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Super Contribution caps remain unchanged in 2023/24

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The IFPA have announced that the government will keep Super contribution caps unchanged for the 2023/24 financial year.

Since the average weekly ordinary time earnings (AWOTE) figure for the December 2022 quarter was unable to meet the required threshold for indexing, the concessional cap will remain unchanged at $27,500 in 2023/23. As a result, the non-concessional contributions (NCC) cap for 2023/24 will also remain unchanged at $110,000, which is four times the concessional cap.

With the general transfer balance cap set to increase to $1.9 million on 1 July, 2023, this means the NCC bring forward the thresholds for 2023/24 are as follows:

Total super balance on 30 June 2023Maximum NCC capBring forward period 
Less than $1.68m$330,0003 years
$1.68m but less than $1.79m$220,0002 years
$1.79m but less than $1.9m$110,000Nil
$1.9m or moreNilNil

For more information about this measure click here.

Working from home deductions 2022-23

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There have been some new working from home deduction changes for 2022/23 and so the following is a summary of those changes. 

The pandemic has changed the way we work, with many people in Australia and around the world now working remotely from home. This has led to changes in tax deductions for expenses incurred while working from home. 

The proposed changes to the working from home fixed rate method has now been finalised and the ATO’s Practical Compliance Guide 2023/1 is now available. 

From the 2022/23 income year, the methods available to assist in calculating the work from home deductions include a revised fixed rate method and an actual cost method. 

The revised fixed rate method is an alternative method for calculating home office expenses. The revised fix rate method has been updated to make calculating expenses easier and avoid any time-consuming apportionment calculations. Therefore, creating better contemporary arrangements when working from home. 

Under this method, taxpayers can now claim an increased fixed rate of 67 cents per hour for home office expenses, regardless of the actual amount spent. The fixed rate calculates the claim for expenses such as electricity and gas. Individuals will no longer need to have a dedicated workspace, such as a home office, that is used exclusively for work purposes during the tax year.  

To claim the fixed rate method you must keep records of the hours worked from home, such as timesheets or diary entries. 

This also includes the evidence of all paid expenses you have incurred that are covered by the fixed rate method (such as phone or electricity bills). You must also have record of all the equipment you had bought in order to work from home, such as technology and/or furniture, which must also require the supplier, cost and date acquired.  

Taxpayers still have the option to use the actual cost method of claiming other work-related expenses as opposed to using the revised fixed rate method.   

For more information about these measures click here. 

Instant Asset Write Off Deadline

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A recent article written by Belinda Crowley, a tax principal at RSM Australia, has advised small businesses to act promptly in order to meet the deadline for the instant asset-write-off (IAW) scheme, otherwise, they may face significant bureaucratic hurdles once the stricter regulations are reinstated.

She stated that numerous small business and medium-sized enterprises (SMEs) would be caught off guard by the deadline and would be required to depreciate any asset worth over $1,000 after 30th June 2023.

This could be a significant time and financial burden, particularly for small businesses. Even if their accountants manage it on their behalf, it would still be an extra cost for them.

IAW has been a feature for small businesses since 2015. The government had introduced temporary full expensing as part of its support program for businesses of all sizes during the pandemic. These initiatives encourage business owners to invest in their enterprises. However, both schemes are now ending.

Accounting for occasional high-value assets of, say, $ 30,000, and doing the same for any asset valued over $1,000 (or $100 for larger businesses) created one of the most significant challenges. Crowley also suggested that SME’s that don’t require an asset write-off in the current financial year should save the depreciation for when it’s necessary.

Business owners must exercise caution and seek professional assistance before making a decision, if they are currently experiencing a challenging period and do not need the deduction to reduce their tax bill. It is also worth noting that supply chain disruptions mean that even if a business wants to buy an instant write-off asset, as the asset must be installed and ready for use before 30th June, 2023, or it will not be eligible to be claimed. Therefore, it is critical to be certain that the asset will be available and operational on the site before the 30th of June.

Although the government has announced initiatives such as the skills and training boost and technology investment boost, they are unlikely to have the same impact as the instant asset write-off.

