| It’s a big newsletter and we ask you to take note of the new working from home regime and watch our seminar recording (link below) as the rules have substantially changed. For employees and Employers alike Superannuation guarantee payments by your employer is set to rise to 11.0% from 1 July 2023 for the 2023–24 financial year with the SG percentage rate is set to increase by 0.5% every year until it reaches 12.0% from 1 July 2025. Be Generous Making deductible donations in June is the best time to do so as you’ll soon see the tax benefit! For Business Last chance the temporary full expensing and temporary loss carry-back (to the year 2019) ends 30 June 2023, after that the maximum write off level is $20,000 for small businesses (under $10m turnover). Prepay your expenses for 2022/3 before June 30 when you can and don’t be too hasty getting out your invoices prior to June 30 even more so if it’s been a great income year. Stocktakes can be counted on Cost price, Replacement Price or even Actual values which is one of our greatest tax planning tools for those that carry stock. Get counting! Working from home changes From 1 July 2022 to 28 February 2023, the ATO will accept a record which represents the total number of hours worked from home (for example a 4-week diary) as usual. Then from 1 March 2023, a record of all the hours you worked from home is required. Key changes: an increased rate – from 52 cents to 67 cents per hour worked from home. inclusion of phone and internet expenses as well as electricity and gas usage, computer consumables and stationery costs in that per hour rate. taxpayers will now separately claim the decline in value of work-related equipment, office furniture, and any other running expenses not covered by the rate per hour. Example: claim via rate method – let’s say 40 hours a week * $0.67 x 46 weeks = $1,232 We do have the option of claiming the actual costs for home office, which will allow for phone and internet to be claimed separately, however we would then need calculations for the costs for electricity and gas or we could simply ignore them. Actual Cost You don’t incur additional running expenses if other members of your household (who are not working from home) are in the same rooms as you while you are working from home. ATO Example: Working from a lounge room Lee works from her lounge room while her partner and 3 children watch television. Lee isn’t incurring any additional costs for lighting, heating, or cooling as a result of working in that room, so she can’t claim a deduction for them. ATO Example: Electricity for cooling and heating Ben works at home several days per week and keeps a record of the total hours he works from home. His record shows he worked a total of 768 hours from home in 2022–23. When he works from home, Ben sits in a separate room of his house and always uses a separate air conditioner in the room when he is working. His air conditioning unit is a small with a 3.5 kilowatt (kw) capacityBased on the unit’s energy efficiency rating, the unit costs Ben 1.09 kw per hour to run.Based on his electricity bills, Ben pays 27.81 cents per kilowatt hour for electricity Ben calculates the cost of cooling and heating for the room he uses when he is working from home as: 1.09 kw per hour × 27.81 cents per hour = 30.31 cents per kw hour 768 hours × 30.31 cents = $233 (rounded up to the nearest whole dollar). ATO Example: Phone, data and internet If you receive an itemised phone or internet bill, you need to work out your work-related use over a continuous 4-week period. You can use your work-related percentage for the 4-week period to work out your expenses for the whole income year. For example, you can mark your work-related calls on your monthly phone bill and work out your work-related use based on the number of those phone calls compared to your total calls. Similar method for internet use hours. Link to our working from home seminar recording; https://www.youtube.com/watch?v=WgIGCJc9cZA&t=201s For Employees Claiming covid test / RAT expenses again, for employees and business alike these are tax deductible expenses and can be claimed. Don’t forget – Sunglasses, Hats and Sunscreen for taxpayers that work in any outdoor occupation (including driving) they are tax deductible – keep receipts! Claim Everything This one each year is a bit tongue in cheek, though correctly claiming expenses is our expertise. Your job is to think of absolutely anything that has a connection with your incomes and let us measure the correct appropriateness of claim. Audits True to form the ATO audits are back at it and their stated four areas of focus are: Recordkeeping (car logbooks, receipts etc) Work-related expenses (must be connected to