As the end of the financial year quickly approaches, individuals and businesses must be aware of the changes that will need to be incorporated in 2023’s tax returns. In this guide, we’ll detail the top three changes to note, ensuring you have the necessary information to file your taxes correctly. 

1. Changes to Working From Home Deductions

The fixed rate for working from home has increased to 67 cents per hour, with the ATO detailing that individuals must continue to provide sufficient evidence for the hours they claim. This evidence can include log sheets and diaries.

Individuals can use other methods when calculating working-from-home deductions. Still, the fixed rate will become the default option for many due to its straightforward approach and revision that reflects the needs of those working from home.

Although the fixed rate isn’t specific and calculates your total working hours deductions, collecting evidence for working from home hours, such as timesheets and individual business expenses, will ensure you’re covered if the ATO asks for further proof. 

2. Self-Education Expense Threshold Removed

Previously, there was a $250 non-deductible threshold for any expenses regarding self-education. However, this threshold has been removed for the 2022-2023 financial year. 

Despite the threshold’s removal, the ATO has advised individuals to keep records of deductible self-education expense claims at hand to provide appropriate evidence. 

3. Low and Middle-income Tax Offset Ending

In previous years, individuals with low and medium incomes have received income offsets that reduce the tax paid on taxable income. In 2023’s tax year, the tax offsetting we’ve become accustomed to has changed, meaning individuals should anticipate receiving lower refunds and less supportive offsetting. 

Individual taxpayers with annual incomes lower than $66,667 are still eligible for low-income offset, with the maximum offset being up to $700 for these individuals. 

How Do These Changes Affect Individuals? 

The above changes affect many different groups of individuals, from those working from home to those with low and middle incomes. The best way to soften the effects of each change is to familiarise yourself with the new legislation and see how much of an impact they have on your income. 

The most significant change will result from tax offsetting adjustments, as lower refunds will impact millions of Australians’ income. On the other hand, revised working-from-home deductions can be seen as beneficial, saving individuals time calculating deductions. Instead, individuals can simply multiply the number of hours they’ve worked by 67 cents to determine how much their deductions will be. 

Need Support Completing Your Tax Return? We Can Help

Handling taxes can be challenging, especially when you need to factor in new guidelines and may be wondering how to cope with lower offsetting. Contact us at Advisory One today for help navigating the new tax year.