SME’s should take advantage of the new 20% uplift deduction, which was highlighted a priority in the federal budget for areas such as environment, digitalization, and training. This deduction allows businesses to receive a $120 deduction for spending $100 on training or digitisation, with the incentive backdated to March 29, 2020. This benefit is very specific and only applicable to training conducted with registered training organizations, making it difficult for SME’s to access. Additionally, access to write-offs is limited to businesses with an aggregated turnover below $50 million, and the training boost expires on  June 30, 2024, while technology scheme only lasts until the end of this financial year. The uplift deduction would not be consistently beneficial across sectors, as some industries , such as agriculture, rely more on-the-job training than formal accredited courses.

If you need to discuss how you can utilize the IAW measures for your business please contact us. To read more detail about these measures please click here.

Changes to Superannuation Concessions  

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As of July 1, 2025, the current Government has proposed to reduce the tax concessions available to individuals whose total superannuation balances exceed $3 million. Any balances that exceed this threshold would be subjected to a tax of 30% based on their earnings and growth of any balance that has exceeded the threshold of $3 million. 

Application 

Starting on 1 July 2025, individuals whose total superannuation balances (TSBs) exceed $3 million at the conclusion of a financial year will be subject to an additional tax of 15 percent on earnings.  

This is separate from any tax that their superannuation funds might pay on earnings during the accumulation phase. Consequently, earnings linked to balances over $3 million will typically be subject to a combined headline rate of 30 percent.  

This change will take effect from the 2025-26 financial year onwards, and the tax will be applicable to the proportion of earnings (and growth) corresponding to balances above $3 million.  

This implies that earnings associated with balances below $3 million will continue to be taxed at a rate of 15 percent or lower. 

Earnings are calculated based on the variation in TSB (Total Super Balance) between the start and end of the financial year, taking into account contributions and withdrawals. 

If negative earnings occur, they can be carried forward and applied to offset this tax in subsequent years.  

Individuals have the option of paying the tax from their personal funds or their superannuation funds, and those with multiple funds can select the fund from which the tax is paid. This tax will be distinct from an individual’s personal income tax and is similar to the current Division 293 tax. 

The calculation of earnings encompasses all notional (unrealised) gains and losses, mirroring how superannuation funds presently compute members’ interests. 

Notice of Assessment and Reporting Process for Funds 

TSBs surpassing $3 million will be assessed for the first time on 30 June 2026, with initial notices of a tax liability anticipated to be dispatched to individuals during the 2026-27 financial year. The Australian Taxation Office (ATO) will notify individuals of their obligation to pay this tax. The ATO already employs superannuation fund reporting to calculate the total sum that individuals have in the superannuation system, encompassing multiple accounts, which is also utilized for other objectives, such as verifying individuals’ eligibility to make non-concessional contributions.  

No doubt there will be more detail on the operation of this change provided by the tax office as we get closer to implementation date. 

For more information about these changes please click the link to the governments guide: Better targeted superannuation concessions – factsheet (treasury.gov.au) 

New Paid Family and Domestic Violence Leave

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Fair Work Australia has released on their website that they will soon be amending the Fair Work Act to introduce paid family and domestic violence leave. This blog summarises the key points of this new leave entitlement as outlined by Fair Work Australia.

This new entitlement will be available as of February 1, 2023, for employees of non-small business employers. This enables small businesses an extra six months to adjust to the change, before the start date August 1, 2023, for the remaining employees.

All part-time and casual employees within the Fair Work System, will be able to access 10 days of paid family and domestic violence leave in a 12-month period. This will then replace the current entitlement to 5 days of unpaid family and domestic leave under the National Employment Standards.

Employees can claim the full 10 days upfront, which means they will not need to accumulate it over time. However, the leave will not accumulate from year to year if it has not been used.

Currently, employees can claim 5 days of unpaid family and domestic violence leave until the new paid leave entitlement is accessible. For more information about these measures’ unpaid family and domestic violence leave click here.

Continue reading for more information regarding how this new leave entitlement will come into effect.

How the leave renews?

The leave is renewed every year on each employees work anniversary – marks an employee’s first day of the job. However, it does not accumulate from year to year if you do not use it.

Employees will have access to the full 10 days, depending on whether they start on or after the date of this new paid leave entitlement. This leave balance will be renewed on their work anniversary.

