Tax Time 2023: What Individuals Need To Know
There are a myriad of changes coming our way for tax time 2023, so here is a summary of what you need to know to make the most of tax time 2023.
Motor vehicles
If you choose to use the set rate per kilometre method for claiming your car expenses, the rate increased from 72 cents per kilometre to 78 cents per kilometre from 1 July 2022. Remember that if you use this method that your claim is limited to 5,000km. Our blog Deep Dive: Tax Deductions For Motor Vehicle Expenses contains more information about using the cents per kilometre method and the operating cost method, the alternative method.
Home office expenses
The Covid cents per hour rate of 80 cents was removed from 1 July 2022. The rate is now 67 cents per hour. Check out our blog Deep Dive: Tax Deduction for Working From Home for what the rate covers. There are also new record keeping requirements. From 1 March 2023 you need to keep a record of the actual hours worked from home for the full year.
Self Education Expenses
The $250 threshold for claiming self education expenses has been removed from 1 July 2022.
Private Health Insurance
The Private Health Insurance Medicare Surcharge threshold is increasing from 1 July 2023. For singles the threshold is increasing from $90,000 to $93,000 and families $180,000 to $186,000 (increasing by $1,500 for each child after the first).
The thresholds are also increasing for the amount rebate you are eligible for:
The portion of your private health insurance for which you receive a rebate remains unchanged at:
Low and Middle Income Earners Tax Offset
First introduced in the 2019-2020 financial year this tax offset saw people earning up to $126,000 receive a tax offset on lodgement of their tax return of between $675 to $1,500. The tax offset has been removed in the 2022-2023 financial year, so sadly you can expect a smaller refund or more tax to pay this year.
Super Guarantee Levy
From 1 July 2023 your super savings will get a boost with the Super Guarantee Levy increasing from 10.5% to 11%.
If you have an interest in super you might like our blog on Tax Time 2023: Super changes and if you are a business owner our blog Tax Time 2023: What business owners need to know, may be of interest.
Superannuation
Super Guarantee Levy
From 1 July 2023 super savings will get a boost with the Super Guarantee Levy increasing from 10.5% to 11%.
Minimum pension amounts
From 1 July 2023 the minimum pension amounts are set to their pre-Covid amounts. The table below summarises the minimum amounts for the 2022/23 and 2023/24 financial years:
Transfer balance cap
The transfer balance cap is the maximum amount of super that can be transferred from accumulation phase to retirement phase. From 1 July 2023 the cap is set to rise from $1.7 million to $1.9 million.
Transfer Balance Account Reporting (TBAR)
From 1 July 2023 all SMSF’s will be required to report events that affect their members’ transfer balances on a quarterly basis regardless of their total super balance. The due date for the report is 28 days after the quarter end. For example events prior to September 2023 quarter are due to be reported by 28 October.
The following events need to be reported:
Super income streams (pensions) that have started in retirement phase, including reversionary income streams
Commutation, for example the withdrawal of a lump sum that isn’t an income stream payment
Income stream that stops being in retirement phase
Personal injury settlement
Limited recourse borrowing arrangement payments
Please contact your accountant asap should you have any of these transactions, so that the reporting deadlines can be met. Failure to lodge on time may result in the ATO issuing a penalty. For small entities this will be at the rate of 1 penalty unit for each 28 day period that the document is late up to a maximum of 5 penalty units. 1 penalty unit, at the time of writing was $275.
Downsizer contribution
From 1 January 2023 the eligibility age for making a downsizer contribution, a contribution of up to $300,000 as an individual or $600,000 as a couple on the sale of your home, dropped to 55.
Contributions caps
The super contributions caps remain unchanged for the 2022/23 and 2023/24 years at:
Concessional: $27,500
Non-concessional $110,000
If you would like specific advice tailored to your business and circumstances, Accounting Heart offers affordable service packages where you can work with Sonia one-on-one to help you get your business where you want it to be. Book your FREE Discovery Call to find out more.
Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.