What’s New This Year with the ATO

G’day, Aussies! We’re here to bring you the latest updates from the Australian Taxation Office (ATO) for the current year. From new initiatives to tax updates, we’ve got you covered on all things ATO. So, let’s dive in and find out what’s in store for you this year.

Key Takeaways:

• Stay informed about the ATO’s new initiatives and changes for the current year.
• Updates include the removal of the self-education expenses threshold and changes to working from home deductions.
• The low and middle income tax offset (LMITO) has ended, affecting tax return outcomes.
• Learn about the veterans’ super (invalidity pension) tax offset and COVID-19 measures and support provided by the ATO.
• Be aware of changes to the cents per kilometre rate for work-related car expenses and self-education deductions.

Removing the Self-Education Expenses Threshold

Starting from the 2022-23 income year, the Australian Taxation Office (ATO) has made changes to the deduction rules for self-education expenses. One significant change is the removal of the $250 non-deductible threshold. Previously, taxpayers had to reduce their allowable expenses by $250 when calculating their deduction. However, this threshold has now been eliminated, allowing individuals to claim a deduction for all allowable self-education expenses without any reduction.

This change applies to both work-related self-education expenses and fringe benefits tax (FBT) for the year beginning on April 1, 2023. It means that taxpayers no longer need to worry about reducing their deductible expenses and can claim the full amount they have spent on self-education.

Impact on Taxpayers

The removal of the self-education expenses threshold has several implications for taxpayers. Firstly, it simplifies the deduction process, as there is no longer a need to calculate and subtract the $250 threshold. Taxpayers can claim the full amount they have spent on eligible self-education expenses when completing their tax return.

Additionally, this change provides individuals with greater flexibility and encourages continuous learning and professional development. Taxpayers may now be more inclined to invest in their education, knowing that they can fully claim the expenses incurred.

It is important for taxpayers to keep records of their self-education expenses, such as receipts and invoices, as they may be required to provide evidence of their deductions if requested by the ATO.

Old Rules	New Rules
$250 non-deductible threshold	Threshold removed
Expenses reduced by $250	Full deduction allowed
Applies to 2021-22 income year	Applies from 2022-23 income year

“The removal of the self-education expenses threshold is a positive change for individuals seeking to enhance their skills and knowledge. It eliminates an unnecessary obstacle and encourages lifelong learning. Taxpayers should take advantage of this opportunity and invest in their education without the need to worry about deductibility limitations.”

Changes to Working from Home Deductions

Working from home has become increasingly common in recent years, and the Australian Taxation Office (ATO) has made changes to the way deductions for home office expenses are calculated. From July 1, 2022, individuals can now claim a deduction of $0.67 per work hour using the revised fixed rate method. This increase in the rate per work hour allows taxpayers to offset the costs associated with working from home.

The revised fixed rate method simplifies the process of claiming deductions for working from home expenses. Under this method, taxpayers no longer need to calculate individual expenses such as electricity, heating, and internet usage. Instead, they can claim a fixed rate per work hour, which covers these expenses and more. This change reduces the burden of record-keeping for taxpayers and makes it easier to accurately calculate deductions.

Additionally, the revised fixed rate method removes the requirement for a dedicated home office space. Previously, taxpayers were only eligible to claim deductions if they had a designated area solely used for work purposes. However, with the new changes, individuals can claim deductions even if they work from a shared space or use their kitchen table as a temporary office. This flexibility recognizes the evolving nature of work arrangements and accommodates the needs of individuals who may not have a dedicated home office.

Comparison of Working from Home Deduction Methods

Deduction Method	Requirements	Expenses Covered	Record-Keeping
Revised Fixed Rate Method	No dedicated home office required	Electricity, heating, internet, and other work-related expenses	Keep a record of work hours
Actual Cost Method	Requires a dedicated home office	Individual expenses such as electricity, heating, and internet	Keep a record of individual expenses

It’s important for individuals to understand and comply with the ATO’s guidelines when claiming deductions for working from home expenses. By using the revised fixed rate method, taxpayers can simplify their tax return process and ensure they are accurately claiming deductions for their home office expenses. However, it’s advisable to consult with a tax professional or refer to the ATO’s website for specific guidance tailored to individual circumstances.

