must have a record of your hours, such as diary entries or a timesheet.

You can choose to use one of the other existing methods to calculate your working from home deduction during the COVID-19 period. The other methods are the fixed rate and actual expenses methods.

Using the fixed rate method, you can claim a rate of 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus calculate the work-related portion of your phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device.

Using the actual expenses method, you can claim the actual work-related portion of all your running expenses, which you need to calculate on a reasonable basis.

Whether you use the actual or fixed rate method you must also keep a record of the number of hours you worked from home along with records of your expenses.

Claims for working from home expenses prior to 1 March 2020 cannot be calculated using the shortcut method, but you can use the pre-existing working from home fixed rate or actual expenses methods.

If you are working from home only due to COVID-19, you can’t claim:

  • occupancy expenses such as mortgage interest, rent and rates
  • the cost of coffee, tea, milk and other general household items your employer may otherwise have provided you with at work
  • expenses for online schooling as they are not used to earn assessable income.

Generally, most people cannot claim a deduction for the cost of travelling from home to work. If you are working from home due to COVID-19 but sometimes need to go to your office, the travel between your home and your workplace still cannot be claimed and is a private expense.

You cannot claim deductions which relate to periods when you are on leave or stood down.

See also:

Protective equipment

If you have been working in an occupation that requires physical contact or proximity with customers or clients during the COVID-19 period, you may be able to claim a deduction for items such as gloves, face masks, sanitiser or anti-bacterial spray if you have paid for the items and haven’t been reimbursed. This includes industries like healthcare, retail and hospitality.

Get your work-related expense claims right

We have developed a range of occupation guides to help determine the work-related expenses you can claim at tax time.

See also:

Gifts and donations

For a gift to be deductible, it must be given to an endorsed deductible gift recipient (DGR). A DGR is an organisation or fund that can receive tax deductible gifts and is registered with the Australian Charities and Not-for-profits Commission (ACNC). Not all charities or causes, such as crowdfunding campaigns to help needy individuals, are registered DGRs.

You can check the DGR status of an organisation on business.gov.auExternal Link

It is also important to keep receipts. The total value of charitable deductions you can claim without some form of written record is $10.

You can’t claim a tax deduction for donations made to social media, crowdfunding platforms or memberships (such as sporting club memberships) unless they are a registered DGR.

See also:

Residency

If you are not an Australian resident and are staying in Australia for longer than expected due to COVID-19, you may need to lodge an Australian tax return if you earn any assessable income from an Australian source.

After you lodge

Progress of your return

You can keep track of where your tax return is up to by clicking through to the ATO from myGov, or if you use a registered tax professional they can also check the progress of your return on your behalf.

Returns lodged through myGov are normally processed within two weeks. There is no need to call us to check the progress of your return. If we need more information about your return while it is being processed, we will contact you.

See also:

If your refund is more than you expect

Last year the Australian Government announced the low and middle income tax offset. If your taxable income is less than $126,000, you may get some of the low and middle income tax offset.

The amount of the offset you are entitled to will depend on your individual circumstances, such as your income level. The maximum offset is $1,080 per annum and the base amount is $255 per annum.

An offset is not a refund and can only reduce the amount of tax you need to pay. The offset may cause a refund of tax that has already been withheld throughout the year. There is nothing you need to do differently to claim the offset, just lodge your return as usual and we’ll work out what you’re entitled to. Any offset amount will be included in your notice of assessment

See also:

If your refund is less than you expect

You may find your tax assessment is different from what you were expecting to receive. The most common reasons are:

If you believe you have made a mistake you can either amend you return online (if lodged using myTax) or contact your tax agent.

If you owe tax

You may receive a tax bill if you:

  • are an employee and enough tax hasn’t been withheld from the payments made to you by your employer
  • are a sole trader and haven’t paid enough tax to the ATO throughout the year
  • receive other income where no tax was withheld.

You can check your outstanding balance and when your payment is due by clicking through to the ATO from your myGov account.

We understand that people sometimes have cash flow issues meaning they can’t pay their whole tax bill on time.

