Tax Alert September 2022

With the tax regulator taking a more aggressive approach to tax debts and reviewing work from home deduction rules, tax issues could become a higher priority in 2022-23.

Here’s a roundup of some of the latest developments in the world of tax.


Consultation on working from home deductions

Taxpayers could face the prospect of new rules when it comes to claiming working from home deductions after the ATO announced it was undertaking a targeted consultation.

Now the temporary shortcut method for working from home deductions has ended (available 1 March 2020 to 30 June 2022), the ATO is currently refreshing its approach to the traditional fixed rate method of calculating work from home deductions.

The regulator is consulting tax practitioner representatives and expects discussions to be completed in October 2022, with any new rules for the current financial year to be announced after this.

Offsetting of tax debts resumes

After taking a lenient approach during the pandemic, the tax man has begun chasing outstanding tax debts by sending taxpayers letters reminding them about existing debts placed on hold.

During the 2022-23 financial year, the ATO will recommence offsetting tax refunds or credits to pay off a taxpayer’s existing tax debts.

In some cases, tax credits will also be used to pay off debts owed to other government agencies such as Centrelink.

JobMaker Hiring Credit open

The seventh claim period for JobMaker Hiring Credit payments is now open and will end on 31 October 2022.

The scheme allows businesses to claim the credit for up to a year for each eligible employee hired between 7 October 2020 and 6 October 2021.

Eligible employers can nominate additional eligible employees through their STP-enabled software and claim using ATO Online Services or their accountant.

ATO app for sole traders

The ATO is encouraging sole traders to download and use the ATO app for a more personalised experience when viewing their tax lodgments and payment due dates.

Did you know you can access the ATO app via our RGM app, if you don’t have our app you can download via the Apple Store – RGM app or Google Play – RGM app.

The app also allows sole traders to check the progress of their tax return, view their income tax and activity statement accounts, access transactions and payment plan details and make payments in ATO online.

Useful tools and calculators such as myDeductions and the Tax Withheld Calculator are also available, together with a Business Performance Check Tool allowing you to compare your business performance with others in your industry.

Thresholds for 2022-23 car claims

The maximum value for calculating depreciation on the business use of a car first used or leased during 2022–23 has increased to $64,741.

The car limit is indexed annually in line with CPI movements and represents the threshold limit on the cost you can use to work out depreciation on a passenger vehicle.

If you purchase a vehicle priced over the car limit, your maximum claimable GST credit is $5,885 in 2022-23.

From 1 July 2022, the luxury car tax (LCT) threshold has also increased. The new threshold for fuel efficient vehicles is $84,916 (up from $79,659) and for all other vehicles it increases to $71,849 (up from $69,152).

Crypto not taxed as foreign currency

The government has announced crypto currencies will continue to be excluded from foreign currency arrangements for tax purposes. Capital gains tax (CGT) will continue to apply to crypto assets held as investments.

The announcement will be backdated to 1 July 2021 to ensure a consistent tax requirement for crypto asset holders.

New rate for claiming car expenses

Taxpayers electing to use the cents per kilometre method when calculating work related car expenses in their income tax deductions have a new kilometre rate to use.

From 1 July 2022, a 78 cents per kilometre rate applies. This rate will remain in place in subsequent income years until varied by legislation.

Director ID reminder

The deadline is approaching for directors to apply for their director ID – a unique 15-digit identifier. If you need assistance with your Director ID please email or contact our office on 03 5120 1400.

From 1 November 2021 directors of all businesses, including directors of self-managed super fund (SMSF) corporate trustees, need a director ID. Anyone who was a director before that date has until 30 November 2022 to apply.

Directors appointed between 1 November 2021 and 4 April 2022 had to apply within 28 days of their appointment. From 5 April 2022, intending directors must apply before they are appointed.

If you need any questions in relation to our articles, please email or contact our office on 03 5120 1400.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.




Understanding CGT when you inherit

Receiving an inheritance is always welcome, but people often forget the tax man will take a keen interest in their good fortune.

When ownership of an asset is transferred, it triggers a capital gain or loss with potential tax implications. So what are the tax rules when you inherit a property, or another investment asset like shares, and when you eventually decide to sell?

Tax and your inheritance

The main tax applying to the transfer and sale of an asset is capital gains tax (CGT). This is added to your tax bill in the financial year in which you sell an asset acquired on or after 20 September 1985.

CGT is not a separate tax but forms part of your normal income tax and is imposed at your marginal tax rate. It applies to the sale of assets such as residential and investment properties, shares and managed funds.

The tax is calculated based on any increase in the value of the asset between the time you acquire or buy it and when you eventually sell.

Inheriting an asset

Fortunately, when someone dies, a capital gain or loss does not apply when an asset passes to the deceased person’s beneficiary, their executor, or from the executor to a beneficiary.

This means if you inherit a property, shares, or an interest in an investment asset, the capital gain on the asset is disregarded by the tax man.

There are also exemptions for personal use assets you inherit that were purchased for less than $10,000. This includes furniture, household items and the like.

Generally, CGT is not payable if you inherit collectables such as art, jewellery, stamps or antiques, provided their market value is $500 or less.

Selling your new asset

Although there is no CGT when you inherit a property, that’s not the end of it, as there may be a tax bill when you eventually sell. If the asset is a dwelling, special rules such as the main residence exemption apply in part or full.

