FY 2022-23 - It’s tax return time again!
Yes, it’s that time of year again!
Having to do your tax return each year is unavoidable for most of us, so here’s some of the basics, and also a few changes to know about when you’re doing your 2022/23 return.
Here are some general warnings from the Australian Tax Office:
1. The ATO has warned taxpayers against dodgy deductions; also
2. Doing a copy and paste of your tax return lodgement details from previous years!;
3. There are occupation and profession-specific guides to help you understand what’s claimable; and
4. Keep records – to claim any deductions.
You must have spent the money yourself without being reimbursed by your employer; and
Any claim must be directly related to earning your income.
Here are some specific changes that the ATO has highlighted under What’s new this year? 2023
1. Removing the self-education expenses threshold
From 1 July 2022, the requirement to exclude the first $250 of certain self-education expenses has been removed. This change applies from the 2022-23 income year onwards.
2. Calculating car expenses
The cents per kilometre rate to calculate eligible car expenses is 78 cents for the 2022-23 income year. This is an all-inclusive rate, and covers for decline in value, registration and insurance, repairs, maintenance, and fuel costs. You need to keep records to substantiate your claims.
You can claim car costs for work–related travel, but not for the ordinary home to work and back commute.
NB for 2023-24 – the cents per kilometre rate for claiming car expenses is 85c per kilometre. The tax office PCG 2023/D1 indicates 4.2c/km will be allowed for these vehicles using the logbook method, and for FBT purposes, from 1 July 2022. However, you can’t claim both the cents/km and a further 4.2c/km.
3. Working from home deductions
There are two methods available to calculaate your working from home deuctions this tax time: the revised fixed rate method and the actual cost method. You are required to keep a record of the total number of hours you work from home when using the revised fxed rate method – a transitional provision is in place for 1 July 2022 to 28 February 2023. Allowing a represntative record of your hours worked at home during that period.
Since 1 March 2023, if you are using the 67c/per hour approach, you must keep a record of the total number of hours worked from home. A representative record of hours is not accepted by the ATO.
The revised fixed rate also covers costs for electricity, gas, stationery, computer, consumables, internet and phone use. And you can claim car costs for work-related travel (see 2, above), but not for the ordinary home to work and back commute.
What else is new…
No more low and middle income tax offset (LMITO), this ended in 30 June 2022. For low and middle-income earners with taxable income below $126,000, LMITO has ended as of 30 June 2022, which will affect your tax returns for the 2022-23 financial year.
This means that without the offset, your tax bill will be higher this year, resulting in either a higher tax liability or a lower tax refund during tax time.
When to lodge:
ATO advises waiting until late July to lodge your return, as they need to lodge prefilled information from your employer, bank and health insurer.
However CPA Australia notes that many people are planning to lodge their returns as soon as possible.
Boosting returns from super and investments (and minimising your taxable income)
As always, you need to understand the fees and costs of your investments i.e. how much you are paying, and what you’re paying for.
Check out VivaEthical’s Introduction to Investing for some tips on tax effective investments.
And for a more detailed read, check out the AFR’s - Boost your returns with clever cuts to investing costs (subscriber only link)
As well…
The Australian Taxation Office (ATO) has identified the top 10 tax myths it says are causing incorrect claims at tax-time. Read it here - Busted! The top 10 tax myths
Next steps:
If you have questions relating to your tax and super needs, call us for a quick chat or drop us a line.
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