For employees who were employed prior to the starting date of the new paid leave entitlement, they can access the full 10 days on the relevant start date. However, the leave will renew on their work anniversary, not on the anniversary of the relevant start date.

Taking family and domestic violence leave

All part-time and casual employees can claim this paid family and domestic violence leave, if is unpractical for them to do so during their work hours or if they need to take further action to deal with the family and domestic violence situation.

This may include, but is not limited to the employee:

  • Accessing police services
  • Attending appointments (medical, financial or legal)
  • Attending counselling
  • Relocating or making safer arrangements for themselves and/or others

Meaning of family and domestic violence

Family and domestic violence refers to the violent acts and/or other threatening behaviours that generally occur between close relatives, a current or former partner or member/s of their household that both coerce and/or seek fear from another.

A close relative can refer to:

  • An employee’s
    • Spouse or former spouse
    • De factor partner or former de facto partner
    • Child
    • Parent
    • Grandparent
    • Grandchild
    • Sibling
  • A child, parent, grandparent, grandchild or sibling of an employee’s current or former spouse or de fact partner, or
  • A person related to the employee according to Aboriginal and Torres Strait Islander kinship rules

Payment for leave

Paid family and domestic violence leave for full-time and part-time employees will be paid at their full pay rate for the hours they would have worked that week.

Casual employees will also be paid at their full pay rate for the hours they were essentially rostered to work for that period they booked their leave.

An employees full pay rate includes their base rate plus others, such as: incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates and any other separately identifiable amounts.

Interaction with other paid leave

Employees are able to use paid family and domestic violence leave even during the period of paid personal/carer’s or annual leave. In this case, will then take paid family and domestic violence leave instead of the other ford or paid leave. The employee is required to notify their employer and supply the necessary evidence to support their claim.

Notice and evidence requirements

If an employee takes paid family and domestic violence leave, they must let their employer know as soon as possible. An employer will request evidence from their employee to show that their employee needs to take further action to deal with family and domestic violence, especially if its not practical for them to do outside their work hours.

An employer can only use this information to satisfy themselves that their employee is entitled to family and domestic violence leave, only if:

  • The employee consents
  • The employers deals with the information by law or
  • If its necessary to protect the safety of the employee or another person involved.

The employer cannot act against the employee or use the information for other purposes.

All the previous rules about notice and evidence under the previous unpaid family and domestic violence leave will continue for the new entitlement.

Find out more about the current rules regarding notice and evidence for family and domestic violence leave.

Support services

Confidential information, counselling and support for people impacted by family and domestic violence can access the 1800 RESPECT website, for further counselling services.

For information about these measure click here.

How to minimise the risks of cyber crimes

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With recent high profile cyber crimes being committed it is no wonder that this is now a priority for both businesses and consumers. Recently the ACSC Annual Cyber Threat Report (July 2021 to June 2022) was released to provide advice for businesses and consumers to protect themselves. An article by Accountants Daily highlighted some of the key aspects of this report.

Since the beginning of the pandemic in 2020, cyber threats have grown excessively. In particular, phishing spam calls, spam text messages, video conference attacks and insider threats.

Russia’s invasion of Ukraine has contributed to the destructive malware and sophisticated cyber-attacks on European Networks.

Advanced cyber threats have drastically increased at a larger scale, due to extortion, espionage and fraud. The Australian Cyber Security (ACSC) have calculated a 13% increase in the last financial year with an approximate of over 76,000 cybercrimes having been reported.

The top security trends for ACSC are:

  1. Cyber space has become a battleground
  2. Australia’s prosperity is attractive to cyber criminals
  3. The most destructive cyber crime remains ransomware
  4. Worldwide, critical infrastructure networks are increasingly targeted
  5. The rapid exploitation of critical public vulnerabilities became the norm

The following are crucial lessons from the latest cyber crime data.

  1. Frequency of cybercrime reports

All businesses should be weary of the increase in cybercrime and cyber security incident. As an increase in cybercrime will require an increase in cyber defence and protection.

The rate at which a cybercrime has been reported was one every seven minutes, however the reporting rate for the previous year was one every eight minutes.

The states reporting the most cybercrimes were Queensland (29%) and Victoria (27%).  However, the Northern Territory reported the highest average of losses resulting over $40,000 and Western Australia resulting exceeding $29,000.