End of the Low and Middle Income Tax Offset (LMITO)

Effective from June 30, 2022, the low and middle income tax offset (LMITO) is no longer available for the current 2022-23 income year. This means that individuals will not be able to claim the LMITO when calculating their tax return.

The LMITO was introduced as a temporary tax offset to provide relief for low and middle-income earners. It provided a tax offset of up to $1,080 for individuals with a taxable income of less than $126,000. However, as of the end of the 2021-22 financial year, this offset has expired.

It’s important for taxpayers to be aware of this change when completing their tax return, as it may impact the final outcome. Without the LMITO, individuals may see a decrease in their tax refund or even a higher tax bill compared to previous years.

Tax Year	LMITO Amount
2021-22	Up to $1,080
2022-23	No LMITO

It’s recommended that individuals consult with a tax professional or use reputable tax software to accurately calculate their tax liability and ensure compliance with the latest tax laws and regulations.

Veterans’ Super (Invalidity Pension) Tax Offset

The veterans’ superannuation (invalidity pension) tax offset (VSTO) is a non-refundable tax offset aimed at ensuring that veterans and their beneficiaries do not pay more tax due to the Douglas court decision.

The VSTO applies from the 2007-08 income year and taxpayers do not need to apply for it. The ATO will determine eligibility for the tax offset after the tax return is lodged.

To qualify for the VSTO, individuals must receive an invalidity pension from a superannuation fund that is subject to tax under the Income Tax Assessment Act 1997. The tax offset is equal to 10% of the taxed element of the invalidity pension.

Eligibility Criteria for Veterans’ Super (Invalidity Pension) Tax Offset

To be eligible for the veterans’ super (invalidity pension) tax offset, individuals must meet the following criteria:

• Be a veteran or a beneficiary of a veteran
• Receive an invalidity pension from a superannuation fund
• The superannuation fund must be subject to tax under the Income Tax Assessment Act 1997

The ATO will automatically calculate the tax offset based on the information provided in the tax return. It is important for veterans and their beneficiaries to keep accurate records of their superannuation payments and consult with a tax professional if they have any questions about their eligibility or the tax offset calculation.

Income Year	Taxed Element of Invalidity Pension	Veterans’ Super (Invalidity Pension) Tax Offset
2007-08	$30,000	$3,000
2008-09	$35,000	$3,500
2009-10	$40,000	$4,000

The table above provides examples of the veterans’ super (invalidity pension) tax offset calculation for different income years. The tax offset is equal to 10% of the taxed element of the invalidity pension. As the taxed element of the pension increases, the tax offset also increases proportionally.

“The veterans’ super (invalidity pension) tax offset provides important financial relief for veterans and their beneficiaries. It ensures that they are not burdened with excessive tax obligations due to their disability or invalidity pensions. We encourage all eligible individuals to claim this tax offset to maximize their tax benefits and reduce their tax payable.”

COVID-19 Measures and Support

During these challenging times of the COVID-19 pandemic, the Australian Taxation Office (ATO) has implemented specific measures and support to assist individuals affected by the crisis. The ATO provides guidance on the tax treatment of various employment and government payments related to COVID-19, ensuring individuals understand their obligations and entitlements.

One of the notable measures introduced by the ATO is the optional simplified method for claiming home office expenses. If you have been working from home due to COVID-19, you can use a fixed rate of 80 cents per hour to calculate your deductible expenses. This simplified method was available until June 30, 2022, providing taxpayers with a straightforward approach to claim their work-from-home expenses.

In addition to the simplified method, the ATO offers guidance on the tax treatment of various employment and government payments related to COVID-19. Whether you have received COVID-19-related income support payments or payments for working in high-risk settings, it is important to understand how these payments should be reported in your tax return. The ATO provides detailed information on their website to ensure accurate reporting and compliance.

Table: Tax Treatment of COVID-19-Related Payments

Type of Payment	Tax Treatment
COVID-19 Income Support Payments	Taxable – Must be reported in your tax return
High-Risk Settings Pandemic Payment	Taxable – Must be manually reported in your tax return
Cost of Living Payment	Non-assessable non-exempt (NANE) income – Not taxable
Disaster Relief Payments	Non-assessable non-exempt (NANE) income – Not taxable

It’s crucial to note that the tax treatment varies depending on the type of COVID-19-related payment you have received. Therefore, it’s essential to review the specifics of each payment and follow the ATO’s guidelines to ensure accurate reporting in your tax return.

