The end of the financial year is coming up very quickly where has half the year gone already… it's time to get ready before the end of the financial year.
TAX UPDATE-Temporary Full Expensing Rule
URGENT: If you need a new car or plant equipment for your business then you should purchase this before the 30th of June 2023. (You must physically have the asset it can’t just be on order). The full expensing rule that was brought in the 2021 FY to support businesses and encourage investment is being withdrawn at the end of the 2023 FY. This means you can no longer deduct the full value of assets over $20,000 net GST in the 2024 FY.
https://www.ato.gov.au/business/depreciation-and-capital-expenses-and-allowances/temporary-full-expensing/
SAVE TAX PAY SUPER
Making voluntary personal super contributions is a great way to save on tax. You can do this as a salary sacrifice through your work or as a separate personal contribution after wages. Make sure that if you're paying this personally into your super fund you do so by the 20th of June so the fund can process this correctly and you get the tax deduction. You must fill out an ‘intent to claim a superannuation deduction’ form and send this to your Superfund.
These are available on our website to download.
https://www.ybab.com.au/resources/#ato
EMPLOYERS
Is your business STP phase 2 ready? Make sure that you have implemented these changes in your Payroll software.
If you are using XERO, MYOB or another software to run your payroll you must finalise the pay run for the 2023 financial year, this will create the payment summaries for your employees. If you don't do this your employee's income statement will not say ‘tax ready’ in their MyGov account which may cause issues when they go to lodge their tax return.
The superannuation guarantee charge will be increasing to 11% as of the 1st of July 2023.
Check your employee's award rates as they may increase on 1 July 2023. If you are a company you will use the fair work website, otherwise, it will be the state relevant to your employees on the labour relations website for sole traders, partnerships and trusts.
make sure your superannuation is all paid before the 30th of June so you can claim the deduction in your 2023 tax return.
WORKING FROM HOME
The working-from-home claim has changed. The ATO knows most people are now back in the office. They require you to keep records of hours worked from home either by using a diary or calendar. You must actually be working from home not just checking a few emails or messages. You do not need a dedicated work area anymore you can work from your kitchen bench and still claim working from home hours. There are two ways to calculate this either by working out your actual costs or the cents per hour method. Click on the link for more information.
https://www.ato.gov.au/uploadedFiles/Content/IAI/Downloads/Toolkits/TaxTimeToolkit_Workingfromhomededuction.pdf
RENTAL PROPERTIES AND AIRBNB
You are on the ATO’s hit list once again. The ATO has its sights on rental property deductions as 9 out of 10 owners are getting their returns wrong and these are being amended or audited by the tax department. The focus for 2023 is interest expenses where part of the loan was used for other property or for personal use, for example purchasing a car, boat, holiday etc. The ATO has sophisticated data matching and has recently implemented a new residential investment property loan data matching program. So make sure you keep your records correct and keep all of your receipts.
Did you know the ATO receives all reports for Airbnb accommodation, you must make sure you apportion your expenses according to the personal use of your property. As you are using your property for income-producing purposes this will be subject to capital gains on sale. Property and the last one.
https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Rental-properties-2022.pdf
https://www.ato.gov.au/General/Sharing-economy-and-tax/renting-out-all-or-part-of-your-home/
WORK-RELATED EXPENSES-DEDUCTIONS
Every year the ATO amend tax returns with excessive work-related expenses. Avoid using a copy and paste method each year by claiming the same deductions over and over. You must have incurred the expense and have a receipt in order to claim a deduction that relates to the income you are earning.
As tax agents we can't accept the old saying ‘It's just the same as last year’ how can it be… your expenses would change each year. As tax agents, we lodge hundreds of tax returns and are very familiar with each industry and know what you can and can’t claim within your particular field. We help many clients to maximise the best possible outcome in their tax returns.+
https://www.ato.gov.au/Individuals/Income-deductions-offsets-and-records/Deductions-you-can-claim/
LOW INCOME TAX OFFSET (LITO)
I'm sorry to say but you won't be receiving the tax refund that you got in the 2022 financial year because the low and middle income tax offset of $1500 is gone. There is only a low income tax offset of $700 available on income above $37,500 TO $45,000. After $45,000 it reduces down by 1.5 cents for every dollar up to $66,667 …I mean where did I get that stupid number from. The only way you'll be getting a refund is if you have overpaid on tax or have deductible expenses.
Still unsure or need a hand going into the 2022/23 end of the financial year, book an in-person or over-the-phone appointment and we will be able to give you expert advice to help you and your growing small business.
www.ybab.com.au