  1. Trending cyber crimes

The three most frequently reported is online fraud (27%), online shopping (14%) and online banking (13%).

Fraud is the most prevalent, however ransomware is classified as the most destructive cybercrime, due its long-lasting impact, especially on data. Furthermore, organisations are also prone to fall victim to the indirect consequences of ransomware. This includes reputational damage and information being leaked and/or sold on the dark web.

The top-tier cybercrime syndicates target Australia’s big names, hence heightening the importance of large enterprises becoming more aware to this severe threat. LockBit was the top-rated weapon of choice against ransomware for 2022.

  1. Top industries targeted

The highest number of cyber security reports were within the healthcare and social assistance sector with a total 10%. The next leading cases were information media and telecommunications with 8% and education and training at 7%.

  1. Business Email Compromise

Business Email Compromise (BEC) is referred to as the scam that targets companies who have suppliers abroad and also conduct wire transfers. Cyber criminals are known to use BEC on the larger enterprises as they can hijack large sums without having to access the malicious payload URL.

Successful BEC attacks have risen significantly with the average loss to have increased over $64,000. According to ACSC Queensland was the most vulnerable with a total of 389 reports and a total of BEC attacks rising to 1,514.

  1. Cyber defence for organisations and individuals

Clare O’Neil, the Cyber Security Minister, had stated that due to Australia’s unique geostrategic position and information-rich environment we must build our cyber defences to ensure we have the tools necessary to protect ourselves against the impacts of cyber-attacks.

ACSC recommend following the essential eight maturity model which includes:

  1. Restricting administrative privileges
  2. Patching or updating operating systems
  3. Implementing multi-factor authentication
  4. Conducting regular back-ups
  5. Configuring your email security settings
  6. Initiating application controls on workstations and servers
  7. Denying corporate computers direct internet connectivity

It is encouraged to secure all devices and accounts, this means:

  • Turning on automatic updates to update applications, programs and smart devices
  • Activating multi-factor authentication across all of your accounts including emails, banking and social media.
  • Backing up your devices every three to six months.
  • Creating strong unique passwords for every account

First Line of Defence

To limit the risk of fraud and payment error, all accounts payable (AP) managers should conduct call-back controls to ensure the payee pays the correct invoices.

Some common challenges associated with AP teams conducting call-backs:

  • They don’t independently source supplier contact details
  • They rely on the return messages and incoming information
  • They don’t ask the correct questions
  • The people conducting them aren’t trained to detect fraud

Every time you onboard a new supplier or update your existing supplier, call-back controls are an essential. It is a simple, yet effective solution for your first line of defence.

The Bottom Line

As previously mentioned, cyber crime is an on-going issue and there are no signs of it slowing down in 2022. Therefore, being aware and understanding of how these threats are created, can minimise the chances of being at risk. For more information about this measure click here.

2022/23 October Federal Budget

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As announced by Treasurer Jim Chalmers, the 2022/23 Federal Budget has been updated as of October 25, 2022. The National Tax and Accountants’ Association (NTAA) provided an excellent summary of those updates and we have highlighted some of the key points:

Clarification for unlegislated taxation and superannuation measures

It has been announced that legacy tax and super measures that were mentioned, but not previously legislated by the Government will not be proceeded. This includes:

The Government proclaimed that certain legacy tax and super measures announced, but not legislated prior by the Government will no longer proceed. This includes:

  • The 2018/19 Budget
    • The annual audit requirement for certain self-manager superannuation funds (SMSFs) will change. Previously, the annual audit requirement for SMSFs with a history of compliance and good record-keeping changed to a three-yearly requirement.
    • Cash payments with a limit of $10,000 will be introduced to goods and services businesses. Initially, any payments made over this threshold were paid through an electronic payment system or via cheque.

Certain legacy tax and superannuation measures will be deferred to ensure policies are legislated ad implemented sufficiently. This includes:

  • The 2019/20 Mid-Year Economic and Fiscal Outlook (MYEFO)
    • The introduction of a sharing economy reporting regime for transactions regarding the supply of ride sourcing and short-term accommodation will be deferred to July 1, 2023.
  • The 2021/22 Federal Budget
    • The residency requirements for SMSFs will be relaxed as of July 1, 2022 through to the income year commencing either on or after the date of the Royal Assent of the enabling legislation.
    • This will be done by extending the ‘central control and management test’ safe harbour to five years and removing the ‘active member test’. This will enable SMSF members to make contributions to their superannuation fund, even when overseas temporarily.

