TaxTime 2023 – Top 10 checklist

Some key checklist items for 2022-2023 tax time for individual taxpayers are as follows.  

GENERAL ALERT 

– NEVER RELEASE YOUR TAX FILE NUMBER (TFN) OR PERSONAL DETAILS TO SCAMMERS BY SMS, PHONE, E-MAIL OR ANY OTHER FORMS OF THREATS RECEIVED –

SUMMARY

Individuals/Businesses

1. Temporary Full Expensing ends on 30 June 2023 for eligible assets 
2. Low Income Tax Offset (LITO) if you earn up to $66,667 from 1 July 2022
3. There is NO Low and Middle Income Tax Offset (LMITO) for income up to $126,000 – this temporary measure ended on 30 June 2022
4. Working from home (WFH) expenses and the revised fixed rate method from 1 July 2022
5. Super guarantee for employees will increase to 11% from 1 July 2023 (10.5% between 1 July 2022 to 30 June 2023)
6. Super (concessional and non-concessional caps) from 1 July 2023 (unchanged from 1 July 2021) 
7. STP Income Statements by 14 July 2023, transitioning to STP2 (software deferral until 30 September 2023).

ATO Focus Areas

8. Shares and investments
9. Digital assets including cryptocurrency and non-fungible tokens (NFTs)
10. Social media as your “side” business.

Read further below for details.

THE DETAILS

1. Temporary full expensing (TFE) allows eligible businesses to claim an immediate tax deduction on eligible assets will end on 30 June 2023.  TFE was introduced for eligible assets first used or installed ready for use for a taxable purpose from 7:30pm AEDT on 6 October 2020 to 30 June 2023.  From 1 July 2023, the non-simplified depreciation rules allow for tax deductions based on the Commissioner’s guide on effective life of assets, published annually.

2. The Low Income Tax Offset (LITO) is a tax offset of up to $700 for taxable incomes to $66,666.  The ATO will automatically calculate the offset for an eligible Australian resident taxpayer.  The LITO is an offset which is non-refundable, cannot be carried forward or transferred.  That is, if you do not have tax to pay, you do not receive a tax refund.

3. There is no Low and Middle Income Tax Offset (LMITO) from 1 July 2022.  The 2021-2022 was the last year of LMITO, being, a non-refundable tax offset of up to $1,500 for taxable incomes to $126,000 which was made available for the 2018-2019 to 2021-2022 income tax years.  

4. Work-related working from home (WFH) expenses continue to be a common deduction to claim running expenses for employees who work from home since COVID-19 times. 
   
   There are two methods: the revised fixed rate method and the actual cost method.  **The 80 cents per hour COVID-19 shortcut method was only available only from 1 March 2020 to 30 June 2022.** 
   

The revised fixed rate method:

• has increased from 52 cents to 67 cents per hour from 1 July 2022 worked from home

• removes the requirement to have a dedicate home office space
• works out the claim for
  1. electricity and gas
  2. phone and internet usage
  3. computer consumables
  4. stationery
• allows taxpayers to separately claim the work-related portion of the decline in value of depreciating assets – such as office furniture and technology
• The revised fixed rate method can also be used by businesses that operate some or all of their business from home to claim home-based business expenses.

From 1 July 2022 to 28 February 2023, you need to provide a record which is representative of the hours worked from home.  From 1 March 2023 to 30 June 2023, you need to provide a record of the total number of hours worked from home (such as a timesheet, roster or diary) as well as evidence they paid for each of the expenses they incurred that are covered by the fixed rate method (for example, a phone or electricity bill). They will also need records for any equipment they bought to work from home, like technology or furniture (which provides details of the supplier, cost, date acquired).

Information required for the revised fixed rate method 

Clients will be familiar with keeping records of WFH already since COVID-19 times. 
A suggested WFH diary/spreadsheet format for the whole 2022-2023 financial year is as follows:

Date*	Day	WFH Times	WFH Hours
Eg. 1/7/22 or 1 July 2022	Friday	9:00 – 5:00pm (1 hr lunchtime)	7

*(excl annual leave, sick leave and days in the office)

For more details, the ATO provides a link here: https://www.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Working-from-home-deduction-changes-for-2022-23/ 

5. From 1 July 2022 to 30 June 2023, employer super guarantee has been 10.5%.  From 1 July 2023, this will increase to 11% until 12% in the future.  For more details, please refer to: https://tfwseelee.com.au/blog/super-guarantee-and-threshold-changes/ 

6. Unchanged from 1 July 2021, the general superannuation contributions cap from 1 July 2023 is as follows:
   • Concessional super cap – $27,500 per year
   • Non-concessional super cap – $110,000 per year.

Please contact us if you have any tax questions relating to:

• The carry forward of unused concessional contributions
• The bring forward of non-concessional contributions and
• Division 293 (limiting concessional super contribution deductions on income over $250,000).

7. We expect to issue STP Income Statements for employer clients by 14 July 2023.  Please ensure you and your employees check that there is a green tick “tax ready” in your myGov account before lodging the tax return, the symbol should be as shown below.

Our software has a deferral transitioning to STP2 until 30 September 2023, but we intend to roll out STP2 for clients from 1 July 2023.  We expect to be phasing out STP lodgment support in future for new clients or who are tech-enabled to self-lodge.  Please be patient as we ready our systems for increased STP reporting – there is a significant amount of administrative workload involved in STP reporting.  

ATO FOCUS AREAS

8. For your property, shares and units bought, sold and held during the year, it is important for you to keep records (and provide the information to us) such as:

• For property transactions:
  • The contract date of purchase eg. contract of purchase
  • The date of purchase settlement eg. settlement sheet
  • The purchase price eg. settlement sheet from your solicitor/conveyancer
  • Any foreign resident capital gains tax withholding amounts (FRCGW)
  • The contract date of sale eg. contract of sale
  • The date of sale settlement eg. settlement sheet from your solicitor/conveyancer
  • any asset-related sale expenses such as solicitor/conveyancer fees, property agent commissions etc
• For shares and managed fund units transactions:
  • the contract and settlement dates of purchase 
  • the purchase amount
  • any stock brokerage fees when you buy or sell shares or units
  • details of any non-assessable payments made to you eg. return of capital
  • the date and amount of any calls (if shares were partly paid)
  • details of events such as share splits, share consolidations, returns of capital, takeovers, mergers, demergers and bonus share issues.

Interest expenses and other property expenses are only deductible to the extent it is for a tax deductible, non-private purpose.   The ATO Pre-Fill Report will show sales information that we can use to cross-check your primary data.

9. Cryptocurrency assets and NFTs are now an increasingly popular investment asset.  For TaxTime2023 the ATO has indicated it will focus on Cryptocurrency and NFTs.  For more details, there is an ATO link here: https://www.ato.gov.au/Individuals/Investments-and-assets/Crypto-asset-investments/ 
   
10. Are you in business as a social media influencer? As an online creator, your income may be assessable even if it may be in foreign and/or local currency.  Your forms of income can include: 

• Cash
• Tips and gratuities (sometimes described as gifts)
• Collaborations with other content creators
• Payments from platforms like YouTube or Twitch
• Products you’ve been given to promote like clothing or make-up
• Fees for appearing at events 
• Fees or payments from others licensing your content.

For more information, please visit: https://www.ato.gov.au/Media-centre/Media-releases/Joined-the-bustle-of-a-side-hustle/ 

DISCLAIMER
The enclosed is prepared as general information only and subject to tax law updates. The contents of this tax update does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.This handy guide was prepared by TFW See & Lee: www.tfwseelee.com.au
(Adapted from Australian Taxation Office (A