Important Changes to Tax Rules for Individuals: What You Need to Know 30 June 2023
As we dive into the new financial year, it's essential to stay updated on the latest changes to tax rules that may affect you as an individual. In this post, we'll break down some key updates and explain them in straightforward language so you can easily understand how they impact your financial situation.
Self-Education Expenses: Starting from July 1, 2022, the $250 non-deductible self-education expense threshold has been removed. This means that you can now claim work-related self-education expenses without any limitations. The non-deductible category E for such expenses, previously listed under question D4 (in your tax return), has been eliminated as well.
Working from Home Expenses: The Australian Taxation Office (ATO) has revised the method for calculating additional expenses incurred while working from home. From July 1, 2022, the fixed rate method allows you to claim 67 cents per work hour as a deduction. Additionally, there have been changes to the expenses covered and record-keeping requirements. See our other blog here for more details.
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You also have the option to use the actual costs method to calculate deductions. The temporary shortcut method, which was previously available, is no longer applicable.
Low and Middle Income Tax Offset: The low and middle income tax offset ended on June 30, 2022. However, taxpayers with a taxable income of $66,667 or less can still benefit from the low-income tax offset. What this means is that the removal of this offset may reduce your tax refund.
Small Business Skills and Training Boost: Please note that this measure is not yet law, and its implementation is pending parliamentary approval.
Under the proposed legislation, small businesses with an aggregated annual turnover of less than $50 million may be eligible for a temporary skills and training boost. This boost allows eligible businesses to claim a bonus deduction equal to 20% of qualifying expenditure incurred for external training courses provided to employees by eligible registered training providers. It applies to eligible expenditure incurred between 7:30 pm (AEDT) on March 29, 2022, and June 30, 2024. You can claim the bonus deduction for expenditure incurred in 2022 when filing your tax return in 2023.
If you prefer certainty, you can choose to delay lodging your 2023 tax return until the legislation has been enacted or the proposal is abandoned. Alternatively, you can submit your return without claiming the bonus deduction and subsequently amend it to claim the deduction if the boost becomes law.
It's important to note that the small business skills and training boost is not limited to companies, so eligible individuals can also benefit.
Small Business Technology Investment Boost: Similar to the small business skills and training boost, this measure is not yet law, and its implementation is pending parliamentary approval.
Under the proposed legislation, small businesses with an aggregated annual turnover of less than $50 million may be eligible for a temporary technology investment boost. This boost allows eligible businesses to claim a bonus deduction equal to 20% of qualifying expenditure incurred for digital operations or digitizing their operations. It applies to eligible expenditure of up to $100,000 per income year from 7:30 pm (AEDT) on March 29, 2022, until June 30, 2023. You can claim the bonus deduction for expenditure incurred in 2022 when filing your tax return in 2023.
As with the previous boost, you have the option to delay lodging your 2023 tax return until the legislation is enacted or abandoned. Alternatively, you can file your return without claiming the bonus deduction and amend it later if the boost becomes law.
Remember that the technology investment boost is not restricted to companies, so eligible individuals can also take advantage of it.
Cloudhouse Consulting Small Business Technology Invesetment Boost
Staying informed about tax rule changes is crucial for individuals to ensure accurate and compliant tax returns. With the removal of the non-deductible self-education expense threshold, revised working from home expenses calculation, and changes to the low and middle income tax offset, it's essential to understand how these updates impact your financial situation.
The proposed small business skills and training boost and small business technology investment boost offer potential deductions for eligible businesses. However, it's important to note that these measures are not yet law, and you should consider your options before lodging your tax return.
As always, it's advisable to consult with a qualified accountant or tax professional, such as Cloudhouse Consulting to understand how these changes specifically affect your individual circumstances.
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