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.
You can view our full range of EOFY 2024 articles below
TAX RATE CHANGES
As announced by the federal government earlier this year, the personal tax rates are set to change from 1 July 2024 to the following:
Taxable Income
Tax Due
$0 to $18,200
Nil
$18,201 to $45,000
16c for each $1 over $18,200
$45,001 to $135,000
$4,288 plus 30c for each $1 over $45,000
$135,001 to $190,000
$31,288 plus 37c for each $1 over $135,000
$190,001 and above
$51,638 plus 47c for each $1 over $190,000
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. From 1 July 2024, the cap for “tax deductible” contributions will increase to $30,000 per year (up from $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 $30,000.
To complicate this further… if you have less than $500,000 in super, 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 cap amount this 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 rate for claiming home office expenses is unchanged at 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
- Stationary and computer consumables
You have the option of not using the ATO rate and instead claim actual costs, and in some cases you are better off doing so (e.g. where your phone, internet, and stationary costs are higher than the result of the ATO rate. Claiming electricity and gas is troublesome under this method as you have to calculate the actual amount of electricity your heater, air conditioner, computer, printer, etc use (i.e. we can’t claim a % of the total costs).
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 2024 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 2023 version here, and most things will be unchanged for 2024.
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.