Clarification that digital currencies are not taxed as foreign currency

A legislation will be introduced to further clarify that digital currencies such as Bitcoin, will continue to not be taxed as foreign currency. This includes the capital gains tax treatment where they are held as an investment. This measure will support the Government of El Salvador’s decision to adopt Bitcoin, which will be backdated to the year including July 1, 2021.

Any digital currencies issued under another authority or government official agency, will continue to be taxed as a foreign currency.

Superannuation – expanding the eligibility for downsizer contributions

The Government has reduced the downsizer contributions eligibility age from 60 to 55 years of age, which will be effective in the beginning of the first quarter after the Royal Assent of the enabling legislation.

This provides an opportunity for people to make a one-off post tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. Either member of the couple can make contributions and it will not be included towards non-concessional contribution caps.

Non-tax measures will also be announced to reduce the financial burdens on pensioners considering downsizing their homes. This will increase the housing availability for younger growing families.  This includes:

  • The assets test exemption will be extended for principal home sale proceeds to 24 months for income support recipients.
  • The income test will change to apply only the lower deeming rate of 0.25% to principal home sale proceeds (calculated 24 hours after the principal home sale)

Fringe Benefits Tax (FBT) – Electric Cars

Battery, plug-in hybrid electric and/or hydrogen fuelled cars will be exempted from import tariffs and fringe benefits tax as of July 1, 2022. This only applies to those who have a retail price below the luxury car tax threshold for fuel-efficient car. The car mustn’t have been held or used prior to July 1, 2022.

Employers must ensure to include the exempt electric car fringe benefits within an employee’s reportable fringe benefits amount.

COVID-19 Business Grants made non-assessable non-exempt

As a result of COVID-19 payments made prior to June 30, 2022, they can be made non-assessable non-exempt (NANE) for income tax purposes and those who are eligible. This tax treatment is only available for businesses who experienced severe economic consequences during the pandemic.

The Government has designed COVID-19 grant programs for the following to be eligible to receive the NANE treatment. This means eligible businesses will be exempt from paying tax for the following grants:

  • Victoria Business Costs Assistance Program Four – Construction
  • Victoria Licensed Hospitality Venue Fund 2021 – July Extension
  • Victoria Licensed Hospitality Venue Fund 2021 – Top Up Payments
  • Victoria Business Costs Assistance Program (Round Two Top Up, Round Three, Round Four, Round Five)
  • Victoria Impacted Public Events Support Program Round Two
  • Victoria Live Performance Support Program (Presenters) Round Two
  • Victoria Live Performance Support Program (Suppliers) Round Two
  • Victoria Commercial Landlord Hardship Fund 3
  • Australian Capital Territory HOMEFRONT 3
  • Australian Capital Territory Small Business Hardship Scheme

Boosting Paid Parental Leave

As of 1 July 2023, the Government will introduce an improved Paid Parental Leave Scheme making it flexible for either parent to claim the payment. Both birth and/or non-birth parents are eligible to receive this payment if they meet the criteria.

Parents will also be able to claim this payment at the same time they take leave.

The scheme will be expanded from 1 July 2024, by an additional two weeks a year until it reaches 26 weeks from 1 July 2026.

The leave entitlement can be shared amongst both parents, with a section titled on a ’use it or lost it’ basis. This is to encourage both parents to use the scheme and share the caring responsibilities amongst one another equally.  Single parents can access the full 26 weeks.

Extending ATO Compliance Program

  • Personal Income Taxation Compliance Program
    • From 1 July 2023, the Government will be extending its Personal Income Taxation Compliance Program for two years. By doing so, it will focus on delivering a more proactive, preventative, and corrective activities fundamental to areas of non-compliance.
  • Shadow Economy Program
    • The ATO Shadow Economy Program will extended for a further three years, starting July 1, 2023. This will strengthen the ATO’s response to target shadow economy activity, continue to protect revenue for businesses following complying to the rules.
  • Tax Avoidance Taskforce
    • The funding for the ATO Tax Avoidance Taskforce has been boosted by roughly $200 million per year for the past four years from 1 July 2022, whilst also extending this Taskforce for another year (1 July 2025). By doing so, the ATO will be supported to pursue new areas of priority for business tax risks, determining the focuses for multinational enterprises as well as large public and private businesses.

