Tax Time Savings


Always a big newsletter – and for even more cost-of-living tax time saving tips attend our annual Kingston Arts tax saving seminar on May 28th at 6pm or ask us for the recording of it after that date!

   


For employees and Employers alike  

Superannuation guarantee payments (on wages) is set to rise to 11.5% from 1 July 2024. Then there’s one more (to 12.0%) from 1 July 2025 then that’s it for rises (for a while).

For people with a HECS-HELP debt  

Whilst there has been some well publicised relief (its coming!) to have even more HECS relief…  

# Every year # HECS-HELP amounts owing on the 1st of June receive indexation (go up).   If you are trying to pay off or pay down your debt a little faster, do it several days ahead of the 1st of June indexation date each year and save on some accrued interest… it all helps (pun intended!)  


Be Generous  

Making tax deductible donations in June is the best time to do so as you’ll soon see the tax benefit from your generosities!    

For Business  

The maximum instant asset write off level is set at $20,000 for small/medium businesses (under $10m turnover) so if you have had a good year and you need a new asset for the business do so before June 30.  

Prepay your expenses 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.  

Your job is to get counting and let us work out the best planning methods to use.      

Working from home changes  

Major changes – From 1 March 2023 a record of all the hours you worked from home is required and an area of audit they will be focused on.  

Fixed Rate Method  

67 cents per hour for every hour worked from home.  inclusion of phone and internet expenses as well as electricity and gas usage, computer consumables and stationery costs all 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.     

Actual Cost Method  

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.   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.    

For Employees  

Claiming covid test / RAT expenses once 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 – please 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 income and let us measure the correct appropriateness of claim.    

Audits  

True to audit form the ATO stated areas of focus are:

– Incorrectly claiming work-related expenses (home office log books)
– Inflating claims for rental properties (loan balance movements a focus)
– Failing to include all income when lodging (sharing economy & crypto)    

Superannuation  

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 11.5%, effective 1 July 2024  

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 $1.9m super balance cap (except downsizer and employer) again, it’s one to discuss with your superannuation fund advisors or discus the caps with CIA tax.  

Contribution caps are increasing for 2024-25  

– Concessional Contributions Cap $27,500 go to $30,000
– Non-Concessional Contributions Cap $110,000 go to $120,000
– Bring forward $330,000 over 3 years go to $360,000 over 3 years

The total superannuation balance threshold, which is relevant for making non-concessional contributions, remains at $1.9 million during the 2024-25 financial year.  

The transfer balance cap also remains unchanged at $1.9 million.    

To claim superannuation deductions this tax year super needs to be paid WELL before June 30 we suggest at the latest the 15th of June to (likely) be safe.  

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 too 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. To be eligible to make catch-up CCs, your total super balance at the prior 30 June must be below $500,000 contact us to know your possible shortfall.  

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 $58,445 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 that can be paid early!  

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 found at:

https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates


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.  

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