work activities especially study) rental property income and deductions (genuine repairs not capital improvements) Capital gains from crypto-assets, property, and shares (these are all tracked by ATO) Superannuation Has become so complex that we recommend that you never contribute until you’ve cleared it with your advisors first. The Superannuation Guarantee rate is increasing to 11.0%, effective 1 July 2023 The tax-deductible cap into super is $27,500 which includes super SG and salary sacrifices. Don’t forget personal super contributions can also be claimed as a deduction but you must have a confirmation from your superannuation fund that they have received and have processed your notice of intent to claim form. Age based limits for those wanting to claim personal super contributions are applicable so discus first with CIA tax. The limit for non-deducted superannuation is $110,000 annually or $330,000 for 3 years. Forget about it if over age 75 unless downsizer or employer contributions. Additionally, you must be under the $1.7m super balance cap (except downsizer and employer) and from 1 July 2023, that total super balance cap rises to $1.9M. Again, it’s one to discuss with your superannuation fund advisors or discus the caps with CIA tax. To claim deductions this tax year super needs to be paid WELL before June 30 (Now!) In many cases you should contribute when appropriate for example, an average earner saves around 20% of tax on their contribution so even if they put the money into the safe cash option of the fund, they have already had one great investment year! However, if you are on the younger side or burdened with a lot of debt then speak to us about doing the tax effective numbers to super contributions before you get to excited. Make larger super contributions when you haven’t used all your concessional cap in earlier years. Unused cap amounts can be carried forward for up to five years before they expire. 2018/19 was the first financial year you could accrue unused cap amounts. To be eligible to make catch-up CCs, your total super balance at the prior 30 June must be below $500,000. Superannuation Co-contributions for super is something you should still DO. Up to a 50% matching rate on up to $1,000 of after-tax contributions, so a maximum amount $500 FREE from the ATO into your super!! Income thresholds must be below $57,016 to receive any pro rata bonus. Superannuation Pensions remember, you need to have made your annual drawdowns by June 30 it is essential to maintain the tax free status. Superannuation Spouse Contribution of $3000 The amount of the offset is 18 per cent of the spouse contribution you make (max. offset of $540) reducing your own tax. Spouse income must be under $37,000 to get the full offset, then it gradually reduces to zero at $40,000. Again, there are always other conditions that effect spouses’ income (reportable amounts) so check with CIA first or your Superfund to avoid disappointment. For Investors Repairs and maintenance on investment properties?Consider bringing forward so you can enjoy a tax deduction in the current financial year as with all other costs! Pre-paying interest Say,on a loan of $300,000 it may cost $15,000 but it could get you up to $7,500 back as a tax refund this year. Discuss with your lender!! Made a capital gain? During the past year, for example, the sale or part sale of a business (including investments the business has made), shares or a property. If the answer is a ‘yes’ then you should be thinking about your options for managing the CGT liability. Start by looking for capital losses to sell down to offset the CGT liability (or losses carried forward from prior years) to offset gains – call to discuss. Medicare levy surcharge & Private Health Insurance Rebate For the rates of Medicare levy surcharge that applies or the amount of rebate you are entitled to see the rebate and surcharge levels applicable are: https://www.ato.gov.au/Individuals/Medicare-and-private-health-insurance/Medicare-levy-surcharge/Medicare-levy-surcharge-income,-thresholds-and-rates/ Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first. Book a time. No newsletter can ever contain or explain the full tax benefits to an individual’s circumstances so if you have any tax concerns reach out ASAP and we’ll bring the tax deducting expertise. CIA tax TV Watch our weekly MONEY series on Ticker Tv – by following CIA tax on YOUTUBE to stay right up to date https://youtube.com/c/CIATaxDrStevenEnticott Carbon Landscapes Is CIA’s supported climate positive corporate social responsibility project and we encourage everyone to support our awareness efforts by becoming free members (or take on a greater involvement) www.carbonlandscapes.com.au |