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You May Need To Amend Your Tax Return If You Received The COVID-19 Disaster Payment For Individuals

If you were the recipient of the COVID-19 Disaster Payments For Individuals due to your situation resulting from the impact of COVID-19, there are certain things you may need to know about it.

The COVID-19 Disaster Payments were provided by the Australian Government to support eligible individuals who are unable to earn an income due to state/territory health orders preventing them from working. This may be due to lockdowns, hotspot or movement restrictions.

Recipients of the payment received $750 per week if they lost more than 20 hours of work during that week, and received $450 if they lost between eight and 20 hours of work.

Your tax return may need to be adjusted, as the payment has been reclassified as non-assessable non-exempt (NANE) income.

With the reclassification of the payments as NANE income, this means:

  • The payment is a non-taxable payment
  • The payment does not need to be included in your tax return.

Due to the rising vaccination rates across states and territories, there will be changes in the way individuals can access the payment. At 70% of individuals aged 16 or over at fully vaccinated status, the payment will need to be reapplied for. At 80%, the payment will need to be reapplied for if you have previously made a claim for it, but will only be available for one or two more weeks (depending on the individual’s circumstances and eligibility).

If you have recently applied for the COVID-19 Disaster Payment with Services Australia and received the payment on/after 1 July 2021, it will not need to be included in your tax return.

If you received the payment as a result of the Greater Melbourne lockdowns during the 2020-21 income year, and have yet to lodge your tax return for that period, the payment does not need to be included.

However, if you have already lodged your return for 2020-21 and included the payment as assessable income, your return will need to be amended due to its reclassification as NANE. This could lead to a refund.

You can speak with us for assistance with this process, as we are equipped with the skills and knowledge to assist. Let us know how we can best help you by starting the conversation with us.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier