The Advocate - Hepburn

Navigating Australian tax changes in 2023/24: Expert insights and strategies

Recent Australian taxation changes bring both challenges and opportunities for individuals, businesses, and retirees. Picture Shutterstock
Recent Australian taxation changes bring both challenges and opportunities for individuals, businesses, and retirees. Picture Shutterstock

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As we continue through the new financial year, there's a buzz in the air about the recent tax changes for the 2023/2024 cycle. While there might not be groundbreaking legislation, several noteworthy changes are on the horizon.

In this article, we'll dive into the key alterations impacting individuals, businesses, and superannuation. Please note that the content below is general information, and should not be construed as financial advice.

Tax changes for individuals

Low to middle-income tax offset

A notable change is the removal of the low to middle-income tax offset. If you've already filed your 2023 individual income tax return, you may have noticed a reduction in your usual tax refund, possibly up to $1,500.

It's essential to adjust your budget to accommodate the reduced tax refund.

Working from home

With remote work being more prevalent post-COVID, tax rules for working from home employees have also seen adjustments. For the 2023 financial year, the revised fixed rate method has increased to $0.67 per hour of work, which also now covers additional costs, including mobile phone expenses and stationery.

Ensure you keep accurate records of actual hours worked, expenses, and receipts for potential audits.

Motor vehicle expenses

For individuals claiming motor vehicle expenses using the cents per kilometre method, the rate has increased to 78 cents per kilometre for the 2023 financial year and will further increase to 85 cents in 2024.

Assess whether claiming motor vehicle expenses using this method is more beneficial for your situation.

Tax changes for businesses

Immediate tax deductions

Businesses saw an uptick in asset buying before June 30, 2023. Eligible businesses could claim an uncapped immediate tax deduction for assets installed and ready for use within the 2023 financial year under the temporary full expensing regime.

In 2024, the small business instant asset write-off threshold stands at $20,000 for businesses with an aggregated annual turnover of less than $10 million. This threshold is applied per asset.

Continue to invest in assets that are eligible for immediate tax deductions under the temporary full expensing regime. This can help reduce your taxable income and potentially boost your cash flow.

Bonus deductions

Most businesses will be eligible for the 20% bonus deduction under the small business technology investment boost, and skills and training boost. This means eligible businesses can deduct an extra 20 per cent off eligible costs, capped at $20,000 of bonus deductions per year, equalling $100,000 of actual expenditure. Eligible claims can include computer equipment, e-commerce costs, cyber security systems, digital advertising, and payments to registered training providers.

Identify eligible costs within your business operations and take advantage of the 20% bonus deductions. This can significantly reduce your tax liability.

Tax changes for superannuation

Work test relaxation

From July 1, 2022, the work test no longer applies to retirees aged between 67 and 75 for specific contributions. Non-concessional and salary sacrifice contributions can be made, assuming their total super cap is below $1.9 million for non-concessional contributions without passing the work test. However, the work test still applies to other contribution types, including personal concessional contributions.

Consider making additional contributions to your superannuation fund if you're between the ages of 67 and 75. Evaluate your super cap limits to ensure you stay within the rules.

Super guarantee rate and contributions increases

Super guarantee rates are steadily increasing. In 2022, it was 10%, in 2023, it is 10.5%, and in 2024, it will be 11%. It's essential for businesses to ensure they are up to date with their employee obligations regarding these changes.

The maximum super contributions base has also increased, making it more critical to understand how this impacts your eligibility for various contributions and pension income calculations.

Transfer balance cap

The transfer balance cap, which is the lifetime limit on the amount of super that can be transferred into the tax-free pension phase, has increased from $1.7 million to $1.9 million as of July 1, 2023.

Take advantage of the increased transfer balance cap by considering moving more of your superannuation into the tax-free pension phase. However, be mindful of the limits and potential tax implications.

Downsizer contributions

The downsizer contributions age requirement has decreased from a minimum of 60 years old to 55 years or older starting January 1, 2023.

If you meet the new downsizer contributions age requirement, consider whether selling your home and making a downsizer contribution to your superannuation is a viable financial strategy for you.

These recent Australian taxation changes bring both challenges and opportunities for individuals, businesses, and retirees. Tax and financial planning can be complex, especially with changing rules.

To make the most of these changes and ensure you're compliant, consult with professional tax specialists, such as Clear Tax. They can provide personalised guidance based on your specific circumstances, and help you develop a tailored strategy that optimises your superannuation and minimises your tax liability. Furthermore, they can give you qualified advice on how to attain the best possible tax environment for your business.