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New ATO rules for 2023: How the way you claim tax has changed

Here's how to claim new and revised tax deductions for your tax return.

Compilation image of money, people walking across a street and ATO tax symbol
The ATO has warned that many Aussies will get a lower tax refund this year. (Source: Getty) (Samantha Menzies)

The Australian Taxation Office (ATO) has made some changes to what you can claim on your tax return this year.

So, as the deadline for the 2022-23 financial year looms, here’s how to make sure you cash in on new and revised tax deductions.

Work-from-home expense changes: What you need to know

The ATO abolished the 80-cents-per-hour “shortcut” rate and the 52-cents-per-hour fixed rate to calculate your deductions from July 1, 2022. It has been replaced with a new fixed rate of 67 cents per hour, with tighter record-keeping requirements and a changed mix of items included in the rate.

Also by Mark Chapman:

The revised fixed rate of 67 cents per work hour covers:

  • Energy expenses (electricity and gas)

  • Phone usage (mobile and home)

  • Internet

  • Stationery and computer consumables.

No additional deduction for any expenses covered by the rate can be claimed when using this new method.

For the first time, phone usage and internet expenses are included in the fixed-rate method. These were previously excluded from the old fixed-rate method, which allowed a separate deduction to be claimed for these expenses. But, under the new rules, if you use your mobile phone for work purposes when you are out and out, as well as at home, you can no longer claim a separate deduction for this use and still use the fixed-rate method.

If you wish to claim actual use of your mobile phone (or home internet), you must claim using the actual method for all working-from-home expenses.

The following expenses can be claimed separately and aren’t included in the fixed rate:

  • The decline in value of assets used while working from home, such as computers and office furniture

  • The repairs and maintenance of these assets

  • The costs associated with cleaning a dedicated home office

The revised fixed-rate method doesn’t require that you have a dedicated home office space to claim working-from-home expenses. So, if you work from the kitchen or living room, you can still claim a deduction.

However, the biggest burden of the new fixed rate is the amount of substantiation required to claim. You need to keep a record of all the hours worked from home for the entire income year. This obligation kicks in from March 1, 2023. Before then, a four-week representative diary or similar document will be required for the period July 1, 2022 to February 28, 2023.

The ATO won’t accept estimates, or a four-week representative diary or similar document for any period after March 1, 2023. But the good news is that records of hours worked from home can be in any form provided they are kept as they occur. For example, timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.

You also need to keep records for any expenses incurred that are covered by the fixed-rate per hour, such as if you use your phone and electricity when working from home, you must keep one bill for each of these expenses.

Car expense changes: What you need to know

The amount you can claim for your car expenses has increased for the 2022-23 financial year, as have the record-keeping requirements.

Here are your options:

1. The cents-per-kilometre method

This gives you 78 cents per kilometre (up from 72 cents per kilometre in 2021/22) travelled for work or business purposes but only up to 5,000 kilometres. You simply need to keep a record of all your qualifying kilometres. The rate increased again on July 1, 2023, to 85 cents per kilometre.

2. The actual-costs method

This provides a deduction for the work-related proportion of actual expenses such as:

  • Fuel and oil

  • Repairs and maintenance

  • Interest on loans taken out to finance the vehicle

  • Insurance

  • Registration

  • Depreciation

Particularly, in the current cost-of-living environment - where car expenses are taking up so much of the household budget (especially fuel), this method generally produces a much bigger deduction and is essential if you intend to travel more than 5,000 kilometres on work or business journeys.

[The actual costs] method generally produces a much bigger deduction and is essential if you intend to travel more than 5,000 kilometres on work or business journeys.

Unfortunately, the record-keeping requirements – once again – are arduous. You need to keep all receipts to justify your claim, such as insurance, servicing and repairs. Petrol can be estimated using the start and end odometer readings for the year, indicating the total kilometres travelled. In addition, you need to keep a logbook for 12 weeks, which can be used to work out the work/private use split, detailing:

  • When the log book period begins and ends

  • The car’s odometer readings at the start and end of the period

  • The total kilometres travelled

  • The business percentage for the logbook period

For each journey in the logbook, you must record:

  • Start and finishing times of the journey

  • Odometer readings at the start and end of the journey

  • Kilometres travelled

  • Reasons for the journey

  • If you make two or more journeys in a row on the same day, you can record them as a single journey.

Superannuation claim changes: What you need to know

If you made a tax-deductible contribution for the year ended June 30, 2023, the payment must have been made by June 30 and you need to advise your super fund that you’ve made the payment by the time you lodge your tax return. Your super fund or accountant can give you guidance on how to complete the form and there’s a standard form on the ATO website.

While it won’t affect the tax outcome for Aussies who are yet to submit their 2022-23 return, it’s important to note the superannuation changes and any tax implications for the 2023-24 financial year.

As of July 1, 2023, the Superannuation Guarantee (SG) rate rose to 11 per cent, with further increases to come each year until July 1, 2025. That’s good news for all employees but employers need to take notice of the change and make sure they are paying at the correct rate.

Individuals can make additional contributions on top of the contributions paid by their employer and claim a tax deduction for doing so. The general concessional contributions cap is $27,500 for the 2023 financial year. This is the maximum amount that can be contributed to super, tax-effectively (including your employer’s contributions, salary-sacrificed amounts and personal deductible contributions). However, carry-forward arrangements can be used to make concessional contributions in excess of this amount in the 2023 financial year. This involves making use of “unused” concessional contributions from earlier tax years, starting from the 2019 financial year.

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