In the case that a tax bill isn’t paid by the due date, engage with us early so we can help you deal with your debt while it’s still manageable. We have a number of tools and services available to support you including:

  • payment plans
  • interest deferrals
  • payment and lodgment deferrals.

Phone us so on 13 11 42 so we can work with you to make sure the options we provide are suitable for your situation.

See also:

Protect yourself at tax time

Be aware that there are scams that may try to trick you into paying money or giving out your personal information. Scammers impersonating the ATO may call you or send you an SMS or an email telling you that you have a refund or a tax debt to pay.

It can be difficult to tell the difference between legitimate ATO interactions and those of scammers. There are some signs to help you verify that you’re not dealing with the ATO.

We will never:

  • send unsolicited pre-recorded messages to your phone
  • ask you to provide your personal identifying information in order to receive a refund
  • send you an email or text message with a hyperlink directing you to a log on page to access myGov or myTax
  • threaten you with immediate arrest over a debt, or insist you stay on the line until a debt is paid.

If you are ever unsure whether an ATO interaction is real, don’t reply. You can contact us directly to check.

See also:

Get help and assistance

If you’ve read through the information on our website and still have a question, why not try the ATO’s:

  • online forum ATO CommunityExternal Link, available 24 hours a day. Your questions are answered by community members and many responses are ATO-endorsed. If your question has not previously been posted by another user, we will respond to you as quickly as we can
  • live chat service, which is accessible through myTax
  • virtual assistant Alex, who is available and ready to help 24/7 on our website
  • information in Other languages.

Use our tax time essentials 2020 to make lodging your tax return fast, easy and free through myTax on myGov.

Gifts and donations

Organisations entitled to receive tax deductible gifts are called ‘deductible gift recipients’ (DGRs). You can only claim a tax deduction for gifts or donations to organisations that have DGR status.

The person that makes the gift (the donor) is the person that can claim a deduction.

On this page:

For a summary of this content in poster format, see Gifts and Donations (PDF, 340KB)This link will download a file.

What is a DGR?

A deductible gift recipient (DGR) is an organisation or fund that can receive tax deductible gifts.

Not all charities are DGRs. For example, in recent times crowdfunding campaigns have become a popular way to raise money for charitable causes. However, many of these crowdfunding websites are not run by DGRs. This means donations to these campaigns aren’t tax deductible.

You can check the DGR status of an organisation at ABN Look-up: Deductible gift recipientsExternal Link.

When a gift or donation is deductible

To claim a tax deduction for a gift or donation, it must meet four conditions:

  • It must be made to a DGR.
  • It must truly be a gift or donation – that is, you are voluntarily transferring money or property without receiving, or expecting to receive, any material benefit or advantage in return. A material benefit is an item that has a monetary value.
  • The gift or donation must be of money or property. This can include financial assets such as shares.
  • The gift or donation must comply with any relevant gift conditions. For some DGRs, the income tax law adds extra conditions affecting types of deductible gifts they can receive.

If you receive a material benefit in return for your gift or donation to a DGR, it’s considered a contribution and extra conditions apply. For more information see, Is it a gift or contribution?

To claim a deduction you must have a record of your donation, such as a receipt.

See also:

What you can claim

The amount you can claim as a deduction depends on the type of gift:

If you receive a token item for your donation you can still claim a deduction. Token items are things of no material value that are used to promote the DGR, such as lapel pins, wristbands and stickers.

You can claim the deduction for your gift for the income year in which the gift was given. In certain circumstances, you can elect to spread the tax deduction over a period of up to five income years – see When can I claim?

Bucket donations

If you made donations of $2 or more to bucket collections – for example, to collections conducted by an approved organisation for natural disaster victims – you can claim a tax deduction for gifts up to $10 without a receipt. To claim contributions of more than $10 you need a receipt.

Political party and independent candidate donations

In some circumstances, your gifts and donations to registered political parties or independent candidates may be claimed as a deduction.

