2023 Tax-Time Checklist

So, you thought the past 2 years tax returns were complicated - welcome to 2023!!!

For the first time in a long time (maybe ever!) the ATO changed a tax ruling 3/4 way through the year - Work From Home Deductions. Added to this the removal of the LMITO means that your refund will be lower than it has been for many years....

This year more than ever is not the time to just Do-It-Yourself!

Rest assured your 2023 tax return deductions will be under more scrutiny than any year ever before. Even more than previous years - if that was even possible.

But, as always we have your back.

The following is the COMPLETE tax return checklist. We know it is long - but we have done all the hard work for you. It includes the income that you need to declare and the deductions you can claim.

Lets get started....

To ensure you are prepared for your appointment make sure that you have the following information available upon booking:

A copy of last year’s tax return
Bank account details where you would like the refund to be paid to
Photo Identification - new clients only
Income – see breakdown below
Deductions – see breakdown below
Spouse details (married or defacto) – Full name, Date of birth and Taxable income for the year
Number of dependant children
Amount of child support you have paid in the year

Lets break down Income and Deductions....

Income Includes

Salary or Wages

Did you know that your employer does not need to supply you with a Payment Summary if they are reporting directly to the ATO?

PAYMENT SUMMARY CHANGES: Please see important information on the changes to Payment Summaries - these are now known as Income Statements you can find this here

If your employer has provided you a copy please let us know and have this available upon request, and if applicable any paid parental leave payments

Allowances, earnings, tips, director’s fees etc.

This is usually located on your payment summary. Please be aware that receipt of an allowance does not automatically entitle an employee to a deduction for expenditure to which the allowance relates (e.g. tool allowance).

Employer Lump Sum Payments

These payments are in respect of unused annual and long service leave paid out on termination of employment. Label A and B of the client’s PAYG payment summary should contain the relevant information. Also, obtain and attach a copy of a statement of termination from the client’s employer.

Employment Termination Payments (ETPs)

Please provide a copy of any ETP payment summaries and employer termination statements.

Australian Government allowances and payments like Newstart / JobSeeker, youth allowance and Austudy payment

Provide details of all youth allowances, Newstart / JobSeeker, sickness allowance or special benefit, or other educational or training allowances. (Please Note: paper copies are no longer sent by Centrelink and will need to be obtained via my.gov)

Australian Government pensions and other allowances

(Please Note: paper copies are no longer sent by Centrelink and will need to be obtained via my.gov)

Australian annuities and superannuation income streams

Provide details of taxable and rebatable components of pension.

Australian superannuation lump sum payments

Superannuation lump sums paid from a taxed source to a person aged 60 or over are tax free. Lump sums paid to persons under 60 are still taxable. Please provide details of these.

Gross interest

Interest that has been received or credited in the 2023 Financial Year, from your Bank or Financial Provider

Dividends

Unfranked, partly franked and fully franked dividends are assessable for taxation purposes. Please provide copies of your dividend statements.

Employee share schemes (ESS)

Please provide details of any Employee Share Schemes.

Please note the discount given on the ‘ESS interest’ (being a share or a right to acquire a share) under the ESS is assessable for taxation purposes unless the deferral concession applies. This assessable discount may be reduced by $1,000 where certain conditions apply.

Sole Trader, Partnerships and Trusts

Please provide all income and expenses related to any sole trader business activity, this can be via bank statements, excel spreadsheets or profit and loss reports from accounting software.

Please provide all details regarding partnership, trust or a managed investment trust fund payment and type of income received are required.

In the case of a Partnership and Trading Trust please provide a copy of the tax return. In the case of Managed Trusts, please provide the tax summary from your Shares portfolio provider or Broker

Cryptocurrency and Capital Gains

For cryptocurrency you will be requested to provide a CSV download for all transactions from your trading platform

In the case of any other possible Capital Gains you will need to provide:

a description of the asset
the purchase date
the purchase cost
date and amount of any expenditure incurred by the taxpayer that forms part of the asset’s cost base including eligible incidental costs
the sale date (or exchange of contract date if earlier)
the sale proceeds amount.

Foreign source income and foreign assets or property

Provide details of country, amount received, exchange rate utilised, foreign tax withheld.

Rental Income

Provide details of:

rental income earned
interest charged on money borrowed for the rental property
details of other expenses relating to the rental property
details of any capital works expenditure to the rental property.

Other income

Please provide details of any of the following that has been received during the year including:

a non-qualifying component of an ETP
lump sum payments in arrears
foreign exchange gains
royalties
certain scholarships, bursaries, grants
any assessable balancing adjustments on depreciating assets
jury duty service fees

Deductions Include:

REMEMBER THE THREE GOLDEN RULES

You must have paid for the expense and not been reimbursed, there must be a direct connection to earning your income and lastly you must have a record to prove it

Work Related Car Expenses

Since the 2016 Financial year there are only 2 methods available to use

1. Cents per kilometre method:

This claim is based on a set rate for each business kilometre travelled which is 78c (increased from 72c in the 2022 year) The taxpayer is able to claim costs by applying the set rate up to a maximum of 5,000 kilometres, "without a logbook"

**Please note you will still need to justify that these kilometres have actually been travelled - that means that the ATO will require you to substantiate your kilometre claim, they can and will call your employer to find out if you are required to use your motor vehicle. You will also need to show your workings on how many kilometres have been calculated.