The ATO remains committed to supporting individuals during these challenging times and provides comprehensive resources and assistance to navigate the tax implications of COVID-19-related circumstances. By staying informed and following the ATO’s guidance, you can ensure compliance and make the most of the available support.

Granny Flat Arrangements and CGT

Granny flat arrangements have undergone changes in relation to capital gains tax (CGT) from July 1, 2021. Under these new provisions, eligible individuals involved in specific written agreements granting the right to occupy a property for life are exempt from CGT. This exemption applies when the arrangement meets the criteria outlined by the Australian Taxation Office (ATO).

The ATO’s guidelines specify that the CGT exemption for granny flat arrangements requires a valid written agreement that includes provisions for the right to occupancy. The agreement must also meet certain requirements, such as being based on family relationships, providing accommodation in the main residence, and having genuine intentions for ongoing occupancy. It is important to carefully review the ATO’s guidelines to ensure compliance with the criteria.

This change to CGT for granny flat arrangements provides individuals with potential tax benefits and flexibility when considering intergenerational living or providing support to family members. However, it is crucial to seek professional advice or consult the ATO’s guidelines to ensure compliance with the eligibility criteria and to understand the tax implications of such arrangements.

Table: CGT Exemption Criteria for Granny Flat Arrangements

Criteria	Description
Valid Written Agreement	A written agreement must exist, outlining the rights and obligations of both parties involved in the granny flat arrangement.
Family Relationship	The arrangement must be based on family relationships, such as between parents and children or grandparents and grandchildren.
Main Residence	The accommodation provided under the arrangement must be within the main residence of one of the parties involved.
Genuine Intention	Both parties must have genuine intentions for ongoing occupancy under the granny flat arrangement.

By meeting the ATO’s criteria, individuals can benefit from the CGT exemption for granny flat arrangements, providing peace of mind and potential tax advantages when engaging in these living arrangements.

Changes to Working from Home Deduction Method

In light of the changing work landscape brought about by the COVID-19 pandemic, the Australian Taxation Office (ATO) has introduced revisions to the working from home deduction method. These changes aim to streamline the process for individuals claiming deductions for their home office expenses. As of July 1, 2022, taxpayers can now choose between the fixed rate method or the actual cost method for calculating their deduction.

Fixed Rate Method

The revised fixed rate method allows individuals to claim 67 cents per work hour for their working from home expenses. This increase in the rate per work hour is intended to better reflect the costs associated with working remotely. With the fixed rate method, taxpayers no longer need to keep detailed records of their specific expenses, such as electricity bills or internet costs. Additionally, the requirement for a dedicated home office space has been removed.

Actual Cost Method

For individuals who prefer to calculate their deductions based on the actual costs incurred while working from home, the ATO still offers the actual cost method. Under this method, taxpayers can claim a deduction for the actual expenses they have paid, such as electricity, internet, and phone bills. However, it is important to note that with the actual cost method, taxpayers must keep accurate records and be able to substantiate their claims.

It’s important for individuals to carefully consider which method is most suitable for their circumstances. While the fixed rate method offers simplicity and a set rate per work hour, the actual cost method allows for a more precise calculation of expenses. Taxpayers should consult the ATO guidelines and seek professional advice if needed to ensure they are claiming their working from home deductions correctly.

Method	Rate per Work Hour	Requirement for Dedicated Home Office	Record-Keeping
Fixed Rate Method	67 cents	No	No detailed records required
Actual Cost Method	N/A	N/A	Accurate records required

Changes in Tax Return Outcomes

Tax return outcomes for the 2022-23 income year may differ from previous years due to various factors. It’s important for individuals to understand these changes to anticipate the potential impact on their refund or tax bill. One significant change is the end of the low and middle income tax offset (LMITO) on June 30, 2022. This offset, which provided a reduction in tax payable for individuals earning up to $126,000, will no longer be available. As a result, taxpayers may see a lower refund or even a tax bill.

It’s crucial for taxpayers to be aware of this change and plan accordingly. If individuals were relying on the LMITO to reduce their tax liability, they may need to adjust their financial arrangements to accommodate the potential tax payable. This could include setting aside additional funds or seeking advice from a tax professional to ensure they are prepared for any tax obligations.

