ATO gives green light to lodge early tax returns
With just over a month of tax time completed, the ATO has confirmed that taxpayers with uncomplicated financial affairs can now lodge their tax returns. Information collected from employers, banks, private health insurers, share registries and other institutions has been prefilled and is available through MyTax for self-lodgers or via registered tax agent portals.
Income that still needs to be entered manually
While much of the information is prefilled, some types of income must still be manually entered. This includes:
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rental property income
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government payments
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capital gains from the sale of investments
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income from side hustles, including sharing economy platforms
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any cash income received for work performed
The ATO has multiple active data-matching programs, particularly in the areas of residential property and ride-sourcing, so accuracy is essential when lodging.
Key changes that may affect your tax refund
Taxpayers should be aware of changes this year that may reduce refunds or result in tax payable.
End of the Low and Middle Income Tax Offset
The Low and Middle Income Tax Offset ended on 30 June 2022 and does not apply to the 2022–23 income year. In the 2021–22 year, this offset reduced tax payable by up to $1,500 for those earning between $48,001 and $90,000.
For 2022–23, only the Low Income Tax Offset applies. This offset is available to those earning up to $66,667, with a maximum of $700 for individuals earning $37,500 or less. As a result, taxpayers earning between $66,668 and $90,000 may pay around $1,500 more tax compared to the previous year.
Changes to work from home deductions
The shortcut method of claiming work from home expenses at 80 cents per hour is no longer available. Taxpayers must now choose between:
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the revised fixed rate method at 67 cents per hour
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the actual costs method
To use the revised fixed rate method, specific record-keeping requirements must be met. The actual costs method is still available but requires detailed records of all expenses and is more complex.
For example, a taxpayer working from home three days a week, eight hours a day, over 49 weeks can now claim around $787 using the revised fixed rate method. Under the old shortcut method, the claim would have been around $940.
Fewer people working from home
The ATO has also noted that many taxpayers are working from home less than in previous years. This may further reduce work from home deductions compared to prior tax returns.
Expect differences in tax estimates
Due to these changes and other factors, the ATO has advised that tax estimates shown in MyTax or by a registered tax agent may not match the final outcome. Taxpayers are encouraged to wait for their notice of assessment before making plans for any expected refund.
Speak to one of our accountants if you have any questions about the changes in tax for 2023.