This includes paying a membership subscription to a registered political party. You must have made the gift or donation as an individual (not in the course of carrying on a business) and it can’t be a testamentary donation.

Your gift or donation must be worth $2 or more. If the gift is property, the property must have been purchased 12 months or more before making the donation.

The most you can claim in an income year is:

  • $1,500 for contributions and gifts to political parties
  • $1,500 for contributions and gifts to independent candidates and members.

To claim a deduction you must have a written record of your donation.

See also:

What you can’t claim

You can’t claim gifts or donations that provide you with a personal benefit, such as:

  • raffle or art union tickets – for example, an RSL Art Union prize home
  • items such as chocolates, mugs, keyrings, hats or toys that have an advertised price
  • the cost of attending fundraising dinners, even if the cost exceeds the value of the dinner. You may be eligible to claim a deduction as a contribution if the cost of the event was more than the minor benefit supplied as part of the event.
  • membership fees
  • payments to school building funds made in return for a benefit or advantage – for example, as an alternative to an increase in school fees or placement on a waiting list
  • payments where you have an understanding with the recipient that the payments will be used to provide a benefit to you
  • gifts to family and friends, regardless of the reason
  • donations made under a salary sacrifice arrangement
  • donations made under a will.

You can’t claim a tax deduction for donations made to social media or crowdfunding platforms unless they are a registered DGR.

Example – material benefits where a deduction can’t be claimed

Robbie is an office worker. Each year his workplace gets involved in the Daffodil day appeal to raise money and awareness for the Cancer Council. Robbie buys a teddy bear toy on Daffodil Day at a cost of $30.

Robbie can’t claim a deduction for the cost of the toy as he has received a material benefit in return for his contribution to the Cancer Council.

End of example

Example – no deduction for donating partially refunded membership fee to non-DGR

Ruby purchased an annual membership for $100 for her football club in January 2020. Her membership included a season pass to attend home games as well as discounted food and drink at club bars and restaurants. Due to the physical distancing requirements put in place as a result of the COVID-19 pandemic, the 2020 season was cancelled after round two and club venues had to close.

The football club offers members a refund of $85, taking into account the fact that some benefits of their membership have been used in the short season. Ruby chooses to donate her $85 refund back to her club to support them. Ruby is not able to claim a tax deduction for this donation as her football club is not endorsed as a deductible gift recipient (DGR).

End of example

Example – claiming partially refunded memberships as donations

Unlike Ruby, Gary decides to donate his partially refunded membership to the Australian Sports Foundation (ASF), which is a DGR, via his football club. Gary is provided with a receipt from the ASF for the amount of his donation and can claim an $85 tax deduction. While Gary may nominate as a preferred beneficiary an ASF project that supports his football club, the ASF has absolute discretion as to how the donation is allocated and may choose to allocate the donation to a different ASF project.

End of example

See also:

Keeping donation records

You should keep records of all tax deductible gifts and contributions you make.

When you make a donation the DGR will usually issue you with a receipt, although they are not required to. In these circumstances you can still claim a deduction by using other records, such as bank statements.

If a DGR issues a receipt for a deductible gift, the receipt must state:

  • the name of the fund, authority or institution to which the donation has been made
  • the DGR’s Australian business number (ABN) (some DGRs listed by name in the law may not have an ABN)
  • that the receipt is for a gift.

If you give through a workplace giving program your income statement, payment summary or a written record from your employer is sufficient evidence.

You can use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. It’s a fast, easy way to capture information on the go by taking and uploading photos of receipts. If you have an electronic copy of your receipts that are a true and clear reproduction of the original, you’re not required to keep the original paper copy.

See also:

You can only claim a tax deduction for gifts or donations to organisations that have the status of deductible gift recipients (DGRs).

Bushfires 2019-20

Devastating bushfires have impacted large parts of Australia since late 2019.

If you live in one of the identified impacted postcodes, and don’t want to think about tax, we’ve automatically deferred any lodgments or payments you have due. You, or your agent, don’t need to apply for the deferral. We’ve automatically deferred income tax, activity statement, self-managed super fund (SMSF), fringe benefits tax (FBT) and excise return lodgments, and their associated payments, until 28 May 2020.