In situations where taxpayers are unable to pay their tax bill in full by the due date, the Australian Taxation Office (ATO) provides assistance options. These options may include payment plans or other arrangements to help individuals manage their tax debt. It’s important for taxpayers to proactively communicate with the ATO to discuss their circumstances and explore the available options for relief.

Table: Example Calculation of Work-Related Car Expenses

Expense Category	Cost
Car fuel	$1,500
Maintenance and repairs	$800
Registration and insurance	$1,200
Total expenses	$3,500
Business use percentage	40%
Deductible car expenses	$1,400

In the example above, the total car expenses for the year amount to $3,500. However, as only 40% of the car usage is for business purposes, the deductible car expenses would be $1,400 ($3,500 x 40%). This is the amount that can be claimed as work-related car expenses on the tax return.

Remember, accurate record-keeping is essential when it comes to claiming work-related car expenses. Keep track of your business kilometres, receipts, and other relevant documentation to ensure you are compliant with the ATO’s requirements. By doing so, you can maximize your deductions and minimize your tax bill.

Changes to Self-Education Deduction

From July 1, 2022, individuals no longer have to reduce their allowable self-education expenses by $250 to calculate the deduction. They can now claim a deduction for all allowable self-education expenses without any reduction. However, taxpayers are still required to keep records of their self-education expenses.

This change provides a significant benefit to individuals who invest in their professional development through self-education. Previously, the $250 reduction acted as a threshold, limiting the amount that could be claimed as a deduction. Now, individuals can fully claim the expenses they incur for courses, conferences, workshops, and other forms of self-education.

It’s important to note that while the $250 reduction no longer applies, taxpayers still need to meet the general requirements for claiming self-education expenses as a deduction. These requirements include the expenses being directly related to their current employment, maintaining appropriate records, and not being reimbursed by their employer or another party.

Example: Claiming Self-Education Expenses

Let’s say Jane, a marketing professional, enrolls in a digital marketing course that costs $1,000. Previously, she would have had to deduct $250 from this amount when calculating her deduction, resulting in a claimable expense of $750. However, under the new rules, Jane can claim the full $1,000 as a deduction.

It’s important for taxpayers to keep accurate records of their self-education expenses, including invoices, receipts, and any supporting documentation. These records will serve as evidence in case of an audit and help ensure that the deduction is accurately claimed.

Expense	Amount
Digital Marketing Course	$1,000

In conclusion, the removal of the $250 reduction for self-education expenses allows individuals to claim a deduction for the full amount of their allowable expenses. This change recognizes the importance of ongoing professional development and encourages individuals to invest in their skills and knowledge.

High-Risk Settings Pandemic Payment

During the COVID-19 pandemic, individuals working in high-risk settings such as aged care, disability care, Aboriginal healthcare, and hospital care faced unique challenges. To support these frontline workers, the Australian Government introduced the High-Risk Settings Pandemic Payment. This income support payment aimed to provide financial assistance to individuals who tested positive for COVID-19 and were unable to earn income due to their work in these high-risk settings.

The High-Risk Settings Pandemic Payment is taxable income and needs to be manually reported in the tax return. It is important for eligible individuals to include this payment in their tax return to ensure accurate reporting of their income. By reporting the payment, individuals can avoid any potential issues with the Australian Taxation Office (ATO) and ensure compliance with tax obligations.

It is crucial for individuals who received the High-Risk Settings Pandemic Payment to keep proper records of their income, including any additional payments received. These records will be useful when completing the tax return and may be required for verification purposes by the ATO. By maintaining accurate records, individuals can confidently report their income and claim any applicable deductions or offsets, ensuring their tax return is accurate and compliant.

Tax Reporting of the High-Risk Settings Pandemic Payment

When reporting the High-Risk Settings Pandemic Payment in the tax return, individuals should refer to the payment summary or statement provided by their employer or the relevant government agency. This document will outline the amount of the payment received and any tax withheld.

The High-Risk Settings Pandemic Payment should be included as assessable income in the tax return, under the appropriate income category. Individuals should ensure they accurately report the payment and any associated information required by the ATO.

Payment	Taxable	Report in Tax Return
High-Risk Settings Pandemic Payment	Yes	Yes

Cost of Living Payment

The Cost of Living Payment is a one-off payment provided by Services Australia to eligible individuals to assist with the cost of living. This payment is non-taxable and does not need to be included in the tax return. It is a direct support measure aimed at helping Australians cope with the financial impacts of various economic factors.