Generally, if you sell an inherited property within two years of the person’s passing and it was either purchased before September 1985 or was the deceased’s main residence at the time or just before their death, and in most cases, not rented being at the time of their death, CGT does not apply.

The two-year period relates to the time from the date of death to the settlement – not exchange – of the sales contract. In some cases, it’s possible to apply to the ATO for an extension to this two-year period.

Special tax rules may also apply if the property was not the deceased’s main residence but it was purchased prior to 20 September 1985. This may result in a full or partial exemption from CGT, so it’s important to talk to us about your particular situation.

After the two-year deadline

If you decide to sell your inherited property after the two-year exemption period has elapsed, you will generally have to pay CGT on the capital gain on your property unless it has become your main residence.

The amount of CGT you pay is based on the increase in your property’s value from the date of the deceased’s death to the date of the sale.

When working out the capital gain on an inherited property asset, CGT is calculated based on the sale price less the cost base of the asset. In most cases, the cost base is equal to the market value of the asset at the date of the deceased’s death, although this will depend on when the home was purchased (before or after 20 September 1985).

If CGT applies when selling an asset, you normally receive a 50 per cent discount on the amount of tax payable if the asset is owned for over 12 months.

CGT is a complex area of taxation, especially as it applies to inheritance, so if you would like help with handling the tax matters relating to an inherited asset, contact our office today on 03 5120 1400 or click here to send through your enquiry and an adviser will be in contact.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

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Tax Alert – December 2021

As COVID-19 turbulence starts to settle, the ATO is moving away from its supportive position and returning to its more usual compliance focus.

That means taxpayers need to be aware their financial affairs will come under renewed attention in the year ahead.

Data gathering programs increase

In recent months the ATO has announced programs to gather data on various aspects of Australians’ financial lives to use in its ongoing data-matching projects.

Recent programs include gathering data on property management and rental bonds, cryptocurrency, online selling and novated leases for the upcoming financial year (2022-23). The ATO will also be collecting data on payments made by government agencies such as Comcare, the Department of Health, the NDIA, Department of Veterans’ Affairs and the clean energy regulator.

Taxpayers who buy and insure high-value lifestyle assets will also be under the microscope, with the ATO looking to collect details that will “assist with profiling [to obtain] a holistic view of a taxpayer’s wealth”. Under this program, the taxman will be obtaining information from insurance companies for the period 2020-21 to 2022-23 about assets exceeding certain nominated thresholds.

These high-value assets include boats valued over $100,000, motor vehicles (including caravans) and thoroughbred horses valued over $65,000, fine art worth over $100,000 per item and aircraft valued over $150,000. Data obtained from insurers will include individual client identification and policy details.

Overseas gifts or loans under scrutiny

The ATO has also announced it will be increasing scrutiny of undeclared foreign gifts or loans from related overseas entities, including family and friends.

The regulator says it has encountered many situations where Australian taxpayers are deriving assessable income or capital gains offshore but failing to declare these in their income tax returns. The ATO will be looking at arrangements where taxpayers are attempting to avoid tax on foreign assessable income by disguising amounts as gifts or loans.

Anyone receiving genuine monetary gifts or loans should keep supporting documentation. Inheritances count as gifts, so if you receive an inheritance from overseas, get a certified copy of the person’s will or estate distribution statement.

Focus on working from home deductions

On a positive note, if you are still working from home due to COVID-19, you can continue using the shortcut method for claiming deductions until 30 June 2022.

From 1 July 2022, you will need to use either the traditional fixed rate or actual cost methods and meet their eligibility and recordkeeping requirements.

The ATO says it’s currently reviewing the 52 cents per hour fixed rate method to make it easier and simpler to use, given more people will be working from home in the longer term.

Backpacker tax under fire

Employers paying working holidaymakers will need to keep a close eye on developments in this area following a decision by the High Court that tax rates applied to these employees is discriminatory as it is based on nationality.

The decision could affect the applicability of the backpacker tax for workers from countries with double tax agreements with Australia. According to the ATO, this means working holidaymakers from Chile, Finland, Germany, Japan, Norway, Turkey, UK, Germany or Israel.

The ATO is currently considering the implications of the High Court decision and will provide further guidance for employers. In the meantime, employers should continue using the tax rates in the ATO’s published withholding tables for backpackers.

Self-education expense threshold to go

The government has made good on its May 2021 Budget promise to remove the $250 non-deductible threshold for claiming work-related self-education expenses.

The Treasury Laws Amendment (2021 Measures No.7) Bill 2021 is currently before Parliament. If passed, it will remove the current threshold for taxpayers claiming self-education expenses. It’s also expected to simplify the claims process in your annual tax return.

The start date for the change is likely to be 1 April or 1 July 2022.

Reminder on super stapling

If you are an employer, don’t forget to request super fund details from new employees, now the government’s super stapling rules are in place.

If a new employee doesn’t choose a super fund, you must request their stapled super fund from the ATO if they have one. This fund is linked to them and must be used for your Superannuation Guarantee (SG) contributions unless the employee requests otherwise.

If you would like help getting your tax affairs in order for the new year, contact our office today on 03 5120 1400 and speak to one of our tax accountants or send us a message via our contact page.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.