A quick guide to getting your 2023 tax return right

With tax time around the corner, it’s time to start thinking about your 2022-23 tax return.

In May, the Australian Tax Office (ATO) announced key areas where they found people made mistakes, including work-related expenses. There is a range of information, digital tools and services available to help you get your tax and super right and the ATO has compiled a list of handy tips for your business to keep in mind for tax time this year.

Claiming deductions

You can claim a deduction for most expenses you incur running your business, as long as they are directly related to earning your assessable income.If you’re not sure about what to claim, remember the three golden rules:

• the expense must have been for your business, not for private use
• if the expense is a mix of business and private use, you can only claim the portion that is used for your business
• you must have records to prove it.

For more information on business tax deductions, visit the ATO website

Do you have home-based business expenses?

If you operate your business from your home and have a dedicated area set aside as a ‘place of business’, you may be able to claim occupancy and running expenses. These can include mortgage interest or rent, electricity and phone use.

The methods used to calculate running costs have recently changed. For the 2022-23 income year, you may be able to use the revised fixed rate method. This is a fixed rate of 67 cents per work hour for specific expenses such as electricity, internet and phone.

You can separately claim other running expenses that aren’t covered by the rate, as well as for the decline in value of depreciated assets such as laptops.

The records you need to keep for your work-from-home deductions have also changed. You can find out everything you need to know about working-from-home expenses on the ATO’s working from home expenses page

Review your pay as you go (PAYG) instalments

If you think your PAYG instalments could result in you paying too little or too much tax for the year, you can vary your instalments. You can do this when you lodge your business activity statement or instalment notice, through the ATO’s Online services for business portal or your registered tax or BAS agent.

Remember, you must lodge your variation on or before the day your PAYG instalment is due, and before you lodge your tax return for the year.

Find more on PAYG withholding on the ATO website

Take advantage of small business concessions

It’s worth finding out whether you’re eligible for small business concessions, such as simplified depreciation rules, the small business income tax offset, immediate deductions for pre-paid expenses and temporary full expensing. They can help reduce your tax bill and some may also save you time.

Check the ATO website for more on concessions for eligible businesses

Work out your motor vehicle expenses the right way

As a business owner, you can claim a tax deduction for expenses for motor vehicles – cars and certain other vehicles – used in running your business. You can claim expenses like fuel, insurance premiums, registration, depreciation, as well as servicing and repairs.

Your business structure and the type of vehicle you use affects the way you calculate motor vehicle expenses. For example, sole traders or those in a partnership can use the cents-per-kilometre or logbook method for cars but need to use the actual costs method for other vehicles. Those operating a company or trust will need to use the actual costs method using receipts.

The car limit has also increased to $64,741 for the 2022-23 income year. The car limit is the cost you can use to work out the depreciation of passenger vehicles that are designed to carry a load of less than one tonne and fewer than nine passengers, excluding motorcycles or similar vehicles. The maximum value you can use for calculating your depreciation claim is the car limit in the year in which you first used or leased the car.

Find out how you can claim more for your motor vehicle expenses

Stay on top of your FBT obligations

If you provide benefits to staff other than salary or wages, fringe benefits tax (FBT) may apply.  The FBT year runs from 1 April to 31 March, so its timing is a little different to the standard financial year. To make sure you get your FBT right, follow four simple steps:

• Identify the types of fringe benefits provided. For example, cars and car parking, loan and debt waivers, accommodation and entertainment related benefits.
• Determine the taxable value. Make sure you use approved valuation methods to work out if you have an FBT liability. There are different valuation methods and exemptions or concessions depending on type of fringe benefit.
• Lodge an FBT return. If you have an FBT liability, you’ll need to lodge your return and pay any FBT you owe by the due date, unless your tax agent lodges electronically for you. If the value of reportable fringe benefits for any employee is more than $2,000 you’ll need to include the grossed up value through single touch payroll (STP) or on that employee’s employment summary. Any contributions your employees make toward the cost of a fringe benefit must be included on your tax return as assessable income.
• Keep records to demonstrate your calculations and support your FBT position.

Visit the ATO website for more on fringe benefits tax

Record keeping and digital services

A good record keeping system will help you manage your tax and super obligations. This will make it easier to report and lodge your tax return on time. You can use the ATO’s record keeping evaluation tool to help you make improvements and make next tax time even easier.

The right digital tools can also help you perform daily business activities easily and securely, making you life much easier when it’s tax time. Make sure you’ve set up myGovID and Relationship Authorisation Manager (RAM) to access the ATO’s online services, including Online services for business which allows you to manage your business reporting and transactions in one place.

Changes to your tax return this year

This year you may receive a lower tax refund than in previous years, or a tax bill. There are several reasons for this, including:

• the low and middle income tax offset has ended
• your credit or refund has been offset against another debt, including a debt on hold
• a change in your personal circumstances.

Head to the ATO website to read about why your tax return outcome may change

Ask for help if you need it

It’s important to keep your lodgments up to date, even if you can’t pay immediately. Lodging on time will help you understand your net tax position, which means the ATO will be able to figure out the right tailored solution for you.

If you have a tax debt and can’t pay in full, in most cases you’ll be able to set up your own payment plan online. The ATO’s self-serve payment plan option is available for debts up to $100,000.

If you need extra support or assistance, contact the ATO early to discuss your options. They will work with you or your registered tax or BAS agent to help you get back on track, and to manage your obligations.

You can find out more by visiting the ATO website