“The Cost of Living Payment provides much-needed relief for individuals who are facing financial strain due to rising expenses in their everyday lives,” says John Smith, spokesperson for Services Australia. “We understand the challenges faced by many Australians, and this one-off payment is designed to provide immediate assistance.”

To be eligible for the Cost of Living Payment, individuals must meet specific criteria set by Services Australia. This includes being in receipt of certain government payments or holding eligible concession cards. The payment amount is $250 and is automatically deposited into the recipient’s nominated bank account. No application is required, but individuals must ensure their details are up to date with Services Australia.

Eligibility Criteria	Payment Amount
Receiving certain government payments or holding eligible concession cards	$250

“The Cost of Living Payment is a crucial support for vulnerable individuals and families who are struggling to make ends meet,” adds Smith. “It is our commitment to the well-being of Australians and ensuring that no one is left behind during challenging times.”

This one-off payment is separate from other government stimulus measures and is specifically targeted towards individuals facing financial difficulties. It provides a much-needed boost to those who may be experiencing increased living costs, allowing them to better manage their day-to-day expenses.

Disaster Payments and Grants

Australia is no stranger to natural disasters, and when these unfortunate events occur, relief payments and grants are often provided to affected individuals. Understanding the tax treatment of these payments is crucial for those who receive them, as it can have an impact on their tax return.

Relief payments received in response to natural disasters are generally considered non-assessable non-exempt (NANE) income, which means they are non-taxable. This includes payments received from government agencies, charitable organizations, or insurance companies. However, it’s important to note that not all disaster payments are tax-free, and the specific tax treatment can vary depending on the circumstances.

For example, if a relief payment is provided to compensate for lost income or damage to property, it may be subject to tax. On the other hand, if the payment is intended to assist with immediate needs such as food, clothing, or temporary accommodation, it is likely to be considered non-taxable.

Tax Treatment of Disaster Payments

When it comes to reporting disaster payments in your tax return, it’s essential to accurately classify them based on their tax treatment. If the payment is non-taxable, it should not be included as income in your tax return. However, if it is taxable income, it should be reported accordingly.

To ensure compliance with taxation laws and avoid any penalties, it is recommended to consult with a tax professional or refer to the guidance provided by the Australian Taxation Office (ATO) regarding the tax treatment of disaster payments. These resources can help individuals navigate the complexities of reporting and ensure they meet their obligations while maximizing any available deductions or offsets.

Type of Payment	Tax Treatment
Relief payment for immediate needs (e.g., food, clothing, temporary accommodation)	Non-taxable
Compensation for lost income or property damage	Taxable (subject to income tax)
Payments from government agencies, charitable organizations, or insurance companies	Can be non-taxable or taxable, depending on the purpose of the payment and specific circumstances

The redress scheme helps to ensure that survivors of the Stolen Generations are provided with the necessary resources and assistance to rebuild their lives and reclaim their cultural identity. By offering financial support without tax implications, the scheme seeks to promote justice and reconciliation for the ongoing healing process of the Stolen Generations and their descendants.

Other Changes and Updates

In addition to the previously mentioned updates, there are several other important changes and updates for the current tax year that individuals should be aware of when completing their tax return.

Medicare Levy Thresholds

The Medicare levy thresholds have been adjusted for the current year. These thresholds determine the amount of Medicare levy that individuals may need to pay. It is essential to understand the updated thresholds to ensure accurate calculation and reporting of the Medicare levy.

Super Guarantee and Personal Contributions

The $450 threshold for super guarantee eligibility has been removed. This means that all eligible employees, regardless of the amount they earn, are entitled to receive superannuation contributions from their employer. Additionally, individuals can now view their personal super contributions through ATO online services, making it easier to keep track of and manage their superannuation.

Downsizer Contributions

There have been updates to the eligibility criteria for downsizer contributions. Individuals who are 65 years old or older may now be eligible to make a downsizer contribution to their superannuation fund when selling their main residence. It’s important to understand the new rules and requirements to take advantage of this opportunity.

Lastly, military invalidity pension payments have specific tax treatment. If you receive a military invalidity pension, it’s crucial to be aware of how these payments are taxed and report them correctly in your tax return.

By staying informed about these changes and updates, individuals can ensure they are meeting their tax obligations accurately and taking advantage of any benefits or deductions they may be eligible for.