What’s New in Australian Taxation for 2023: A Comprehensive Overview
As we approach the end of 2023 it’s the perfect time to review the significant changes in Australian taxation that individuals, businesses, and investors should be aware of. At AMD Chartered Accountants, we believe that staying informed about these changes is crucial for making well-informed financial decisions. In this article, we will provide an overview of the key updates in Australian tax laws for the 2023 fiscal year, highlighting what’s new in individual taxation, superannuation, and other essential updates.
Changes in Individual Taxation
Tax Offset for Individuals:
In the 2022-23 income year, the low and middle-income tax offset (LMITO) came to an end, ceasing to provide tax relief. Simultaneously, there were revisions in the fixed rate method for calculating deductions related to working-from-home expenses. This revised method allows you to claim $0.67 per work hour for the 2023 financial year, an increase from previous rates. It also altered the expenses covered, simplified record-keeping requirements, and removed the necessity for a dedicated home office space.
Medicare Levy Thresholds:
The Medicare levy low-income thresholds increased in 2023. For singles, this threshold is now $24,276, and for families, it’s $40,939. If your taxable income falls below these thresholds, you may have been exempt from paying the Medicare levy. This change benefited many Australians, reducing their healthcare-related expenses.
Veterans’ Super Tax Offset:
The Veterans’ superannuation (invalidity pension) tax offset (VSTO) was still available for the 2023 financial year to ensure veterans and their beneficiaries aren’t taxed unfairly. Eligibility for VSTO was automatically determined by the Australian Taxation Office at the time of filing a tax return in 2023. This simplified the process for veterans, offering tax relief without extra paperwork.
Education Expenses:
The 2022-23 income year has seen a significant change in self-education expenses. The $250 non-deductible threshold for self-education expenses has been removed, simplifying the deduction calculation process.
Superannuation Updates
Superannuation Guarantee Increase:
The superannuation guarantee has increased from 10.5% to 11%, which will continue to rise incrementally until it reaches 12% in 2025. This change benefits workers who are building their retirement savings.
Retirement Savings:
For retirees, the temporary reduction on minimum super drawdown rates that was introduced as a response to the COVID-19 pandemic has ended. Retirees have now returned to regular super drawdown requirements.
Other Notable Changes
Small Business Boosts
The Treasury Laws Amendment (2022 Measures No. 4) Act 2023 introduces two temporary boosts for small businesses. The first, a skills and training boost, allowed small businesses with annual turnover below $50 million to claim an additional 20% deduction for eligible training expenditure from March 29, 2022, to June 30, 2024. The second, a technology investment boost, permitted small businesses to claim an extra 20% deduction for eligible digital investment up to $20,000 per year, for expenses incurred from March 29, 2022, to June 30, 2023. These initiatives aim to support small businesses in enhancing their skills and technology capabilities.
First Home Owner Schemes:
Eligibility for the federal government’s Home Guarantee Scheme, including the First Home Guarantee and Regional First Home Guarantee, has been expanded. Friends, siblings, and other family members can now jointly apply for these schemes. They are also available to non-first-home buyers who have not owned a property in the past 10 years.
Childcare Subsidy:
From July 10, families earning less than $530,000 will be eligible for an increased childcare subsidy, making it more affordable for families to access childcare services. Rates will be lifted for every family with one child in care earning less than $530,000. The maximum CCS amount for families earning up to $80,000 has been increased from 85% to 90%.
Parental Leave:
New parents are entitled to claim up to 20 weeks of paid parental leave. For partnered couples, this leave can be shared between them, while single parents can access the full 20 weeks.
Age Pension Age:
The eligibility age for the Age Pension has increased to 67 years from the previous age of 66 years and six months. However, individuals can start the claim process 13 weeks before reaching the pension age.
These tax changes reflect the evolving landscape of Australia’s financial regulations and have had a significant impact on individuals, families, and businesses. Staying informed about these updates is essential for responsible financial planning and decision-making. At AMD Chartered Accountants, we are committed to providing expert guidance and support to navigate these changes effectively. If you have any questions or require assistance with your future tax returns or financial planning, please don’t hesitate to contact us.