For information about these measures click here.

Working from home expenses

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If you are working from home, you are eligible to claim a deduction for the expenses you have incurred in relation to your work.

Eligibility to Claim

To claim this deduction, you must fulfill all employment duties whilst working at home, not just answering phone calls or checking emails. As a result of working from home, you must incur any other additional expenses too.

As a result of working from home, you can claim a deduction for the additional running expenses used within your home. This includes your phone expenses, electricity expenses, internet expenses and the devalue of office furniture and other items used to support your work, such as your laptop.

If your employer covers your working from home expenses, this must be included in your tax return.

If you’re the owner of the business and working from home, see deductions for home-based business expenses for more information.

In limited situations, you may also claim the occupancy expenses.

How to claim work from home expenses

You must choose one of the following methods that suits your circumstances to calculate your deduction:

Please refer to the Home office expenses calculator for further assistance in calculating your work-related expenses.

Expenses you cannot claim

If you’re an employee working from home, you cannot claim a deduction for the following expenses:

  • Coffee, tea, and milk – even if this is provided by your employer at work
  • Payments made towards your child/ren’s education for example, iPads, online learning subscriptions etc
  • Items provided by your employer whether it be a phone or a laptop
  • Items that have been reimbursed to you or paid for by your employer

Occupancy Expenses

Occupancy expenses are the expenses you pay to rent, own, or use your home. This includes land taxes, mortgage interest, rent, house insurance premiums as well as council and water rates.

Generally, if you are an employee working from home, you are ineligible to claim occupancy expenses and there will be no capital gains tax (CGT) implications for your home.

You can claim occupancy expenses if you can show that your employer could not provide an alternative place for you to work besides your own home, ensuring that your home is exclusively used for work purposes and is incapable for any other uses.

If you only use that particular area of your home for work for parts of the year, you are required to apportion your expenses on a timely basis.

For more information about these measures click here. Or if you need assistance with preparing your tax return and claiming your working from home expenses, give us a call to discuss them further on 07 3367 0852.

Switch to eInvoicing

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What is eInvoicing? 

EInvoicing is a government initiative designed to make the exchange of electronic invoices more efficient via your accounting software. Once the sender generates the invoice within their software, the information will be directly sent to the receiver, ready to be approved and paid for.  

EInvoicing enables better control over your invoicing by: 

  • Automatically appearing in your software to reduce the need to manually enter the invoices 
  • Using the ABN (Australian Business Number) of your trading partner as well as validating key details before the eInvoices are sent. This then removes the need to follow up the invoices that were incorrectly addressed or lost.  
  • Removing the manual entry of invoices to eliminate the time-consuming and costly errors  
  • Delivering the invoices with real-time information that can be accessed in your accounting software 
  • Limiting the fake or compromised invoices as well as other false billing scams 
  • Allowing you to seamlessly trade with other eInvoicing-enabled businesses across Australia and worldwide. 

This process can be implemented easy and efficiently. For more information about these measures ask your accounting software provider or click here. However, if you do not currently use an accounting software, there are several free and low-cost options available.  

How does Xero incorporate eInvoicing? 

EInvoicing software is similar to Xero as it allows the eInvoices to be exchanged efficiently and safely amongst the government and other businesses. Hence why we highly recommend Xero as your go to accounting software. 

Get started with eInvoicing with Xero within a few steps.  

  • Within Xero, you can register via the Peppol network by using your ABN and it’s a free service. 
  • In Xero enter your ABN, then enter your chosen customer’s ABN to ensure they are registered within the Peppol Network.
  • The eInvoices will be received automatically from the supplier which reduces the risk of misdirected emails or letters. This also means there is no need to manually enter the data into the invoice. These eInvoices can be viewed as draft bills via the Xero app or on your laptop, ready to be approved and paid for. 

For more details on how it works in Xero check out the following Xhelp guide: Register to receive eInvoices – Xero Central