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Tax Season Due Dates (+ the Money Lucky Series)

October Tax Deadline

Tax returns are due end of October if you are not with a tax agent (or were late in lodging last years tax return) the good news is if you join CIA tax before this deadline we can add you onto our client list and extend your tax lodgement dates (for most) well into next year. Spread the good news!

June 30: Tax Saving Tips!!

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

The 2023 Federal Budget

Hard to recall a budget with no surprises and with just about everything leaked early or had already been announced. It was almost boring watching the speech last night even for us accountants!

Highlights from the budget courtesy of the Institute of Public Accountants:

A $4.2 billion surplus buffeted by stronger commodity prices, a strong jobs market, and strong immigration. While a surplus is welcomed, it is also short lived because Australia is predicted to return to the red over the forward estimates.

Inflation remains elevated at 6% for this year, it is expected to fall to 3.25% in 2023-24 and return to the RBA’s target band of 2-3% in 2024-25. The Government also believes that its cost-of living measures will take 0.75 of a percentage point off inflation in 2023-24.

Tax-related measures:

▪ Small businesses instant asset write-off threshold set at $20,000 per asset for 2023-24 for businesses with aggregated annual turnover of less than $10m.

▪ Small Business Energy Incentive – businesses with annual turnover of less than $50m will be able to claim an additional 20% deduction on spending that supports electrification and more efficient use of energy. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

▪ Small business lodgement penalty amnesty – will be provided for small businesses with aggregate turnover of less than $10m to encourage them to re-engage with the tax system. The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.

▪ FBT exempt rules for electric vehicles (EVs) – the eligibility of plug-in hybrid electric cars will sunset from 1 April 2025 from the FBT exemption for eligible electric cars; (that was short lived!).

▪ Personal tax rates unchanged for 2023-24; Stage 3 start from 2024-25 unchanged.

Superannuation

▪ Payday super – employers will be required to pay their employees’ super guarantee at the same time as their salary and wages from 1 July 2026.

▪ Pension drawdowns: no reduction in minimum – the Budget did not announce a further extension to 2023-24 of the temporary 50% reduction in the minimum annual payment amounts for superannuation pensions and annuities

▪ Non-arm’s length income (NALI) – the amount of non-arm’s length expenses (NALE) taxed at 45% as NALI will be limited to twice the level of a general expense from 1 July 2023 for SMSFs and small APRA funds.

▪ Super account balances above $3m – the Budget confirmed the Government’s intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025.

Cost of living

$14.6 billion cost‑of‑living plan will provide help with power bills, bring down out‑of‑pocket health costs, support vulnerable Australians, create more affordable housing, and boost wages,” the Treasurer said.

The funds cover energy relief for households and small businesses, a boost to JobSeeker of $40 per fortnight as of 20 September, and an increase to the age cut-off for the Parenting Payment (Single) from eight to 14 from 20 September 2023.

Energy costs

Some 5.5 million Australian households and one million businesses are to receive financial support with their rising energy bills under a multi-billion-dollar package.

From July 2023, this plan will deliver up to $500 in electricity bill relief for eligible households and up to $650 for eligible small businesses.

Where to get the full Budget

As ever the details will emerge over coming weeks and for more information the 2023 Budget Papers are available from the following website: https://budget.gov.au/

How to beat the recession mindset:

You don’t know how good the good times are unless you have some tougher times with our Dr Steven Enticott & Mike Loder (Ticker News)

How to thrive past a recession: https://www.youtube.com/watch?v=-eoOAFnT7TU

How to be a sustainable business

It’s easier than you think with our Dr Steven Enticott & Mike Loder (Ticker News) To measure, reduce, offset and adopt a climate positive project: https://youtu.be/yL07CbAjC6M

Tax return deadlines

Yep, we are there now and it’s the last moment – so act now and if there are circumstances preventing you contact us today and we will add you to our extension list with the ATO!

Working from home? Trust Distributions? Superannuation?

Major Tax Changes Seminar 28th March