With the end of the tax year approaching , now is the time to see what you can do to reduce your tax for 2022. This would mean more money in your pocket for you and your family to enjoy.
Home Office Expenses during Covid-19
If you worked at home because of Covid-19 you will be able to claim a special deduction of $0.80 per hour worked. This covers all office expenses and you will need a record of how you calculated the number of hours. The important aspect is that you do not need a dedicated work area such as a home office.
The other method which has been around prior to Covid-19 that DOES require a dedicated work area, is the fixed rate method that allows $0.52 per hour worked to be claimed.
In addition you can also claim phone, internet and computer consumables and decline in value of equipment.
A third method that can be used, is the actual cost method. This would require a home office that no other members of the household use and you would need to know for example how much electricity is used for business. The record keeping for this method is onerous, but it could work out to be a larger deduction than the other methods.
You can contribute into super as a deductible contribution up to $27 500 including your employer contributions.
In order to claim this non-employer contribution as a deduction, you would need to give your fund a form called “a notice of intent to claim” and receive an acknowledgment letter from your fund.
These contributions would then be taxed at 15% in the super fund if your income is less than $250 000 or at 30% if above this amount.
Carried Forward Contributions to Super
If your super account balance is less than $500 000 and you haven’t used the full amount of your contribution cap in previous years starting from 2019, you can use the previously unused amounts for up to five years as per the table below. ie You can contribute more than $27 500 into super.
|In this income year …||… unused caps from these years can be applied|
|2020–21||only 2018–19 and 2019–20|
|2021–22||only 2018–19 to 2020–21|
|2022–23||only 2018–19 to 2021–22|
|2023–24||only 2018–19 to 2022–23|
|2024–25||only 2019–20 to 2023–24|
Please check with us what your unused concessional contributions are.
Spouse Super Contributions
If your spouse’s income is less than $37 000 p.a and you make a contribution into their super account of up to $3 000, you will receive a tax offset of $540.
This offset reduces to nil as their income increases to $40 000 p.a
Government Co-Contribution to super
The government will pay into your super account $500 if you make a non-concessional contribution of $1 000 into super and you earn less than $41 112 in 2022.
You can’t claim this non-concessional contribution as a tax deduction against your income.
At least 10% of your income needs to be from employment or business income.
The Co-contribution will decease if less than $1 000 is contributed and as your salary increased up to $56 112.
Property Depreciation Report
Investors who have purchased an established (not brand new) residential investment property after 7.30pm on 9th May 2017 can’t claim depreciation on second hand assets. You will be able to claim depreciation on new equipment only and the building structure (Capital Works). You will need to have a Depreciation Report prepared by a quantity surveyor in order to do this.
The report should cost around $500 dollars, which is a deductible expense, but results in thousands of dollars of non-cash flow deductions over the years.
Motor Vehicle Expenses
In order to claim motor vehicle expenses against your salary income, you would need to prove that you have done travelling for work purposes.
The way to do this, is to keep a record or logbook of your travel for at least 12 weeks during the year. This record is valid for 5 years unless your travel pattern changes before then.
You should also record your odometer reading at 30 June 2022.
The percentage of work travel would be calculated from this record and applied to the total of your motor vehicle expenses and claimed as a deduction.
An alternative method where no log book is needed, is to simply claim up to a maximum of 5 000 km business travel, based on a reasonable estimate, using the cents per km method. For 2022, 72 cents per km can be claimed.
Here is a link to a website called Driversnote, where you can download an excel log book or even better an App. Please contact our offices should you have any questions or need help in using it.
If you own investments such as shares or property, and you pay up to 12 months in advance of interest on a loan or other expenses before 30 June 2022, you will be able to claim these amounts in the 2022 tax year.
You may also prepay other expenses like property repairs, memberships, subscriptions or journals.
Income Protection Insurance Premiums
If you are unable to work as result of sickness or an accident, Income Protection Insurance will replace up to 75% of your salary. These premiums are tax deductible and protect your family’s lifestyle.
These premiums can also be prepaid for up to 12 months and claimed as a deduction in 2022.
CryptoCurrency Capital Gains & Losses as an Investor
As the Crypto market increased in 2021, you may be sitting with capital gains if you sold Cryptocurrencies during this time. This would be added to your salary income and taxed accordingly if you are defined as an investor. If you are running a business then CGT does not apply. As the market has recently decreased, you can reduce the tax you pay on capital gains by selling any loss-performing Crypto assets before 30 June 2022. You can’t claim a loss just because the market value has decreased, you must sell the asset in order to use the loss. Be careful of being caught in a wash-sale arrangement where the ATO will not allow you to claim the loss against the profit. This will apply if the intention of the sale is to reduce a tax liability.
If your losses are greater than the gains, then the unused capital losses can be offset against future capital gains.
Even if you have only made Capital losses, you still need to disclose these losses on your tax return.
For more information about how we can help you with disclosing your cryptocurrency profits and losses on your tax return click here to go to our crypto blog.
These laws apply also to shares and investment properties.
Hold Crypto currencies for longer than 12 months
An investor is entitled to a 50% discount on a Capital gain if they sell an asset after holding it for 12 months. If you are expecting a profit on the sale, then try hold it for 12 months and you will reduce your gain by 50%.
These laws apply also to shares and investment properties.
Defer Investment Gains
Arrange for the contract date of sale of a Capital Gain asset to occur after 30 June 2022 as then the gain will fall into the 2023 tax year.
The contract date and not the settlement date is the key date for working out when a sale occurs.
Should you have any questions specific to your situation, contact us at email@example.com or contact Accolade Accounting on (08) 6263 4466 or (03) 9524 3145 to get further advice.