Staff and Office Updates
With the onset of the coldest months which usually see people suffer from the seasonal illnesses we hope everyone is staying safe and healthy.
We are excited to announce that we have moved our tax system to Xero, which is a secure online platform with a variety of new features like secured digital signing. We have been testing it for weeks and found it to be very productive. If you would like to migrate your business platform to Xero as well, please do not hesitate to contact us and we are more than happy to assist you.
Don’t forget to make super contributions
Since we are fast approaching the end of the financial year, if you would like to make super contributions please don’t forget. We recommend doing it as soon as possible as it could take 3 days or more for a contribution to be received if using BPAY or cheque. Don’t leave it until the last week.
Minimum pension withdrawal and drawdown rate change
For our super fund clients, if you haven’t withdrawn your minimum pension for this financial year, it is time to do it! You will be able to find the exact amount of your minimum pension requirement on the cover letter of your financial statements issued to you for the 2022 financial year. We also recommend you attend to this as soon as possible because sometimes the processing time does take longer than you might think. Give it at least one week to be safe.
Also, because of the Covid-19 pandemic, the government has applied reduced minimum pension drawdown rates for all account-based pensions up to 30 June 2023. However, from 1 July 2023, the government’s standard minimum drawdown rates will apply to all account-based pensions:
| AGE AT 1 JULY | DRAWDOWN RATES END 30 JUNE 2023 | DRAWDOWN RATES FROM 1 JULY 2023 |
| Preservation age to 64 | 2% | 4% |
| 65 to 74 | 2.5% | 5% |
| 75 to 79 | 3% | 6% |
| 80 to 84 | 3.5% | 7% |
| 85 to 89 | 4.5% | 9% |
| 90 to 94 | 5.5% | 11% |
| 95 and over | 7% | 14% |
If you have scheduled payments for pension withdrawals, the easy approach is to double the scheduled amount to avoid a big withdrawal at the end of the 2023-24 financial year.
Changes to Working from Home tax deductions 2022-2023
The revised fixed rate method applies from 1 July 2022 onwards. The amount of the fixed rate is $0.67 cents per hour.
The revised fixed rate of $0.67 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 if you use this method.
For the first time, phone usage and internet expenses are included in the fixed rate method. These were previously excluded from the fixed rate method, which allowed a separate deduction to be claimed for these expenses. Note that under the new rules, if you use your mobile phone for work purposes when you are out-and-about, 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.
Also, from 1 March 2023, you need to keep a record of all the hours worked from home for the entire income year. Before then, a 4-week representative diary or similar document will be required for the period 1 July 2022 to 28 February 2023.
The ATO won’t accept estimates, or a 4-week representative diary or similar document for any period after 1 March 2023.
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.
Records must be kept for each expense that you have incurred which is covered by the fixed rate per hour (for example, if you use your phone and electricity when working from home, you must keep one bill for each of these expenses).
The actual cost method hasn’t changed. You can claim the actual work-related portion of all running expenses. To claim this method, you must have an area set aside as a dedicated home office.
Taking advantage of temporary full expensing before 30 June 2023
Temporary full expensing, or TFE for short – allows businesses to deduct the full cost of eligible capital assets from their profits for the year, rather than depreciating the cost over several years. TFE is scheduled to last until 30 June 2023 so it’s vital that businesses take advantage now.
To be eligible, businesses must have an aggregated annual turnover of less than $5 billion. This high turnover threshold means almost every Australian business is included in the scheme.
For full details, please check the third topic of our April Newsletter.