Information for preparing tax return
Your tax checklist: Don’t leave for your tax appointment without these documents
What you need to bring to your tax return appointment
Here is a brief general checklist of things to prepare for your tax return appointment. Not all of the following will be relevant for everyone, but will depend on your own circumstances. But as a checklist it should help you tick off what you do or don’t have in preparation for your next visit.
Income
1. Your Tax File Number (TFN)
2. Copy of your Driver's license or any other photo ID,
3. Copy of your PAYG Certificate from employer (if received),
4. Amount of Interest received from each bank account, managed funds, platforms, etc.,
5. Distributions from trusts, partnerships, managed super funds,
6. Dividend received on shares; dividend letters and or platform forms,
7. Capital gains – for e.g., sale of shares or property; trading-platform reports & contract for buy and sale,
8. Superannuation lump sum payments,
9. Government pensions and allowances,
10. Foreign income; details for all income, foreign tax deductions, related expenses,
11. Lump sum termination payments.
Low and middle income earner tax offsets (LMITO) CEASED
The government did not reintroduce the Low and Middle Income tax Offset (LMITO) repealed effective from the 2022-23 financial year.
LMITO’s removal means many individuals who received tax refunds in the past 3 years may now be in a tax-payable scenario. Especially taxpayers who were entitled to the $1,500 maximum tax offset whose taxable income was between $48,001 and $90,000.
The only offset available is the Low-Income Tax Offset (LITO) of $700 which commences to be progressively phased out at $37,501 and is fully phased out at $66,667.
Expenses for tax deductions
– Motor vehicle expenses based on business use percentage and kilometres travelled (include your log book if applicable)
– Travel and accommodation information – domestic and overseas
– Work uniforms and other clothing expenses
– Self Education expenses
- Courses, education and seminars
– Home office expenses
– Computer, software and repairs
– Tools and equipment
– Notice for intend and confirmation from superannuation for your personal super contribution,
– Dividend deductions
– Bank fees
– Low value pool deductions/depreciation
– Telephone and internet costs
– Freight and transport costs
– Utilities – electricity, gas, water
- accounting and Tax Agent fees
– Donations
– Certificate of premium paid for income-protection insurance outside super,
– Details of any asset purchases
It is highly recommended that you keep receipts for all expenses and possible tax deductions you are considering claiming for you or your business. It is also a good idea to scan electronically so that they are accessible should you need them for audit purposes.
Home office expenses - Big change
ATO have withdrawn:
the shortcut rate method which has enabled taxpayers to potentially claim running expenses incurred whilst working from home because of COVID-19 at a rate of $0.80 per hour between 1 March 2020 and 30 June 2022; and
the fixed rate method that allowed taxpayers to claim home office expenses and electronic device expenses at a fixed rate being currently $0.52 per hour, which has applied between 1 July 1998 and 30 June 2022. This was in addition to claiming separate deductions for work-related internet, phone, and the depreciation of home office equipment.
Accordingly, from 1 July 2022 taxpayers will only essentially be able to either claim a deduction for actual expenses incurred as a result of working from home or alternatively apply the revised fixed-rate method of $0.67 per hour in claiming a deduction for prescribed home office expenses.
Deductions will be separately available in respect of the depreciation of depreciating assets (e.g. a computer, desk, and office chair) to the extent to which they were used whilst working from home provided such a claim can be substantiated and records are retained (see commentary below).
Eligibility for the revised fixed-rate method
Working from home whilst carrying out employment duties or carrying on a business on or after 1 July 2022. To meet this requirement the work has to be substantive and directly related to the individual’s income producing activities. Accordingly, minimal tasks such as occasionally checking emails and taking telephone calls whilst at home will not qualify as working from home for the purposes of claiming the revised hourly rate;
Incurring additional prescribed running expenses which are not reimbursed by a third-party such as an employer. These prescribed expenses include energy expenses (e.g. electricity and/or gas) for lighting, heating, cooling and to run electronic items used for work); internet expenses; mobile and/or telephone expenses; and stationery and computer consumables. However, the Guideline does not require a taxpayer claiming the fixed rate of $0.67 per hour to compare current and former expenses and specifically identify the extra costs incurred from working from home; and
Keeping and retaining relevant records in respect of both the time spent working from home as well as the additional running expenses incurred because that person has been required to work from home.
Potential pitfalls under the revised methodology
Taxpayers applying the revised fixed rate method of $0.67 per hour will be precluded from also claiming a separate deduction in respect of any of the energy, internet, phone, stationery or computer consumables covered by the above hourly rate so as to avoid double dipping.
From 1 March 2023 onwards it will also be necessary for an individual taxpayer to keep a record of the number of actual hours worked from home during the entire year.
For reference check the Working from Home diary template:
https://www.dropbox.com/sh/16y58xqyxbvfifr/AACg3LcAj7y3EfQxDODZXvhEa?dl=0
Hence, it will no longer be sufficient to provide an estimate of total hours worked from home based on the number of hours worked from home during a particular representative period and to then extrapolate that estimate to be indicative of the hours worked from home for the entire income year.
Example – Adapted from Example 6 of PCG 2023/1 showing that a family member who does not contribute to household bills cannot apply the revised fixed rate method
Sergei is employed as a graphic design artist. He works in the office 3 days per week and works from home 2 days per week. Sergei lives with his parents and when he works from home, he works in his bedroom using his employer-provided laptop and mobile phone. Sergei does not pay his parents any rent and he does not contribute to any of the household bills.
Although Sergei is carrying out his employment duties while working from home, he is not incurring additional running expenses. Accordingly, Sergei is not entitled to a deduction for additional running expenses and he cannot rely on PCG 2023/1.
