Tax Time !

Before preparing your 2023 income tax return this year, there are some changes to the following deductions that might be relevant to you.

Cents-per-kilometre method?– The cents-per-kilometre method for claiming car expenses increased from 72 cents to 78 cents per kilometre in the 2023 income year. Taxpayers can use this method if they are a sole trader or in a partnership where at least one partner is an individual. This method is based on a set rate for each kilometre they travel for work-related use and allows them to claim a maximum of 5,000 kilometres per car, each year. For taxpayers using this method, the 78 cents per kilometre rate covers all their vehicle running expenses, including registration, fuel, servicing, insurance and depreciation. Taxpayers using this method cannot claim these costs separately.

Car limit for business owners?– The car limit has also increased to $64,741 for the 2023 income year. The car limit is the maximum value taxpayers can use to work out the depreciation of passenger vehicles (excluding motorcycles or similar vehicles) designed to carry a load of less than one tonne and fewer than nine passengers.

Work from home business expenses?– For the 2023 income year, the 'fixed rate method' (for taxpayers operating their business from home) increased from 52 cents to 67 cents per hour worked from home, and taxpayers are no longer required to have a dedicated home office space. The fixed rate method covers electricity, gas, stationery, computer consumables, internet, and phone usage. Taxpayers can also claim separate deductions for expenses not included in the hourly rate, such as the decline in value of depreciating assets, e.g., laptops or office furniture. There have also been changes to the records taxpayers need to keep for their work-from home deductions. For more information, taxpayers can refer to 'records you need to keep' on the ATO’s website.

Should you have any questions regarding the above changes, please don't hesitate to contact us.