JUNE 2023 NEWSLETTER
Welcome….to The Enterprise Sanctuary’s June 2023 newsletter.
During this post-Covid era, we look forward to continuing working with you and your business.
Today, we will have a look at some items relating to the approaching tax season and also to specifically cover the revised work-from-home deduction.
We will also include a brief overview of the Federal Budget 2023 and the Victorian State Budget 2023-24.
KEY CHANGES FOR 2023 TAX COMPLIANCE
The Tax Office have highlighted several key changes for both individuals and companies and the effect it could have on their 2023 returns.
Individuals:
1. Self-education expenses threshold - the $250 non-deductible threshold was removed for the 2022/23 year.
2. Working from home deductions – the rate per work hour claim has been revised (refer below: the next topic in this newsletter).
3. Low and middle income tax offset (LMITO) – this tax offset will cease for the 2022/23 tax year, which may result in a lower refund overall or a tax bill for the 2023 tax return.
Companies:
1. Small business boost
Small businesses with less than $50 million aggregated turnover could claim the temporary skills and training boost of an additional 20 per cent tax deduction for eligible expenses incurred between 29 March 2022 until 30 June 2024.
Small businesses could also claim the introduced temporary technology investment boost at an additional 20 per cent discount on top of the ordinary deduction for eligible expenditure incurred and depreciating assets acquired for their digital operations or digitizing their operations.
There is a maximum deduction amount of $20,000 per income year and applies to eligible expenditures of up to $100,000 per income year incurred from 29 March 2022 until 30 June 2023.
2. Temporary full expensing
Temporary full expensing ends on 30 June 2023.
Deductions under this method are only available for eligible assets first used or installed ready for use or improved by 30 June 2023. Any asset after this date will not be eligible to claim deductions under this method.
Alternatively the general or simplified depreciation rules are still available to be used for claiming deductions for the business portion of the depreciating asset.
REVISED WORK-FROM-HOME DEDUCTIONS
The all-inclusive 80c shortcut method devised from the pandemic and the existing 52c fixed rate method has been amalgamated and are now known as the revised fixed rate method of 67c per hour rate claim.
You can still choose from the existing actual cost method in addition to the revised fixed rate method, so long as you meet the eligibility and record-keeping requirements.
Revised Fixed Rate method
This method now involves 67 cents an hour claim that includes energy (electricity & gas), phone usage (mobile & home), internet, stationery and computer consumables. Any additional deduction for any expenses already covered by the rate cannot be claimed if you use this method.
Separate claims can be made for depreciation of computers or office furniture, repairs, cleaning and maintenance. The threshold cost for depreciation of an asset remains at $300.
There is no requirement to have a dedicated home office space to claim working from home expenses.
If using this method, the following record keeping is required:
from 1 July 2022 to 28 February 2023 – a record which is representative of the hours they worked from home;
from 1 March 2023 to 30 June 2023 – a record of the total number of hours they 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). Records for any equipment bought to work from home, like technology or furniture (which provides details of the supplier, cost, date acquired).
This revised method applies from 1 July 2022 and can be used for the 2022–23 income tax returns.
FEDERAL BUDGET 2023 - SUMMARY
Businesses
Instant Asset Write-off
The current temporary full expensing incentives of the Instant Asset Write-off threshold have been increased for another year.
Small businesses with an aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
Small Business Energy Incentive
Businesses with an annual turnover of less than $50 million are able to access an additional 20% deduction on spending that supports electrification and energy efficient usage.
Total expenditure up to $100,000 will be eligible for this incentive, with the maximum tax deduction of $20,000 per business. Eligible assets or upgrades must be first used or installed ready for use between 1 July 2023 and 30 June 2024.
Employee Superannuation payments
Commencing 1 July 2026, employers will be required to pay superannuation guarantee contributions at the same time as their employees’ salary and wages.
Employers must currently pay super guarantee contributions on a quarterly basis by the 28th day after quarter end. The current payment due dates are 28 April (for the March quarter), 28 July (for the June quarter), 28 October (for the September quarter) and 28 January (for the December quarter).
Individuals
Government welfare payments
From 20 September 2023, base rate payments will increase by $40 per fortnight for JobSeeker Payment, Youth Allowance, Parenting Payment (Partnered), Austudy, ABSTUDY, Disability Support Pension (Youth), and Special Benefit.
Eligibility for the existing higher single JobSeeker Payment rate of those aged 60 years and over will be extended to those 55 years and over.
Extension of eligibility for Parenting Payment (Single) to support single principal carers with a youngest child 14 years and under (previously 8 years and under).
Exempting lump sum payments in arrears from the Medicare levy
Eligible lump sum payments in arrears (e.g. wages previously underpaid) will exempted from the Medicare levy from 1 July 2024.
Superannuation
From 1 July 2025, the tax rate applied to earnings attributable to superannuation account balances above $3 million will be 30%.
No changes to total superannuation balances of less than $3 million.
VIC STATE BUDGET 2023-24 - SUMMARY
Land Tax
The tax-free threshold for general land tax rates will decrease from $300,000 to $50,000.
An additional fixed charge will apply, starting at $500 for landholdings between $50,000 and $100,000, and $975 for landholdings above $100,000.
For individual taxpayers with total landholdings above $300,000, land tax rates will increase by $975 plus 0.1% of the taxable value of their landholdings.
For trust taxpayers with total landholdings above $250,000, land tax rates will increase by $975 plus 0.1% of the taxable value of their landholdings.
Exemption continues to apply on principal places of residence, primary production land and land used by charities.
Starts: 1 January 2024 (for 2024 land tax year) and will apply until 30 June 2033
Payroll Tax
From 1 July 2023, payroll levy will apply to businesses with annual Australia-wide taxable wages above $10m;
From 1 July 2024, the tax-free threshold will increase from $700,000 to $900,000, and will be increased further to $1m from 1 July 2025.
From 1 July 2024, the Government will remove the payroll tax exemption for high-fee non-government schools.
The Mental Health and Wellbeing Levy will continue to apply as a payroll tax surcharge on wages paid in Victoria for those businesses with annual Australia-wide wages over $10m.
Starts: 1 July 2023 and will apply until 30 June 2033
Annual Property Tax
From 1 July 2024, businesses purchasing commercial and industrial properties will transition to 1% annual property tax on the unimproved land value.
Businesses owning the property can choose whether to pay the final duty liability as an upfront lump sum or as instalments over 10 years (with interest);
After 10 years, no further duty will be payable when the property is sold and the annual property tax will apply going forward.
Starts: 1 July 2024
Please contact us at ESF Partners if you would like to talk about these topics in more detail.
Disclaimer
Clients should not act solely on the basis of the material contained in Client newsletter. Items herein are general comments only and do not constitute or convey advice. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Client newsletter is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.