By Alisa Sainoski

Income Tax Threshold

In the 2018 Federal Budget the coalition government announced the Personal Income Tax Plan, a seven-year plan of income tax cuts.  The plan became law on 21 June 2018.

The resident tax rates have been updated for the 2018/2019 income tax year.

Tax Rates: https://www.ato.gov.au/Rates/Individual-income-tax-rates/

5,000km claim for motor vehicle use

The Australian Taxation Office (‘ATO’) is making work-related car expenses a key focus again during this year’s tax year.  When using your motor vehicle for work purposes there are two ways to claim this expense.

Cents per kilometre

The cents per kilometre method is used by claiming the number of kilometres based on a set rate of 68 cents per kilometre (Prior year rate was 66 cents per kilometre) from 1 July 2018 for each work-related kilometre travelled.  When using this method you must be able to show how you worked out your work-related travel by way of a diary record, calendar record, excel spreadsheet etc.  The downside of using this method is the maximum cap of 5,000 kilometre per car.

Logbook

The Logbook method uses the percentage of “work use” of your car and your actual expenses.  To make a claim using this method you need to keep a logbook as well as records of your car expenses.

Your logbook must be kept for a minimum continuous period of 12 weeks with the representation of your car travel throughout the year.  The logbook needs to include odometer readings at the start and end of each journey.

Receipts will need to be kept when claiming car expenses such as fuel and oil costs, however you can estimate your expenses based on odometer readings for the period in which you used the car. In addition to the car costs and odometer reading, you will need to calculate your claim for decline in value of your car.

Home Office Usage

There are two ways to calculate the amount of deduction available for home office usage.  If you’re using your home for work-related activities you are entitled for a tax deduction.

  1. keeping a diary of the details of your actual costs and your work-related use of the office, or
  2. use a fixed rate of 52 cents per hour for heating, cooling, lighting and the decline in value of furniture in your home office.

There may be subsequent tax consequences as a result of claiming home office usage so we suggest talking to your tax advisor before making a claim.

Private Health Insurance

Previously health insurance providers were required to send a private health insurance statement to each adult covered by the policy by 15 July each year.  It is now optional for them to send you this information.  The health insurer may send the statement by mail, email, or as a link to an online version.

Low and Middle Income Tax Offset (‘LAMITO’)

Is your taxable income not exceeding the $125,333 threshold? If so, you are in luck and will potentially be receiving the tax offset.  You will be available for the offset provided you are an Australian individual resident. The LAMITO is targeted to assist low and middle income Australian taxpayers.  You do not have to do anything to claim the offset, it will be calculated as part of your tax return.  The offset will reduce the amount of tax you pay on your taxable income but will not create a refund.  The concept is the same as the Low Income Tax Offset (‘LITO’) which means you could be eligible for both offsets.

Please be aware that LAMITO does not mean you will receive an extra $1,080 (maximum offset per year) in your tax return.

The below summary is your entitlement if your taxable income:

Examples:

https://www.ato.gov.au/Individuals/Income-and-deductions/Offsets-and-rebates/Low-and-middle-income-earners/

 

Payment Summaries

With the introduction to Single Touch Payroll (‘STP’) employers are no longer required to provide you with a payment summary.  Your payment summary information will be available from the ATO online services through MyGov. It is now called an ‘income statement’.

Accelerated Depreciation – Instant Asset Write-off

For ‘small business entities’ the instant asset write-off can be used to claim an immediate deduction for depreciating assets costing less than the below threshold amounts.  Entities with an aggregated annual turnover of $10 million but less than $50 million can access the deduction.  For assets costing less than $30,000 (GST exclusive) where the asset is purchased, and is first used or installed ready for use between 7:30pm (AEDT) 2 April 2019 and 30 June 2020.  From 1 July 2020, the instant asset write-off will return to $1,000.

As a result, any small business depreciation pool with a closing balance of less than $25,000 at the 30 June 2019 will be entitled to a full write-off.

Pic Vba Instant Asset Write Off Ab14 7 2020