For everyone from the top end of town to working holiday-makers, this tax year involves plenty of changes.
Play by the rules for June returns
The ATO has flagged a long checklist of rule changes for accountants handling this year’s tax returns that takes in everything from the offshore banking regime and film tax offsets to granny flats and COVID tests.
Top of the list are items relating to the pandemic and for those who received disaster payments the situation is fairly simple: it is tax-exempt and does not have to be included on a return.
That is unless it was a “leave disaster payment” – granted for those isolating, or caring for someone with COVID – in which case it does count as income and has to be included.
Deductions for COVID tests must be for “a work-related purpose, such as to determine whether you could attend or remain at work”. The relevant test must be on the Australian Register of Therapeutic Goods and there has to be a receipt.
Claims cannot be made if an employer supplied the test, you were working from home or it was for private purposes, such as testing children for school.
The ATO warned against claiming for the entire cost of a test multipack when only some were used for work, or trying to recover the costs of travelling to get a test.
Another pandemic measure was temporary full expensing, which now extends to 30 June 2023 but otherwise functions as before.
Corporate entities using the alternative income test to determine eligibility for temporary full expensing can now include the cost of depreciating assets that are capital works. This is when determining if their cost of depreciating assets for the three tax years to 2018-19 inclusive exceeds a total of $100 million.
The ATO also alerts businesses to a loss carry back tax offset tool that helps work out eligibility.
There were fewer working holiday-makers during the pandemic, but some who were here will need to lodge a return, including those on visas 417 or 462 where tax was withheld.
Most working holiday-makers are foreign residents for tax purposes except those from a non-discrimination article country (Chile, Finland, Germany, Israel, Japan, Norway, Turkey or the UK).
Tax implications for granny flats have changed this tax year, so that CGT does not apply when a granny flat arrangement is created, varied or terminated. There has to be a non-commercial written agreement that gives an eligible person the right to occupy a property for life and the owners must be individuals.
Other changes this tax year involve film tax offsets, with an increase to the producer offset to 30 per cent for an eligible (non-feature) film and various threshold and integrity changes across the three film tax offsets.
Also changing is how the R&D tax offset is calculated, R&D expenditure thresholds and certain integrity measures.
Amendments to the offshore banking unit regime became law last September, removing the concessional tax treatment for OBUs for offshore banking activities from the 2023-24 income year. The interest withholding tax exemption for OBUs will also be removed for interest paid on or after 1 January 2024.
For all companies, tax return labels include new items about capital allowances, loss carry back, and the R&D tax incentive. The corporate tax rate for base rate entities for 2021-22 is 25 per cent.