If you’re ready to lodge sooner, you don’t have to wait until the deferred due date.

If you’ve been affected by this disaster but your postcode or local government area (LGA) is not in the current postcodes list, don’t worry. Phone our Emergency Support Infoline on 1800 806 218 for help.

We understand that your priority at this time is your family and community, and we’ll help you sort out your tax affairs.

Find out about:

See also:

Support is available

To help you we may:

  • give you extra time to pay your debt or lodge tax forms such as activity statements
  • help you find your lost tax file number (TFN) by using methods to verify your identity such as your date of birth, address and bank account details
  • re-issue income tax returns, activity statements and notices of assessment
  • help you re-construct tax records lost or damaged in the bushfire
  • prioritise any refunds you are owed
  • set up a payment plan tailored to your circumstances including an interest-free period
  • remit penalties or interest charged during the time you have been affected by the bushfires
  • give you more time to meet SMSF lodgments and payment obligations
  • be able to give you a refund when you lodge, which we’d normally use to reduce or pay down a debt.

You can phone our Emergency Support Infoline on 1800 806 218 to see what support is available based on your circumstance.

Lodgment and payment deferrals

We recognise the ongoing effects of this disaster and will continue to update the list of identified impacted postcodes.

Even if your postcode or LGA is not listed, you can phone our Emergency Support Infoline on 1800 806 218 for help.

If your business or residential address is in one of the postcodes granted access to the Australian Government Disaster Recovery Payment (AGDRP), we’ll automatically defer any lodgments or payments you have due.

If you’re ready to lodge sooner, you don’t have to wait until the deferred due date.

We’ll automatically apply a deferral so that you, or your agent if you use one, don’t need to apply. If you need further assistance, you can phone our Emergency Support Infoline on 1800 806 218.

If you don’t have a tax or BAS agent and are unable to access forms or business records, call us on 1800 806 218 and we’ll help you lodge over the phone.

Tax and BAS agents

Tax practitioners and their clients affected by this natural disaster can access additional support. For more information, see Natural disasters.

Tax and superannuation audits

If you or your client are in the identified impacted postcodes and are currently subject to an audit, this will be temporarily suspended. If you wish to continue your audit, contact us or ask your registered agent to contact your audit officer for assistance. Where we identify a risk of fraud, we will continue to complete reviews before issuing any refund.

If you’re subject to an audit and not in the impacted postcodes, but have been affected, you can phone our Emergency Support Infoline on 1800 806 218 for help.

Large tax withholders

Payment and lodgment deferrals for people in bushfire impacted postcodes don’t apply to large withholders. Large withholders are those who have previously withheld more than $1 million tax annually or are part of a corporate group that has.

Super guarantee payments

Employers still need to meet super guarantee obligations for their employees.

By law, we can’t vary the contribution due date or waive the super guarantee charge on late super guarantee payments. For more information, see Employers affected by disaster.

Prioritising refunds

If your business or residential address is in one of the bushfire impacted postcodes we will automatically prioritise any refunds due to you. You don’t need to ask us to prioritise your refund unless you have a debt.

If you lodge and are owed a refund, which we’d normally use to reduce or pay down a debt, you can contact us and we may be able to give you the refund instead.

Monthly GST credits

Businesses making purchases to replace stock and other losses may elect to change their GST reporting and payment to monthly, to get quicker access to net amount refunds. You can only change from the start of a quarter, so a change now will take effect from 1 April 2020.

Changing your GST reporting cycle to monthly doesn’t mean you have to change your PAYG withholding reporting cycle. You can manage this by specifying the roles you are changing.

Once you choose to report and pay GST monthly, you must keep reporting monthly for 12 months before you can elect to revert to quarterly reporting.

However, if your GST turnover is more than $20 million you must pay and report monthly.

If you’re registered for fuel tax credits, and change your GST reporting from quarterly to monthly, you will also need to claim your fuel tax credits monthly.

