Happy New Financial Year. 2023
It’s Tax Time again. The 2023 financial year has come to an end and it’s time for you to complete this year’s Income Tax Return.
What you need to know – Individual
In preparing for your 2023 Income Tax Return, you should consider the following:
The Australian Taxation Office (ATO) has clearly indicated across its various media channels that, this Tax Time, it will be focusing on the accuracy of claims for work-related expenses, rental properties and capital gains tax liabilities.
The rate per kilometre for claiming car expenses is 78 cents per kilometre for the 2023 financial year.
Clothing tax deductions are only available for occupation-specific clothing, protective clothing, compulsory work uniforms and registered non-compulsory work uniforms (plus the cleaning of such clothing).
The $250 non-deductible threshold for self-education expenses was removed from 1 July 2022.
The fixed rate method (52 cents per hour) and the temporary COVID shortcut method (80 cents per hour) for working from home (WFH) expenses both ended on 30 June 2022. From 1 July 2022, you can claim a deduction of 67 cents for each hour you worked from home. This includes electricity, gas, your phone costs, your internet costs, computer consumables and stationery. You can claim a separate deduction for the decline in value and repair of home office furniture and furnishings and of technology/computer equipment. To claim the fixed rate method you must keep a record of the total number of actual hours you WFH.
Rental property owners should only claim for the periods the property is rented out or is genuinely available for rent. This is particularly relevant for Holiday homes. Periods of personal use can’t be claimed.
Ensure that interest expenses are correctly apportioned where the investment property is has some private use, the property is not genuinely available for rent or there is mixed use of borrowed funds.
Ensure all capital gains on cryptocurrency, shares and properties (as well as other CGT assets) are correctly calculated and reported. Record keeping is essential.
It’s worth noting that the low and middle income tax offset (LMITO) is no longer available in the current 2023 financial year, and will not be available in future years. This means that it is likely that your 2023 refund will be less than 2022 refund. The legislated stage three tax cuts are due to come into effect next year from July 1, 2024.
The income threshold for the Medicare levy surcharge will also be increased for those without private health insurance. The income threshold for singles will increase from $90,000 to $93,000 before the tax applies, while for families it will increase from $180,000 to $186,000.
What you need to know – Business
In preparing for your 2023 Income Tax Return, you should consider the following:
With the temporary full expensing measure ending on 30 June 2023, it is crucial that you get the timing right. To fully expense a depreciating asset under these provisions, the business needs to first use or install the asset ready for use by the end of 30 June 2023. Merely signing a contract, paying a deposit or receiving an invoice will not be sufficient. If the asset is not first used or installed ready for use until after 30 June 2023, the asset will be subject to the rules that apply for the 2024 financial year:
If the asset costs less than $20,000 (GST-exclusive), it will be able to be fully written off under the yet-to-be-legislated increase in the instant asset write-off threshold to $20,000 (only for 12 months); or
If the asset costs $20,000 or more, the asset will need to be depreciated over the asset’s effective life
The COVID-19 Loss Carry Back temporary measure also ends on 30 June 2023. Any corporate tax entity with an aggregated turnover of less than $5 billion that makes a tax loss in 2022–23 can choose to carry that loss back against taxed profits made from 2018–19 to 2021–22. The refundable income tax offset is available by lodging the 2023 income tax return.
Ensure all staff 2023 staff superannuation contributions are paid by 28 July 2023
Ensure you have quality & detailed record keeping
Two business boosts are on offer for businesses with an aggregated turnover of less than $50 million:
The Small business technology investment boost is a bonus 20% deduction you may be able to claim this tax time, if your eligible technology is installed by 30 June 2023;
The Small business skills and training boost allows eligible small business an additional 20% tax deduction for employee training/education expenses.
What you need to know – Superannuation
In preparing for your 2023 Income Tax Return, you should consider the following:
If you have made tax deductible superannuation contributions in the 2023 financial year (maximum $27,500), please ensure that you have completed and submitted the ‘Intent to Claim’ form with your Super fund.
From 1 July 2023, the Superannuation Guarantee (SG) rate increases from 10.5% to 11%
There for you
At National Taxation, we're great listeners and we know that every single one of our clients are unique. We have a proven track record and are well equipped with the latest knowledge to ensure that your income tax return is prepared in the most professional manner, at a reasonable cost. Our objective is always to maximise your TAX REFUND.
Get Ready
For your convenience, we have prepared a 2023 Individual taxation checklist and a 2023 Small Business taxation checklist. To assist in preparing your 2023 income tax return, you should to review these checklists.
Don't be too eager
The Australian Taxation Office (ATO) has suggested that taxpayers should not be too eager to complete their tax returns this year and ensure that all their information is accurate before lodging their 2023 income tax returns. According to the ATO, your employment income statement (formally known as PAYG Payment Summary and Group Certificate) may not be finalised until late July 2023. Your 2023 income tax return cannot be completed without a finalised income statement.
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We look forward to being of service to you.
Disclaimer
The information presented is general in nature and not to be used, relied or acted upon without seeking professional advice to ensure that the information appropriate for your individual circumstances. National Taxation accepts no liability for any errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. www.nationaltaxation.com.au. ABN 63 665 545 130.
