The 2022-23 Financial year has finished, and that means tax time has come around for millions of Australian workers and businesses. However, each financial year, the ATO institutes a series of changes to be introduced to tax return instructions. As Melbourne accounting consultants, we are going to go through some of the changes the ATO has announced for the 2022/23 financial year. If you haven’t completed your tax return yet, don’t worry, we’ll be able to provide some assistance on that as well.
Income Tax thresholds
Income tax thresholds have remained the same for this financial year and have been unchanged since the 2021-22 financial year. They currently sit at the following thresholds:
Taxable income:
Less than $18,200 – nil
$18,201 – $45,000 – 19% (of all over $18,200)
$45,001 to $120,000 – $5.092 (total from the previous threshold) + 32.5% (of all over $45,000)
$120,001 to $180,000 – $29,467 (total from the previous threshold) + 37% (of all over $120,000)
Greater than $180,001 – $51,667 (total from the previous threshold) + 45% (of all over $180,000)
LITMO (Low-and-Middle-income tax offset)
The Low-and-middle-income tax offset was not extended beyond the 2021-22 financial year. There are currently no plans to re-introduce it for the 2023-24 financial year either. This may result in reduced tax refunds for low-and-middle-income earners (up to $90,000)
Self-education expenses threshold changes
Starting from this financial year, there has been a significant change in the calculation of work-related self-education expenses. The previous requirement of reducing allowable expenses by $250 has been eliminated, making it easier for individuals to claim deductions.
In your individual income tax return, these expenses are reported in Section D4. The category labelled ‘non-deductible category E’ for work-related self-education expenses in this section has been removed.
Individuals are still required to maintain records of deductible self-education expenses. These may include but are not limited to:
- Course fees
- Textbooks
- Stationery
- Computers and laptops
- Office equipment, etc.
These expenses must be directly related to your employment activities at the time of incurring them to be eligible for deduction.
Meanwhile, you no longer need to keep records of non-deductible self-education expenses that were originally offset against the $250 threshold.
Working from home changes
The ‘short-cut method’ for claiming working from home expenses has been removed as an option in the 2022/23 financial year. This method was introduced at the start of the coronavirus pandemic and allowed individuals to claim 80c per hour for each hour working from home. However, this meant you couldn’t claim any additional work from home expenses – including if you bought new equipment.
The ‘fixed rate’ method has been revised up to 67c per work hour (from home), an increase from 60c per hour, and covers a variety of costs incurred from working from home. These include home/mobile/internet/ data expenses, electricity & gas expenses for heating, cooling, and lighting, and consumables such as stationery, printer ink, and paper.
By using the fixed-rate method, individuals can additionally claim deductions on depreciating assets such as furniture, computers, and other materials items used for work from home.
Changes to the record-keeping requirements for this method have occurred. Individuals must keep a record of the number of actual hours worked from home during the entire income year, such as a timesheet, roster etc, alongside a record of the running expenses incurred.
However, the requirement to have a home office set aside for work has been removed, given that many people have created flexible work-from home spaces since the COVID-19 pandemic.
An ‘actual cost method’ is available for individuals who don’t want to apply the fixed-rate method. If you need help calculating working from home deductions with the new available methods, please consider talking to an accounting consultant to ensure you are providing accurate information to the ATO.
How an Accounting consultant can help you this financial season.
Are you yet to file your tax return for the 2022-2023 financial year? Don’t worry! Our team of expert accounting consultants at Centre of Wealth is here to assist you. We offer comprehensive services to ensure you file your taxes accurately and efficiently, while navigating through the complexities of the Australian tax code.
Make the Right Move Today: Don’t let the financial season pass without taking care of your taxes! Speak to our accounting consultants today and let us help you secure the best possible outcome for your tax return. Take charge of your financial future and ensure your taxes are filed correctly to avoid unnecessary hassles.
Speak to an accounting consultant today:
Get in contact with a member of our accounting consultant team today via the contact page on our website! Or call either of our Melbourne branches:
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