We have summarised a few key accounting notes and ATO updates that could provide the insight you need to craft your next game plan and elevate your business operations accordingly for the next couple of months.

Tax Tips & Alerts

ATO: Deductions for holiday homes

The Australian Taxation Office (ATO) has provided guidance on claiming deductions for holiday homes that are also used to generate rental income. The ATO has highlighted that a few holiday-home owners have claimed deductions that exceed their rental income by six times on average. To ensure compliance, it is important to apportion eligible deductions based on the periods when the property is being rented out.

ATO reminder: Electronic sales suppression tools illegal
The Australian Taxation Office (ATO) has issued a reminder that it is committed to tackling the use of “electronic sales suppression tools” (ESSTs) that manipulate sales records, enabling businesses to under-report their income and evade paying the correct amount of tax. The ATO has emphasized that producing, supplying, using, or even possessing an ESST is illegal, and severe penalties can apply. Recently, the ATO, with the support of the Australian Federal Police, conducted a series of raids across Australia as part of a coordinated global crackdown on businesses suspected of supplying or using ESSTs. The ATO has also noted that ESSTs come in various forms, including external devices connected to point-of-sale (POS) systems, software installed into POS systems, features or modifications built into POS systems, and services provided by third parties.

February Updates

Claiming “working from home” deductions

The Australian Taxation Office (ATO) has announced changes to the way taxpayers can claim deductions for costs incurred while working from home. The new “fixed rate” method will apply from 1 July 2022 and can be used for calculating deductions for the 2022-23 income tax returns. Under the new method, expenses like phone and internet are now covered by a rate of 67 cents, an increase from the previous rate. Taxpayers no longer need to have a dedicated home office to use the fixed rate method. However, starting from 1 March 2023, taxpayers will be required to record the total number of hours they work from home. Practical Compliance Guideline PCG 2023/1 contains details of this new approach for claiming deductions for additional running expenses incurred while working from home, as per the ATO compliance approach.

Super: rates and thresholds for 2023/24

According to the latest Average Weekly Earnings statistics (AWOTE) released by the Australian Bureau of Statistics (ABS), the concessional ($27,500) and non-concessional ($110,000 or $330,000 under the bring-forward rule) contributions caps will remain unchanged for the 2023/24 income year. However, other superannuation thresholds are set to increase from 1 July 2023, including:

  • the general transfer balance cap is $1.9m;
  • the total superannuation balance threshold for making non-concessional contributions will also increase to $1.9m;
  • the small business lifetime CGT cap amount is $1,705,000;
  • the government co-contribution ‘lower income threshold’ is $43,445 and the ‘higher income threshold’ is $58,445;
  • he super guarantee (SG) maximum contribution base is $62,270 per quarter and the SG rate will increase to 11%;
  • the lump sum low rate cap is $235,000 and the untaxed plan cap amount is $1,705,000;
  • the ETP cap amount is $235,000; and
  • the genuine redundancy and early retirement payments tax free base amount is $11,985 and $5,994 service amount

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