Claims for additional running expenses

The ATO is making changes to the methods of claiming working from home expenses.

The temporary shortcut method of claiming for working from home expenses (all inclusive 80c/hr) is no longer available after the 2021/2022 financial year!

The fixed rate is increasing from 52c to 67c/hour, however the new rate will include the following home office expenses:

• Home and/or mobile phone and internet expenses
• Computer consumables and stationery
• Heating, lighting and cleaning costs

Claimants will need to have a representative record of the total number of hours worked from home in the first half of 2022/2023 and a record of the total number of actual hours worked for the second half of 2022/2023 – estimates will not be acceptable and the record of hours may be timesheets, rosters, diary or similar maintained contemporaneously!

You can’t claim a deduction for the following expenses if you’re an employee working at home. These include:

• coffee, tea, milk and other general household items, even if your employer may provide these at work
• costs that relate to your children’s education such as equipment you buy – for example, iPads and desks, subscriptions for online learning
• items your employer provides – for example, a laptop or a phone
• any items where your employer pays for or reimburses you for the expense

CONTACT US TODAY so we can help you maximise your claim!

Car claims for work use

Claims for private car use for work purposes have changed!  These days there are only two methods available to employees, sole traders, contractors and partners to make a claim.  They are the log book method and the cents/kilometre method.  Each one has its advantages and disadvantages but where there is significant employment and/or business use, the log book method will maximise your claim!

Most of us don’t like maintaining log books, but recording employment/business trips (other than home to work, work to home) for just a twelve week period gives you a log book that is valid for five years!  Your log book will establish an employment/business use percentage.  This percentage may then be applied to all car expenses such as depreciation, fuel, repairs and maintenance, loan interest, registration and insurance.

The cents/kilometre claim method is limited to a maximum of 5,000 kilometres per year even though more kilometres  may have been travelled for work.  This is known as the “reasonable estimate” method because that’s all you’ll need to substantiate the claim – a reasonable estimate!  No substantiation or receipts are required to support of the claim, however you do need to be able to demonstrate how the number of kilometres was worked out.  This will be multiplied by the ATO set rate which is 72c/kilometre for 2021/2022.

Travel between home and your workplace is generally a non-deductible expense, however you may be able to claim a deduction when you carry bulky tools and/or equipment to and from work.

Still unsure about private car use for employment/business?

CONTACT US TODAY at BSN & Co so we can help you with your car claim for work use.

Credit: Image by PIRO4D from Pixabay

Death tax on superannuation balance

Members usually look to the bottom line of their annual statements to check the growth or improvement, hopefully, in the balance of their benefits since the last report.  Members should also note the tax make up of the balance and consider the estate planning aspects in the event of any untimely death.

Tax components – Tax Free and Taxable

The tax free portion of your super benefits is usually from non-concessional or non-deducted contributions and generally this total is not substantial.   The taxable portion is from employer and other concessional or deducted contributions and generally is the significant tax component.

Upon the death of a member, the deceased member’s superannuation entitlement generally may only be paid to the member’s dependants, or the member’s legal personal representative such as an executor.  There are no tax consequences where the entitlement is paid to a spouse or children under 18 years of age (24 years if financially dependant).  However, where the entitlement is paid to adult non-dependant children, and this is not uncommon, the taxable portion is taxed at 17% including medicare, and therefore can be a significant amount!

A little estate planning in advance would be invaluable in optimising the tax components.

For more information on estate planning CONTACT US today!

Contributions to superannuation

• • Generally very tax effective in the fund as maximum tax rate of 15%, discounted capital gains taxed at 10% and in the retirement pension paying phase income is tax-free!

• • Concessional (deductible) contributions of up to $27,500 per annum

• • Catch up concessional contributions available from 2019 and subsequent years, where total superannuation balance is less than $500,000

• • Non-concessional (non-deductible) contributions of up to $110,000 per annum

• • Possible bring forward of three years non-concessional (non-deductible) contributions totalling $330,000 subject to total superannuation balance being below the prescribed threshold and taxpayer less than 67 years

• • No work test for 65 and 66 year old contributors and no work test for those 67 to 74 years likely from 1/07/2022

• • Downsizer contributions of up to $300,000 for each owner over 65 years, may be made and are not constrained by the total superannuation balance nor subject to the general contributions cap, however property ownership of ten years and contribution within 90 days of the change of ownership (contract date) necessary

• Capital gains tax small business concessions under the “15 year exemption” and the “retirement exemption” for disposals of active assets of small business allow contributions of capital proceeds or capital gain:

For more information on super contributions CONTACT US today!