TAX-TIME NEWSLETTER 2023
Welcome to Barker – Smith’s Tax-Time Newsletter for the 2023 tax year. In it we have gathered the most common queries we receive every year. We hope it is useful to you.
As in previous years, our mobile tax team is available for appointments Monday to Thursday 5:00pm to 8:00pm and Saturday 9am to 4pm.
We also have office appointments every day and most evenings, however please be aware that our office is not always attended, so please make sure you call before you “drop in” to avoid disappointment.
Our individual tax returns start from $135. Rental property returns start from $195.
See our full price list here.
We also have an online option that is $10 less than our office prices, why not give it a go here!
We accept payment by cash, debit or credit (Mastercard/Visa) with no surcharge.
Please note that from fee from refund incurs an additional $10 handling fee and we no longer accept cheques.
If you have any queries, or would like an appointment please call the office on 9301 4677.
We look forward to seeing you again in 2023!
The Low and Middle Income Tax Offset is FINISHED.
You know the old saying, all good things must come to and end, and that’s exactly what has happened with the $1,500 Low and Middle Income Tax Offset (free cash from the Government). We expect that people will see smaller refunds this year, but it’s still a bit too early to say, so don’t spend your refund until you know you’re actually getting one!
You will NOT get a payment summary this year.
All employers are now required to use Single Touch Payroll (STP) and they are not required to provide a payment summary to you for this year.
Instead income statements will replace payment summaries. If you have a MyGov account, you will receive a notification from the ATO in your myGov inbox when their income statement has been marked ‘Tax ready’ by your employer.
It’s NOT necessary for you to have a MyGov account for us to access your income statement, so it you’ve don’t have an account or can’t remember the password don’t worry!
Don’t forget to check if your income statement is “tax ready” from your employer BEFORE booking an appointment. Be aware that you employer has until the 31st of JULY to make this date ready if they use STP. If you’re not sure, ask us when you call.
Immediate Asset write off (Temporary Expensing) for small business has finished.
This measure allowed small business to immediately deduct the cost of any business use asset. There was no cost limit and no limit to the number of assets that can be purchased, however they MUST be installed and ready to use.
That means if you’ve ordered something (like a car) and it’s not delivered and paid for before 30 June, you’re too late.
This has been replaces with a previous system where the limit is now $20,000.
In order to be eligible the entity must be a “business” (generally not a personal service/labour only subcontractor) and have turnover less than $10M. For GST registered businesses the value of the asset for the purposes of the limit excludes GST.
Work Related Deductions
The ATO have extended the special “Covid-19” rate for working from home until the end of March 2023. You are able to use the ATO’s ALL INCLUSIVE rate of 80c/hr for your work from home rather than the previous 52c/hr rate plus other expenses. It’s important to note that if you choose the 80c/hr rate then that is “all inclusive” and you can’t claim any additional expenses for things such as phone, internet and depreciation on equipment. We have found that generally the 80c/hr rate is good if your work from home doesn’t involve purchasing much, ie your employer provides the computer etc and all you’re really using is the internet and electricity.
Please note that as of the 1st of March 2023 a new revised fixed rate per hour system has come into play that had stricter record keeping requirements and also does not allow extra claims for things like mobile phone use. For more details see HERE.
If you have purchased things like computers, desks etc then the “old” method may be better but you need to have receipts for the purchases, plus a basis for working out what the work-related percentage of the equipment is such as a 2 week diary of use.
Also remember you need to have some sort of record of the hours and dates you worked from home. Often this may be a directive from work in an e-mail, so keep a record of that. Also when working from home, things like tea and coffee and food are NOT deductible, just like they wouldn’t be for you at the office!
There is a common misunderstanding with work related deductions about the $300 substantiation limit. You are able to claim up to $300 in total for work related deductions without receipts, but if you did not actually have $300 of expenses, then you cannot automatically claim the full $300 (so you still need to be able to explain how you came up with your total). Also if your claim exceeds $300 in total, then you must have receipts for the total amount, including the first $300.