You can change your GST reporting cycle through your tax or BAS agent, in the business portal, or by phoning us on 13 72 26.

Pay as you go instalments

If you are a quarterly pay as you go (PAYG) instalments payer you can vary your PAYG instalments to nil on your activity statement for the December 2019 quarter. You can do this by lodging a revised activity statement before you lodge your income tax return for the year.

You can also vary your PAYG instalments in future periods. We won’t apply penalties or charge interest to varied instalments for taxpayers within the impacted postcodes in the 2019–20 financial year.

If you’ve already lodged

If you’ve already lodged any quarterly activity statements for 2019–20, you can claim a credit (at item 5B) on your next activity statement for the instalment amount you paid in the previous quarters, to receive a refund of the amount paid.

You can also revise your latest lodged activity statement to nil, and claim a credit for amounts previously paid.

If you realise you’ve made a mistake working out your PAYG instalment, you can correct it by lodging a revised activity statement or varying a subsequent instalment.

See also:

Counselling and mental health support

The Australian Government is offering free counselling and additional mental health support to individuals, families and emergency services workers affected by the 2019–20 bushfires. The Australian Government mental health response to bushfire trauma program provides access up to 10 free mental health support sessions and Medicare rebates through GPs for up to 10 counselling sessions with a psychologist or other mental health professional.

For information on how to access these services, visit How to get mental health supportExternal Link.

Financial counselling

If you are a small business or sole trader and you’ve been impacted by the bushfires you can get free financial counselling support from the Small Business Bushfire Financial CounsellingExternal Link Support Line on 1800 413 828. This service is supported by the Australian Government.

See also:

Return to:

COVID-19

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).

Certificates of residency or status

Tax treaties are special treaties Australia has entered into with over 40 countries. They prevent double taxation and fiscal evasion and foster cooperation between Australia and other international tax authorities in enforcing their respective tax laws.

As part of some of the agreements, if a person or entity is certified as an Australian resident for income tax purposes and receives income from these countries, they can request the tax authorities of these countries to reduce their withholding tax or to exempt them from paying tax in these countries. They can do this by supplying a tax relief form or a certificate of residency. However, it is important to note that overseas tax authorities may have additional administrative requirements for Australian residency certificate holders that impact on their tax obligations in the foreign jurisdictions.

Individuals or entities that use custodians to act on their behalf have to provide written authorisation to support the custodian’s authority. The documentation must also provide the capacity in which the custodian is authorised to act in.

Check with your custodian to confirm if they have a valid authorisation with us to act on your behalf.

On this page:

Countries with a tax treaty with Australia

The full list of our tax treaties is maintained by Treasury and can be found at Australian tax treatiesExternal Link.

There is also an agreement between the Australian and Timor-Leste governments in respect of the exploration for, or the exploitation of, petroleum in the Joint Petroleum Development Area (JPDA).

See also:

Certificates of residency

A certificate of residency is a document supplied by us. It’s issued to Australian residents to prove to foreign tax authorities that you are an Australian resident for income tax purposes.

Requesting a certificate of residency or status

A resident can request a certificate of residency or status by sending us a letter or fax and including the following information:

  • full name of the Australian resident
  • residential address of the Australian resident and postal address if different
  • date of birth (individuals only)
  • tax file number (TFN) or Australian business number (ABN) (or both)
  • country the certificate is for
  • a statement whether the Australian resident is only a tax resident of Australia or whether the Australian resident is also dual resident under the relevant tax treaty
  • period the certificate is required for – the certificate period can’t be greater than a year from the date of issue
  • number of certificates required
  • signature and date.

Tax professionals will need to establish proof of identity (POI) when contacting us.

See also:

Information required for a certificate of residency

The certificate will be issued or the tax relief form will be certified only when all the following requirements are met:

  • the name and TFN or ABN supplied in the request matches our records
  • lodgment of Australian tax returns are up to date
  • the individual or entity is known to us as a permanent resident for income tax purposes.

