We're excited to bring you important updates and insights relevant to your business.
This month, we highlight significant legislative changes for the 2024-2025 financial year, including the passing of the $20,000 instant asset write-off.
Read on to learn more about this and other crucial updates, including sharing economy income declarations, home office deductions, data-matching for online sellers, and upcoming superannuation changes.
$20K instant asset write-off passes Parliament
Effective: 1 July 2023
Legislation increasing the instant asset write-off threshold from $1,000 to $20,000 for the 2024 income year passed Parliament just 5 days prior to the end of the 2024 financial year.
Purchases of depreciable assets with a cost of less than $20,000 that a small business makes between 1 July 2023 and 30 June 2024 can potentially be written-off in the year of purchase. It’s a major cashflow advantage because the tax deduction can be taken in the year of purchase instead of over a number of years.
To be eligible, the asset must be first used, or installed ready for use, for a taxable purpose between 1 July 2023 and 30 June 2024. For example, you cannot simply have a receipt for an industrial fridge, it must have been delivered and installed to be able to claim the write-off in 2024.
The write-off threshold applies per asset, so a small business entity can potentially deduct the full cost of multiple assets across the 2024 year as long as the cost of each asset is less than $20,000. A Bill to extend the instant asset write-off threshold increase to 30 June 2025 is currently before Parliament.
Earned an from the sharing economy?
It’s essential that any income earned from sharing economy platforms such as Airbnb, Stayz, Uber, etc., is declared in your tax return.
Since 1 July 2023, the platforms delivering ride-sourcing, taxi travel, and short-term accommodation (under 90 days), have been required to report transactions made through their platform to the ATO under the sharing economy reporting regime. 2023-24 is the first year that the ATO will have the income tax returns of taxpayers to match to this data.
All other sharing economy platforms will be required to start reporting from 1 July 2024.
This reporting regime, combined with the ATO’s data matching programs, mean that if income is not declared, it’s likely you will receive a “please explain” request from the regulator.
Individuals claiming home office deductions
The ATO has issued a list of common questions and answers in relation to individuals looking to claim deductions for home office running expenses.
Previously, individuals have had the choice of claiming deductions for home office running expenses either using the actual or revised rate method of 67 cents per hour since 1 July 2022. A key focus of the ATO’s guidance is on the revised fixed rate method.
First, the ATO explains that there are no requirements around minimum hours worked from home before someone is entitled to use the revised fixed rate method. This is as long as the following conditions are satisfied:
• They perform genuine work or business activities from home (rather than just carrying out minor tasks such as checking emails or taking calls);
• They personally incur additional running expenses as a result of this work; and
• They keep and retain relevant records.
In relation to record keeping, the ATO also explains that taxpayers must have records showing the total number of hours they have worked from home during the income year (including their start and finish time on relevant days). This can be recorded through a diary, spreadsheet, rosters or timesheets and must be recorded contemporaneously.
Apart from a transitional period which has now expired, estimates or a sample period of representative hours worked from home are no longer accepted.
While this is not available to individuals who use the revised fixed rate method, the ATO also clarifies that individuals using the actual method to claim home office running expenses may also be entitled to claim additional deductions for mobile phone call and data usage costs.
The challenge then becomes apportioning the deduction between work and private use. While there might be several ways to undertake such an apportionment, the ATO considers the easiest way to manage this is for individuals to keep a diary over a continuous 4-week period (e.g., of the type of calls made and time spent using the internet for work versus private use).
Finally, the ATO cautions that an employee generally can’t claim deductions for occupancy expenses such as rent, insurance or interest on their mortgage. This is unless their home meets the conditions to be considered a ‘place of business’, which tends to be less common for employees.
Data-matching program for eBay and Amazon sellers
The ATO will require Amazon and eBay to provide the ATO with details of taxpayers who provide an online marketplace and where annual trading activity amounts to $12,000 or more in any of the 2019 to 2026 income years.
The ATO estimates that it will receive between 20,000 and 30,000 records each year under this program. The ATO will use the data to identify taxpayers who might not be complying with all of their tax-related obligations.
Superannuation changes from 1 July 2024
Effective: 1 July 2024
The ATO is encouraging taxpayers to be aware of certain changes to the superannuation rules that take effect from 1 July 2024.
First, employers need to be aware that the SG rate has increased to 11.5% from 1 July 2024. It is important for employers to take this into account to ensure superannuation guarantee amounts are calculated correctly.
Also effective from 1 July 2024 is an increase in the concessional super contributions cap from $27,500 to $30,000 per year. Subject to any unused concessional contribution cap amounts from previous years, this is the maximum amount of before-tax contributions (including employer superannuation guarantee amounts) that can be contributed each year without contributions being subject to extra tax.
Other key changes include:
• The non-concessional super contributions cap has increased from $110,000 to $120,000; and
• The maximum super contribution base for employers has increased from $62,270 to $65,070 per quarter.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
Publication date: 2 August 2024
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