Examples of expenses include, use of a home computer for work, mobile phone calls, stationery purchased to use at work eg diary, pens etc, protective clothing (including hats, sunscreen and sunglasses for outdoor workers), and uniform with company logos. As with any tax deduction, if there is any private use, then you must record that private use and not claim that percentage. Also receiving an allowance from your employer does not automatically entitle you to a deduction, you must have spent the money.
Laundry also remains a key area of focus. To claim laundry you must wear a uniform or occupation specific clothing such as chef’s whites, you can’t claim it for “ordinary” clothing such as suits, phys-ed gear etc even if your employer says you MUST wear it.
The $150 claim is also under scrutiny, there’s a mis-conception that you can automatically claim $150 for laundry on top of your other work related expenses without a receipt, however this is NOT the case. The ATO will generally accept $96 based on 2 washes a week and is included in your overall limit of $300, however you still need to explain how that was worked out. We can guide you through this.
Motor Vehicle and self-education expenses are always an area of focus for the tax office. According to the ATO the main areas of concern for these deductions are;
1) insufficient documentation for motor vehicle and travel claims (no log book/receipts) Remember your log book must be valid to make a claim (no older than 5 years)
2) incorrectly claiming motor vehicle expenses, especially travelling from home to work.
3) Incorrectly claiming training and self-education expenses where the training is not directly related to the current employment (for example claiming training to get a new job or “self-improvement/development” courses)
4) Incorrectly claiming home office, mobile phone and internet expenses (no evidence for the work portion).
If you wish to claim these expenses, please ensure you have the appropriate documentation to support your claim.
Rental Properties
The tax office continues to view rental properties as a key audit area, particularly “holiday homes” that are infrequently rented. Here are a few tips that can help you maximise your deduction and avoid unnecessary complications from the tax office.
Don’t forget travel to rental properties can NO LONGER be claimed.
1) Keep the rental property mortgage separate from your home’s mortgage so there’s no ambiguity as to the amount of interest charged on it (this principle also applies for funds used for investments like shares etc).
2) Keep accurate records of rent received and expenses. If you use a property manager, request an end-of-year report. Note also that rent charged to tenants must be a market-value rate or your deductions cannot exceed the rent received. This is particularly important where you rent to a family member or friend.
3) Consider a quantity survey to maximise your depreciation claim.
4) Request a copy of the ATO publication “Rental Properties” for a detailed explanation of making rental property claims and negative gearing.
5) If this is your first year with a rental property or have refinanced, we’ll also need your loan documents to ascertain borrowing expenses.
6) Note that many of the fees involved in purchasing and making a property ready to rent (improvements etc) are NOT deductible and must be written off against the value of the property when sold. The ATO has identified this as a key focus area also.
Motor Vehicles
Employees can claim a deduction for using their motor vehicle for work-related purposes. Generally this includes travel between two places of work on the same day, visiting clients etc.
The trip from home to work is not tax deductible for employees even if you are on-call, the travel is after-hours or you are seconded to another location. Travel to and from the Airport for FIFO workers is also NOT allowed.
There are two main methods for making a claim for motor vehicle;
The “set rate per kilometre” is the easiest method to use, and simply involves recording the mileage for work-related trips up to a maximum of 5000km. You do not have to keep receipts for fuel etc, and the mileage can be recorded in an ordinary diary or similar. This method is best suited to older vehicles or vehicles where the percentage of business mileage is low.
The other main method is the log book method. With this method you record all business trips in a log book for 12 weeks, and then calculate the percentage of business use for that period. You then claim that percentage of running expenses (fuel, servicing, rego, insurance etc) as well as depreciation and any lease or interest payments. This method is best suited to vehicles less than five years old that are financed and have a high proportion of business/work use like sales reps and tradespeople.
