Things you need to know for the new financial year
For Individuals
2023 tax season – what the ATO is looking for
These are the key areas the ATO is particularly focusing on:
- Work-related expenses
- Rental property income and deductions
- Capital gains from crypto, property, and shares
Also on the ATO’s radar this year, is income that you might not realise needs to be declared.
For example:
- Side hustles (other than genuine hobbies with no profit-making intention)
- Crowd funding
- Food delivery, Ride sharing, AirBNB etc
- Income from social media and other online activities
- Income received in cash (other than genuine gifts)
- Non-cash income and barter transactions
ATO Data Matching
Every year the amount of information the ATO has access to, increases. They now have access to information on residential rental properties from:
- Property managers
- Landlord insurance providers
- Financials institutions that provide loans for residential rental properties
- Sharing economy providers (AirBNB etc)
- Income protection policies
Therefore anyone with a rental property needs to be careful to include everything accurately – the ATO will know if you don’t!
Of particular concern, as the ATO believes this is often done incorrectly, is where the loan for a rental property is refinanced or funds drawn down. Any funds drawn from the loan for any purpose other than the property itself, means that the interest cannot be claimed in full. The apportionment calculations can get get complex very quickly, so it’s best to avoid if at all possible.
The end of LAMITO
LAMITO is the Low and Middle Income Tax Offset.
This was a temporary measure introduced by the government in the 2019 budget, and then extended during Covid. It resulted in extra tax refunds (or lower tax payable (of between $675 and $1,500 for individuals).
The government has not extended LAMITO, and so it ended on 30 June 2022.
You may notice therefore, that your refund may not be as large this year as in the last few years.
The Low Income Tax Offset – which is a separate offset of up to $700 – will continue.
Changes to work from home deductions
The rules for claiming work from home expenses have changed significantly.
If you work from home – either regularly or occasionally – I recommend reading this article.
Deductions for car expenses
For anyone claiming car expenses on a cents/kilometre basis, the rate for 2023 was $0.78/km. This is up from $0.72/km in 2022.
The rate for the 2024 financial year (1 July 2023 onwards) will be $0.85/km.
Electric vehicles using the logbook method can use 4.2c/km in lieu of fuel expenses – this only includes fully electric vehicles, not hybrids. As with the cents/kilometre method, you need to keep a record of how you have calculated the number of kilometres claimed.
Guides to deductions
The ATO has published some handy guides for various occupations, on what you can and can’t claim as a deduction.
They also have some guides for general deductions.
For Businesses
Technology Investment Boost
This was originally announced in the March 2022 budget – and was confirmed as law late June 2023.
The Technology Investment Boost allows small businesses with revenue less than $10 million to claim a deduction of 120% (ie, an extra 20%) for eligible expenses and depreciating assets for the purpose of their digital operations or digitising their operations.
The bonus deduction applies to eligible expenditure incurred between 7:30pm (AEST) on 29 March 2022 (budget night) and 30 June 2023. Eligible expenditure is capped at $100,000 per financial year.
Skills and Training Boost
Like the Technology Investment Boost, this was announced in the March 2022 budget and has recently become law.
This boost allows small businesses with revenue of less than $50 million, a deduction of 120% (again, an extra 20% bonus deduction) on eligible expenditure on external training provided to their employees.
The training must have been provided by an RTO (Registered Training Organisation) and must have been between 7:30pm (AEST) on 29 March 2022 and 30 June 2024 – ie it runs for a year longer than the Technology Investment Boost.
More information on both Boosts can be found here.
Super Guarantee (ie, super on wages)
Super guarantee will increase by 0.5% to 11% from 1 July 2023.
This applies to all payruns with a payment date of 1 July onwards.
Temporary Full Expenses / Instant Asset Write Off
For the last couple years, most businesses that have purchased business assets could claim 100% of the cost in full in the year that it was purchased and ready for use.
This finished on 30 June 2023.
From 1 July 2023, the threshold for claiming the cost of new business assets in full reduced to $20,000. Anything costing more than that will need to be depreciated over time.
STP Finalisation
For anyone with employees who are not also owners of the business:
Single Touch Payroll (STP) is required to be finalised by 14 July 2023.
For anyone with only “closely held” employees – ie, you only employ yourself and no one else:
STP is required to be finalised by the date your own return is lodged.
Wages and PAYG Withholding now prefilling on activity statements
From July 2023, labels W1 (Gross Wages) and W2 (PAYG Withheld) will be pre-filled by the ATO using information reported through Single Touch Payroll (STP).
This should save businesses a bit of time in completing activity statements (BAS’s and IAS’s) and help with avoiding typo’s and errors.
Upcoming changes to how super is paid on wages – “Payday Super”
The government has recently announced that, from 1 July 2026, employers will be required to pay super on employee wages each payday. This is a significant change to the current requirement to pay quarterly.
The logistics on how exactly this is to be done have not yet been confirmed.
While it won’t begin for three years, employers need to be aware of this now and start factoring it into your future cashflow planning.
Please do get in touch if you would like to discuss any of these topics, or how they might affect you.