**To make sure you get it right we recommend you always keep a logbook! At the very least, get a signed letter from your employer stating that you must use your own car

2. Logbook method:

This claim is based on the business use percentage of car expenses. Ensure log is kept for 12 consecutive weeks and business use percentage did not vary more than 10%. The resulting business use percentage may then be applied to all car expenses to calculate a deductible amount. The log book must be renewed every 5 years.

**Please note you must have a starting and ending odometer for every year claimed for the log book to be valid

IMPORTANT: if you work from home the ATO will be looking closely at your Motor Vehicle Deductions in that period

Work Related Travel Expenses

Domestic travel

Generally requires you to sleep away from home. Expenses include meals, accommodation, car hire and incidentals (such as tolls, parking and hire of third party vehicles).

Overseas travel

Must provide documentary evidence as well as diary evidence.

**Receipts must be kept for all deductions claimed even if they do not exceed the daily allowance as set by ATO

Work related uniform, occupation specific or protective clothing, laundry and dry cleaning expenses 1. Protective clothing and safety footwear: clothing or footwear that is specifically designed to protect or compulsory uniforms: unique and distinctive to the employer. 2. Non-conventional clothing that the employee is required to wear and is registered with AusIndustry or 3. Occupation specific: clothing that identifies a person as a member of a specific profession, trade, vocation, occupation or calling **Please be aware that ordinary clothing is not deductible, even if your employer requires you wear a specific colour or style. Launder of Uniform is only allowable for eligible

Records Needed: You must have written evidence, such as diary entries and receipts for your laundry expenses if both of the following apply:

The amount of your claim is greater than $150.00

Your total claim of Work Related Expenses exceed $300.00

If you don't need to provide written evidence for your laundry expenses, you may use a reasonable basis for working our your laundry (that is washing, drying and ironing):

$1 per load - if the load is made up of only work related clothing, or

50c per load if other items of clothing are included

**Please note: You cannot claim a deduction for the launder of uniform if it is does not satifisfy the 3 above requirements.

IMPORTANT: if you work from home full time you cannot claim Launder of Uniform

Work Related Self-Education expenses

Self-education expenses are deductible when the course you undertake has a sufficient connection to your current employment, and maintains the specific skills or knowledge you require in your current employment or results in (or is likely to result in) an increase in your income from your current employment.

You cannot claim a deduction for self-education for a course that relates only in a general way to your current employment or profession, or will enable you to get new employment - such as moving from a nurse to a doctor.

If your self-education is eligible you may be able to claim a deduction for your expenses. Examples include student union fees, books, stationery, consumables, travel and depreciation.

**Please note: You cannot claim for tuition fees if you have been reimbursed for them or paid by someone else, including your employer. You also cannot claim for fees that have been paid under a government loan eg: HELP, SFSS, SSL and TSL programs

Work from Home Changes

Announced in February this year the ATO now provides 2 methods for WFH deductions, Fixed Rate 67c per hour or the Actual Costs method

Fixed Rate Method:

The fixed rate method has increased to 67c per hour, up from 52c per hour in 2022. The fixed rate method incorporates the following:

Internet
Mobile
Electricity
Cleaning Costs
Stationery
Computer Consumables - eg Ink & Paper

You can still claim the following costs:

Computer Hardware / Software
Technological items like Monitors, Mouse & Keyboard, USB Sticks
Office Furniture
Online Subscriptions like Canva & Adobe
Internet Security

WFH Record Keeping Requirements

from 1 July 2022 to 28 February 2023 – a record which is representative of the hours you have worked from home
from 1 March 2023 to 30 June 2023 – a record of the total number of hours you have worked from home (such as a timesheet, roster or diary) as well as evidence that you have paid for each of the expenses you have incurred that are covered by the fixed rate method (for example, a phone or electricity bill)

To find out more about these shortcuts please see here

Other Work Related Expenses

Examples include union fees, seminars, registrations and licensing, overtime meals, home office, telephone, subscriptions, briefcase or ladies bag that is used to carry a laptop), calculator, electronic organiser, depreciation on assets costing > $300 and write off of assets not exceeding $300.

**Please note: There will be a high scrutiny of these expenses this year, make sure that you follow the three golden rules when considering your deductions

Gifts or Donations

These are required to be paid to an endorsed deductible gift recipients and that the client did not receive any tangible benefit from making the donation eg lotteries or tickets to win a prize

**Please note no RSL Prize Homes raffles or any pens or items paid for under charity promotions