Crypto Currency
The ATO continues to use comprehensive data matching for people trading crypto currency. If you have sold any crypto currency (including converting it to another crypto currency) then you will be required to report that. Crypto currency generally works like shares for most people, when you sell (or convert) a capital gain or loss is created so you need to keep a track of your purchases and match it to each of your sales. If you are doing a lot of sales then there is online software that can match the trades and produce a tax report for you as most crypto exchanges do not provide any tax reporting. It’s also important to note that each transaction must be converted to Australia dollars at the time of the transaction for tax purposes. The ATO have published a guide to the tax consequences of Cryptocurrencies here.
Private Health Insurance
Remember that your private health insurer will NOT to issue a tax statement to you in paper form. Instead this information will be provided directly to the ATO by the health insurer and we will have access to it. However your health insurer is not required to provide this information until the 15th of July, so it would pay to check if your health insurer has provided this information before you book an appointment. You will also need your spouse’s income details if we are not also preparing their return.
The private health insurance rebate and the Medicare levy surcharge are income tested against three income tier thresholds.
Higher income earners will receive less private health insurance rebate or, if they do not have the appropriate level of private patient hospital cover, the Medicare levy surcharge may increase. The family threshold increases by $1,500 for each dependent child at home after the first.
Remember that salary sacrificed amounts are included as income for MLS calculations and the MLS is calculated for each day in the year that you did not have private health insurance. Therefore if you were over the income threshold and took out eligible health insurance half way through the year you would still be liable for the MLS for remaining half year. For further information on eligible type of cover contact your private health insurer or the ATO.
If you have over claimed the rebate (by underestimating your income) then you will be required to pay back the over claimed rebate as part of your tax return. (Don’t forget that the “income” definition includes “adding back” salary sacrifice, fringe benefits, and rental loss amounts).
Summary of changes to Private Health insurance Rebate and Medicare Levy Surcharge
| Base Tier | Tier 1 | Tier 2 | Tier 3 | |
| Singles | $93,000 or less | $93,001-$108,000 | $108,001-$147,000 | $144,001 or more |
| Families | $186,000 or less | $186,001-$216,000 | $216,001-$288,000 | $288,001 or more |
Medicare levy surcharge (for no private health insurance)
| All Ages | 0.0% | 1.0% | 1.25% | 1.5% |
Claiming donations to charity
You can claim a tax deduction for a charitable donation if the organisation is a registered deductible gift recipient and issues you with a receipt. A donation is a straight monetary gift, it does NOT include raffle tickets, dinners, calendars or generally any circumstance where you receive something in return even if it is from a registered charity. Also church donations are not included, unless the church has a registered building fund in which case you will need a receipt from them also.
A web receipt or credit card statement is acceptable if you donated over the phone, web or through third parties such as banks or retail outlets.
Please be aware that many people and organisations on online platforms like GoFundMe are NOT registered charities and therefore you CAN’T claim a deduction for these.
Reminder about abolished tax offsets
Just a reminder that the following tax offset have been abolished.
Zone Tax Offset – Abolished (with some exceptions)
‘Fly-in fly-out’ (FIFO) and ‘drive-in drive-out’ (DIDO) workers cannot claim the Zone Tax Offset where their normal residence is not within a designated ‘zone’. This means that FIFO/DIDO workers cannot claim this tax offset if they do not genuinely also reside full-time in a zone.
Medical Expenses Tax Offset – Abolished Completely
The Medical Expenses Tax Offset has been abolished completely.
Mature Age Worker and Dependent Spouse Tax Offset
Were abolished as of 1 July 2014.
Record Keeping
Records must generally be retained for a period of 5 years after the return is lodged so that claims can be substantiated if required in a subsequent audit.
For assets subject to capital gains tax, records of the purchase and sale must be kept for 5 years after the final sale of the asset.
Disclaimer: the information provided in this newsletter is intended as general information only. It does not consider any individual’s circumstances, and as such should not be relied upon in exclusion to other advice. Any views expressed are the views of Barker-Smith and are believed to be correct at the time of writing. We specifically disclaim any liability to any person for any action taken on the basis of this publication without seeking advice specific to their circumstances.