Will I get $1080 payment in 2020? How to access income tax offset
The roll out of the federal government’s low and middle income tax offset in 2019 caused mass confusion as well as a spike in early lodgements as Aussies scrambled to get the cash.
And this year, the frenzy is expected to be even greater.
As the coronavirus crisis takes its toll on the Australian economy and leaves millions of workers in the lurch, tax professionals are bracing for an onslaught come tax time.
The good news for those feeling the squeeze is that the offset is back on the table again this year.
Here’s everything you need to know to claim it.
According to the ATO website, if your taxable income is less than $126,000, you will get some of the low and middle income tax offset.
The maximum offset is $1080 per year, but the base amount is far less at $255 per annum.
The amount of the offset you are entitled to will depend on your individual circumstances, such as your income level and how much tax you have paid throughout the year – and if you earn above that cut-off, you won’t get a cent.
The new low and middle income tax offset is available for the 2018–19, 2019–20, 2020–21 and 2021–22 income years and is in addition to the low income tax offset.
But it’s just that – an offset – so if you’re expecting it to come in the form of a lump sum, prepare to be disappointed.
“It’s not a cheque for $1080 from the government, it’s more complex than that. It’s a tax offset which reduces your overall tax bill, which could mean you will either get a bigger refund than you normally would, or alternatively, you might end up having to pay less if you receive a tax bill,” H&R Block’s director of tax communications Mark Chapman previously told news.com.au.
Mr Chapman said he believed there would be an “even bigger spike” this year in Australians lodging their tax returns as soon as possible in order to receive that offset, as household budgets have been stretched further than normal.
“The tax offset is coming around again and it will be an incentive for people to lodge early, as they will be desperate to get their hands on their refund,” he explained.
“A lot of people who have lost their job over the course of the year and are experiencing financial stress will be really keen to get their refund ASAP, and they may well get a bigger refund than usual.”
But according to Ben Johnston from leading Sydney accounting firm Willett Johnston Partners, the offset will be available for the next few years – and for that reason, “the urgency has been sucked out” now as the bonus has become “almost the norm”.
HOW DO I CLAIM IT?
If you’re worried about the process, you shouldn’t be – because you don’t have to lift a finger to claim it.
The ATO website states “you are not required to do anything to claim the low and middle income tax offset, we will work out how much you are entitled to and include it in your tax return”.
In other words, it is automatically calculated in at the time you lodge your tax return, so it will be factored into your final refund estimate.
You can find out how much of an offset you were entitled to in the “non-refundable tax offsets” section of your notice of assessment.