Actual expenses method
Where the revised fixed rate method is not chosen an individual will only be able to claim deductions for actual expenses incurred whilst working from home.
This means the individual must keep adequate records from the start of the income year to demonstrate that expenses have been directly incurred as a result of working from home.
Records will also need to be retained demonstrating how the income producing portion of those expenses was calculated.
For investment property
Property ownership in %
Annual Property-Manager report for the year 2022;
Depreciation report.
NRAS certificate must relate to the NRAS year 1 May 20XX to 30 April 20XX. If applicable.
Rental expenses
The taxpayer can claim expenses relating to the rental property but only in relation to the period the property was rented or made available for rental such as when it is advertised for rent by an estate agent.
If only part of the property is used to earn rent, the taxpayer can only claim expenses relating to that part of the property which is rented out. The taxpayer will need to work out a reasonable basis to apportion the claim (which will be usually based on a floor area basis including access to common areas.
Immediately deductible expenses, to the extent that they relate to the rental of the property
advertising for tenants;
agent's commission for rent collection post-acquisition;
bank charges;
body corporate fees for ongoing administration and general maintenance (but not to extent amount is paid to a special purpose fund to finance capital improvements);
borrowing expenses (e.g. establishment fees if less than $100, or otherwise amortised over the shorter of the loan term or 5 years on a pro rata basis);
cleaning;
costs of relocating tenants into temporary accommodation if property is unfit to occupy for a time:
costs of attending a property investment seminar to the extent it relates to operating, or maximising the return from, existing investment properties;
council rates;
electricity and gas (including annual power guarantee payments made on a remote rental property);
gardening and lawn mowing;
insurance premiums (for building, contents, public liability and loss of rental income);
interest (but not to the extent an original or refinanced borrowing partly relates to a non-income producing purpose or to a period when the property was not made genuinely available for rent);
in-house audio and video service charges;
land tax;
lease document expenses (e.g. preparation and surrender of a lease);
legal costs (such as costs that relate to evicting a non-paying tenant; taking court action to recover unpaid rent and defending damages claims suffered by a third party on the rental property);
mortgage discharge expenses (including penalty interest payments where there is an early repayment of a loan and a penalty is imposed for the early discharge of the mortgage);
pest control;
rent paid (e.g., where the taxpayer rents the property and then subleases it to a tenant);
repairs to the extent that repairs relates to wear and tear that occurred during the owner’s period of ownership and did not result in any capital improvement. (It would therefore excludes any initial repairs to remedy defects on the damage that existed at the time of acquisition which may be depreciable as capital works under Division 43 of the ITAA 1997 or capitalised as an improvement to the property under the cost base rules pursuant to section 110-25 of the ITAA 1997);
secretarial and bookkeeping expenses;
servicing expenses (e.g. servicing a water heater);
security patrol fees;
stationary and postage;
tax-related expenses (provided by a recognised tax adviser for compliance or advisory services);
Tax alert – sharing economy
Taxpayers must disclose income earned from operating in the sharing economy (which connects users and providers of goods and services through an online or app facilitator (e.g., AirBnb and Stayz)).
See ATO document ‘Sharing economy and tax’: https://www.ato.gov.au/General/Sharing-economy-and-tax/
Also, refer ATO document ’Renting out all or part of your home’: https://www.ato.gov.au/general/sharing-economy-and-tax/renting-out-all-or-part-of-your-home/
Rent derived from jointly held property
If the taxpayer derived rent jointly (or in common) with another person from a jointly held property (where the taxpayer was not a member of a general law partnership carrying on a business of renting out properties) include their pro-rated share of rent and expenses at this item.
Their share is calculated according to their co-ownership interest in the property for legal purposes (see FCT v McDonald 87 ATC 4541).
For example, if the property is owned by joint tenants the rental income or loss will be equal based on the number of joint tenants (e.g. a 50/50 split if the joint tenants are a husband and a wife).
By contrast, if the property is owned by parties as tenants in common their interest will be determined according to their legal interests in the property (which may be unequal depending on the terms of the co-ownership).
Comments
The following factors should also be considered in calculating the amount of rental income:
the market value of property will be included in assessable income when received in lieu of cash rental payments;
non-arm’s length amounts received for ‘board and lodging’ would not be regarded as assessable income as it arises from a domestic arrangement; and
rental deductions may be capped to the amount of rental income received if property is rented out on a non-arm’s length basis under Taxation Ruling IT 2167 (as would be the case where a non-commercial rental is charged to a relative as in Rizkallah v FCT [2022] AATA 3081).
Business Income
Further to the above information, we may also require the following information for review, so it is recommended you scan or photocopy these:
– Gross income received during the year; list of invoice with date, amount and GST, and / or
– Bank and credit card statements to calculate your gross income
– If Uber, Ola, Didi, etc. download monthly and annual report from the service providers;
– Lease, hire purchase, chattel mortgage or other loan agreements to your business
– Stock valuation figure after performing your June 30 stock take.
– List of expenses incurred or paid relating to your business
We will work through every allowable tax deduction available for you and/or your business.
For crypto currency transactions
As a crypto investor you need to consider Capital Gains Tax (CGT) when you dispose of your cryptocurrency (CGT Event). Dispose doesn't just mean sell though. In general we can think of a disposal as any time your crypto trades ownership. This could include:
Selling crypto for AUD or another fiat currency.
Swapping crypto for crypto, including stablecoins and NFTs.
Spending crypto on goods and services (if not seen as a personal use asset).
Gifting crypto.
Get online capital gain complete report for Crypto currency transactions for the financial year 20XX from Koinly or any other service providers.