Dr Steve Enticott from CIA Tax is a tax expert and a financial media presenter recommended by First Option Bank. Dr Steve’s Tax Tips for 2022 are below, we hope they’re helpful!
For everyone
Superannuation
Superannuation guarantee payments by employers are set to rise to 10.5% from 1 July 2022 for the 2022–23 financial year, and set to increase by 0.5% every year until it reaches 12.0% from 1 July 2025.
COVID text expenses
Again, for employees and business alike these are tax deductible expenses and can be claimed.
Be generous!
Making deductible donations in June is the best time to do so as you’ll soon see the tax benefit!
For businesses
Last chance? The temporary full expensing and temporary loss carry-back (to the year 2019) until 30 June 2023. Why is it the last chance? Well this author just ordered a new vehicle … but delivery isn’t possible until April 2023! So with supply chain delays, think well ahead, not just to June 30, 2022.
Prepay your expenses for 2022/3 before June 30 when you can and don’t be too hasty getting out your invoices prior to June 30 even more so if it’s been a really good income year.
Stocktakes can be counted on Cost price, Replacement Price or even Actual values which is one of our greatest tax planning tools for those that carry stock. Get counting!
For employees
Work-related expenses: anything at all connected to your income in any major or minor way (see final point in this section) pay them prior to June 30 when you’ve had a great income year to smooth the tax pain. Or delay them if next year is going to be a better/bumper year.
Don’t forget: sunglasses, hats and sunscreen for taxpayers who work in any outdoor occupation (including driving) are tax deductible – keep receipts!
Claim everything: This one is a bit of self-promotion because correctly claiming expenses is our expertise. But your job is to think of absolutely anything that has a connection with your income… and let us measure the correct appropriateness of claiming it.
Audits
The ATO are back hard at it post-COVID and their stated four areas of focus this year are:
- Record-keeping (car logbooks, receipts etc)
- Work-related expenses (must be connected to work activities especially study)
- Rental property income and deductions (genuine repairs not capital improvements)
- Capital gains from crypto-assets, property, and shares (these are all tracked by ATO)
Superannuation tips (for all ages)
Whilst there are no major changes for current tax Superannuation has become so complex that we recommend that you never contribute until you’ve cleared it with your advisors first.
- The Superannuation Guarantee rate is increasing to 10.5%, effective 1 July 2022
- The tax deductible cap into super is $27,500 which includes super SG and salary sacrifices. Don’t forget personal super contributions can also be claimed as a deduction but you must have a confirmation from your superannuation fund that they have received and processed your notice of intent to claim form.
- The limits for non-deducted superannuation is $110,000 annually or $330,000 for 3 years (below 67’s) For under 67’s they may be able to also contribute $330,000* Non-Concessional all at once. For over 67’s they will need to pass the work test (this year – no work test in 2023) and be restricted to $110,000. Forget about it over 75 sadly unless downsizer or employer contributions. Must be under the $1.7m super balance cap (except downsizer and employer).
- To claim deductions this tax year super needs to be paid WELL before June 30 (NOW!) And yes, in many cases you should contribute. For example; an average earner saves around 20% of tax on their contribution… so even if they put the money into the safe cash option of the fund, they have already had one great investment year! However, if you are on the younger side burdened with a lot of debt then speak to an expert about doing the numbers on super contributions before you do.
- Make larger super contributions when you haven’t used all of your concessional cap in earlier years. Unused cap amounts can be carried forward for up to five years before they expire. 2018/19 was the first financial year you could accrue unused cap amounts. To be eligible to make catch-up contributions, your total super balance at the prior 30 June must be below $500,000.
- Superannuation co-contributions is something you should still do up to a 50% matching rate on up to $1,000 of after-tax contributions, so a maximum amount $500 FREE from the ATO into your super!! (Income thresholds must be below $56,112).
- Superannuation pensions: remember, you need to have made your annual drawdowns by June 30 and the good news continues for 2022/3 as the minimum amount drawdown has been halved.
- Superannuation spouse contribution of $3000: the amount of the offset is 18% of the spouse contribution you make (max. offset of $540) reducing your own tax. Spouse income must be under $37,000 to get the full offset, then it gradually reduces to zero at $40,000. Again, there are always other conditions that effect spouses’ income (reportable amounts) so check with us first or your super fund to avoid disappointment.
For investors
Repairs and maintenance on investment properties? Consider bringing forward so you can enjoy a tax deduction in the current financial year as with all other costs!
Pre-paying interest: on a loan of $300,000 it may cost $12,000 but it could get you up to $6000 back as a tax refund this year. Discuss with your lender!!
Made a capital gain during the past year? For example, the sale or part sale of a business (including investments the business has made), shares or a property? If the answer is ‘yes’ then you should be thinking about your options for managing the CGT liability. Start by looking for capital losses to sell down to offset the CGT liability (or losses carried forward from prior years) to offset gains.
Medicare levy surcharge and private health insurance rebate
For the rates of Medicare levy surcharge that applies or the amount of rebate you are entitled to see the rebate and surcharge levels applicable are:
Notes: Single parents and couples (including de facto couples) are subject to family tiers. For families with children, the thresholds are increased by $1,500 for each child after the first.