Individuals always go through the most amount of changes when it comes to tax Law and associated rules. Many of these are subtle (such as minor changes to rates and thresholds), and some that are really important to know get lost in the “noise”.
This article will highlight some of the important recent changes, but also some often forgotten rules that are important to follow.
TAX RATE CHANGES
We won’t focus on rate changes as they have been extensively covered in our 2023 Federal Budget Insights article, as well as in the media. We will point out:
- The “low to medium income tax offset” that was a bonus $1,500 given to many people last year will NOT be provided for again this year; and
- The immediate write-off for asset purchases is not available to salary and wage earners, rental property owners, and some contractors – only businesses are eligible.
LAST MINUTE TAX TIPS
If you’re looking for little nuggets of gold for saving tax at the last minute, have a read of our EOY Tax Tips brochure.
CONTRACTORS
If you are a contractor with an ABN, please don’t automatically think you are a “business” in the eyes of the ATO and can make all sorts of claims such as writing off car purchases in full and all of your travelling to and from work.
These “business” deductions are only available to contractors that fit the ATO’s definition of a business. We highly recommend reading our Is Your Contractor A Contractor brochure to give you an idea as to when a contractor is considered a “business”. The brochure is aimed at businesses using contractors (to work out if they should be paying super and other entitlements), but the concept is there.
The media tells us there are billions of tax dollars going missing by not taxing multi-nationals, but the ATO estimates that significantly more tax dollars is lost by contractors and individuals doing the wrong thing.
Have a guess where the ATO’s next focus point is?
SUPERANNUATION CONTRIBUTIONS DEADLINE
If you are looking to claim a contribution to super as a tax deduction, it needs to be in the bank account of your superannuation fund and processed before 30 June. Transfers done on 26 June that appear on 3 July are not deductible until next year. We recommend allowing 10 days for the super funds to process contributions.
You also need to complete an Intent to Claim notice and provide it to your superannuation fund (which can be done at a later date). Most public super funds will send you a form later in the year.
SUPERANNUATION CONTRIBUTIONS CAP
To prevent “wealthy” people taking advantage of the low tax rates in superannuation, people are capped at the amount they can contribute into superannuation. For “tax deductible” contributions, this cap is $27,500 per year.
This amount includes all contributions made by your employer, so if you are looking to put some of your savings into super, the amount you can put in may be less than this. To work it out, ask your employer (or check your superannuation fund) how much they have contributed and deduct this from $27,500.
To complicate this further… you are also allowed to make a “catch up contribution” and claim a tax deduction for this. Essentially if you didn’t use up the full $27,500 last year (or in any of the past 5 years), you may be able to use that unused portion this year and make a much larger tax-deductible contribution now.
If you are interested in taking advantage of this, you need to chat to your accountant as there are some conditions and you need to ensure you get the balances correct.
HOME OFFICE DEDUCTIONS
The ATO have altered the shortcut method for claiming home office expenses, and it is now a set rate of 67c per hour. This rate includes deductions for the following expenses:
- Use of your utilities (electricity, gas, etc)
- Use of your home internet
- Use of your mobile telephone
You can choose to claim each home office expense individually, but doing so requires you to calculate your usage of each item (and for electricity it involves calculating the actual electricity consumption of your computer etc) – which is nearly impossible, so the shortcut method will be used by most.
Notably, the shortcut method includes phone and internet, so if you want to claim home office costs (electricity etc), then these can no longer be claimed also. Depending on what level of phone and internet expenses you have, it may be that you are better off claiming these expenses separately and no home office expenses – all of this we can figure out as we do your tax return.
GOING DIGITAL WITH THE ATO
The ATO is moving digital and we are seeing more and more instances of the ATO only sending letters and notifications to your MyGov Inbox. If you don’t have one, or are not using yours, then you risk missing those letters. Importantly, tax instalments are often sent to your MyGov account and are no longer mailed, resulting in clients wondering why the ATO are issuing demands for payment for a debt they have never seen.
We’d love to tell you we can ask the ATO to revert you back to paper. We’d love to say that we can get them sent to us – but we can’t. It’s MyGov or nothing in many cases.
Below are some links to information about setting up and using your MyGov account:
- Online services in general: https://www.ato.gov.au/general/online-services/
- Creating a MyGov account and linking it to the ATO: https://www.ato.gov.au/General/Online-services/Create-your-myGov-account-and-link-it-to-the-ATO/, or watch the ATO’s YouTube video at https://www.youtube.com/watch?v=1t7shuGoNL8
- Using online services: https://www.ato.gov.au/General/Online-services/Using-ATO-online-services/
- The “MyGov Inbox” (where ATO letters are sent to): https://www.ato.gov.au/general/online-services/in-detail/mygov/ato-and-the-mygov-inbox/
This brings us to MyGovID (note the ID on the end). Almost as if it was named deliberately this way to confuse you, MyGovID is completely separate to MyGov.
MyGovID is your “digital ID” for dealing with the Government. Instead of logging into services with a username and password – you will use your MyGovID (like flashing your drivers licence to enter instead of a username and password.
You can read all about it at https://www.mygovid.gov.au/. We have a video that goes step by step through the setup process (https://youtu.be/NAhBrx6485M) and you can view a video linking your MyGovID with your MyGov account (https://www.mygovid.gov.au/using-mygovid-mygov).
YOUR 2023 TAX RETURN
We are in the process of updating our tax return guide that goes through what you can and can’t claim, what evidence we expect to see, and what the ATO expect you to keep. You can view the 2022 version here, and most things will be unchanged for 2023.
If you do not need to lodge a tax return because you earned under the tax free threshold, then you still need to notify the ATO of this. A simple phone call to the ATO is normally sufficient, or we can lodge a “no return necessary” form on your behalf (upon request). Please view the ATO’s webpage on this topic for more information.
