Are you ready for tax season? Well, whether you’re excited or dreading it, there are some important changes coming to the Australian tax system on July 1st, 2023. These changes could have a significant impact on your bottom line, so it’s important to be aware of them.

To help you get more clarity on what has changed compared to your last tax return, we’ve outlined the most important updates from the ATO that will affect how you lodge your return — for your business, as well as your personal return.

Changes that will Impact Businesses

There are a number of important changes to consider for your business, from both a cashflow and tax perspective, including:

  1. Wages and Super — From July 1st 2023, the super guarantee rate will increase from 10.5% to 11%. It is important to factor this into your budgets for the next 12 months. With this, there has also been an uplift in the minimum wage to $882.80 per week. 
  2. Instant Asset Write-Off — With temporary full expensing finishing up on June 30th 2023, the ATO has reinstated the instant asset write off program for small businesses with less than $10 million annual turnover, which will allow for assets up to $20,000 to be written off from July 1st 2023 to June 30th 2024. 
  3. Small Business Energy Incentive — In encouraging small businesses to invest in alternative energy, the Government will allow an additional 20% deduction (up to $20,000) on the purchase of essential electrification equipment (e.g. batteries, heat pumps and energy efficient appliances).
  4. Fuel Tax Credits — The FTC rate for heavy vehicles (e.g. buses, trucks) is decreasing due to the increase in the road user charge. The road user charge is a federal tax paid by heavy vehicle operators that must register with the ATO.
  5. Loss Carry Back Tax Offset — As part of the COVID measures, the government allowed eligible businesses to offset their current year tax losses against previously paid taxes. From FY24 onwards, this initiative has not been extended. 
  6. Small Business Technology Investment Boost (NOTE: THis only applies up to June 30th 2023) — Small businesses with a turnover of less than $50 million, will be allowed an additional 20% tax deduction for the following:
    • Digital enabling items (computer, hardware, equipment, software)
    • Digital media and marketing
    • E-Commerce
    • Cyber-security

The cap on the expenditure that is subject to the additional 20% deduction is $100,000. Important to note that the legislation around this investment boost only passed the Senate in late June of 2023 and ends on June 30th 2023!

Changes that will Impact Individuals

  1. Low and Middle Income Tax Offset (LMITO) — This will not be extended beyond 2022, which could result in a reduction in refunds for low-to-middle income earners!
  2. Medicare Levy Surcharge — One of the biggest changes for individuals is to the Medicare levy surcharge threshold. This is the income level at which you’re required to have private health insurance, or you’ll have to pay an additional 1% – 1.5% tax. The threshold is increasing for singles from $90,000 to $93,000, and for families from $180,000 to $186,000. 
  3. Aged Pension — Australians born in 1957 onwards will now have to be 67 before they become eligible for the pension.
  4. Work From Home — The ATO has increased its fixed rate of deduction allowed to be claimed per hour that an individual works from home from 52 cents/hour to 67 cents/hour.
  5. Childcare — Families earning less than $530,000 will unlock an increased subsidy from July 10th 2023. The maximum subsidy amount will also increase from 85% to 90%.
  6. ATO — Not so much a change, but the ATO has released its 3 key focus areas for the 2023 tax returns, being:
    • Rental property deductions
    • Work-related expenses
    • Capital gains tax

It’s important to have accurate records on file for anything you lodge in your tax return, especially the things the ATO has its eye on!

We’re Here to Help!

These are just some of the key tax changes that you need to be aware of for the 2023-24 financial year. It’s important to review your tax affairs and make sure you’re aware of the upcoming changes so that you can stay prepared and avoid any surprises.

If you need help understanding how some of these considerations may impact you and your business, the team at Hoffman Kelly is always here to help make tax time easy and stress-free. Contact us today to learn more about how we can support you!