If you are a tax resident of a treaty country as well as Australia (a dual tax resident) please consider the information and procedures below before requesting a certificate or tax relief form.

Dual tax residents in tax treaty countries

You can be a tax resident of more than one country at the same time.

When you have dual tax residency, the relevant double tax agreement may determine your country of residence for tax purposes and which country has taxing rights over certain classes of income to prevent double taxation. In some cases, this may have the effect of limiting Australia’s taxing rights. The tax liability of a person who is a tax resident of two treaty countries is shaped by application of the ‘tie breaker’ provision in the treaty. For example, Article 4.2 of the Australia/New Zealand tax treaty. The need to apply a ‘tie breaker’ provision means it is a more complex task to establish such a person’s tax residency status.

Citizenship or nationality of another country will not necessarily mean you are a tax resident under their laws.

Dual tax residents – natural persons

If you consider that you are a tax resident of a treaty county, you should lodge an Early engagement advice request. This will assist us in making a determination about your residency status under the relevant double tax agreement.

Dual tax residents – companies – New Zealand

Companies that are tax resident in both Australia and New Zealand may be eligible for the administrative approach agreed between the ATO and the New Zealand Inland Revenue.

See also:

Dual tax residents – non individuals – treaties amended by the multilateral instrument

Specific procedures are in place for dual tax resident non-individuals who are resident in countries where the relevant tax treaty has been amended by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, also known as the Multilateral Instrument.

Non-individual taxpayers that are dual residents under Australia’s tax treaties which are modified by Article 4(1) of the MLI will need to apply to either Competent Authority for a determination of their residency for the purposes of the relevant treaty.

If you are a company resident in New Zealand, see the Australia and New Zealand administrative approach.

See also:

Dual tax resident – non individuals – treaties not affected by the Multilateral Instrument

Dual tax resident companies, which are tax resident in Australia and one of the unaffected treaty countries, should consider lodging an application for a private ruling on your tax residency status under the relevant tax treaty. Once this has been ruled on we can consider a certificate of residency for you.

Lodging a request for a certificate of residency

To lodge a request for a certificate of residency:

  • complete the Certificate of residency coversheet (PDF, 572KB)This link will download a file fillable PDF on screen before printing – if you can’t open this coversheet, write ‘certificate of residency’ and your TFN or ABN on a sheet of paper to use as a coversheet. A maximum of 20 TFNs or ABNs can be included on the coversheet.
  • only list a TFN or ABN once on the request form even if the request requires certificates for multiple jurisdictions place the coversheet on top of your request and either    
    • fax your request to 1300 730 298
    • submit your request through Online services for agents or the Business Portal
    • mail your request to

     

Australian Taxation Office

PO Box 3006

PENRITH NSW  2740.

How long it will take

We aim to process your request within 28 days of receiving all the necessary information. If your request is incomplete or incorrect, it may take longer.

Tax relief forms

Tax relief forms are forms supplied by overseas authorities to residents of Australia whose overseas sourced income is subject to overseas tax. The forms are to be completed by the Australian resident and certified by us to confirm residency status.

These forms will only be certified if there is a comprehensive tax treaty with Australia. If an agreement is not in place, we will supply a certificate of residency.

How to lodge a tax relief form

To lodge a tax relief form:

Australian Taxation Office

PO Box 9977

PARRAMATTA NSW 2124.

Nominating a custodian for non-individual entities

If you are the primary contact of a non-individual entity, you can nominate a custodian to:

  • request a certificate of residency or status on the entity’s behalf
  • lodge a tax relief form on the entity’s behalf.

To nominate a custodian:

Australian Taxation Office

PO Box 3006

PENRITH NSW 2740

  • alternatively, fax the completed nomination form to us on 1300 730 298.

If the nominated custodian is no longer required to act on behalf of the entity, contact us by phone on 13 28 66.

More information

For more information on tax relief forms or on certificates of residency phone us on 13 28 61 (for individuals) or 13 28 66 (other than individuals).

See also:

Information regarding which countries Australia has a tax treaty with, lodging a tax relief form and requesting a certificate of residency.