Here is a summary of the key changes that will apply this tax time.
Working from home
The rules for working from home have not changed. Therefore, we can claim expenses for working from home in 2023/24 using either the fixed rate method (67 cents per hour) or the actual cost method.
Cents per KM for car used for work increased
When claiming work-related car expenses using cents per kilometre method, we can now claim 85 cents per kilometre.
This rate is an all-inclusive rate and covers all of our eligible car expenses including registration, insurance, repairs, maintenance, fuel, and decline in value. We can’t claim a deduction for these costs separately, elsewhere in our return.
Electric vehicle home charging rate
From 1 July 2022, if we own and drive an electric vehicle for work purposes, we can claim 4.2c per kilometre to determine the cost of electricity, as long as we:
- use a zero emissions electric vehicle for gaining or producing assessable income
- incur electricity expenses when charging their electric vehicle at home, and
- have kept the relevant records for the income year.
If we choose to use this rate and can’t accurately determine the home charging percentage, commercial charging station costs incurred can’t be claimed as a separate deduction.
Alternatively, we can choose to claim the electricity used for charging by determining the actual cost incurred. Refer to below link for more details:
https://www.ato.gov.au/law/view/document?DocID=COG/PCG20242/NAT/ATO/00001&PiT=99991231235958
Please note that the electric vehicle home charging rate is applicable only when using the logbook method for work-related car use. Home charging cannot be claimed in addition to the 85 cents per kilometer rate when using the cents-per-kilometer method.
Here are ATO’s 3 key focus areas for this tax time.
Work related expenses
The ATO may review your tax return or contact you for an explanation if there are indications of improperly claimed working from home expenses, such as just copying and pasting your claim from last year. Therefore, if you are claiming for working from home, make sure to keep records that show the actual number of hours worked from home (like a calendar, diary, or spreadsheet) and the additional running costs incurred (like a copy of the electricity or internet bill).
Also, keep in mind the 3 golden rules for claiming a deduction for any work-related expense:
- you must have spent the money yourself and weren’t reimbursed,
- the expense must directly relate to earning your income, and
- you must have a record (usually a receipt) to prove it.
Rental properties
Rental properties remain a significant focus, as the ATO data reveals that 9 out of 10 rental property owners make errors in their income tax returns, particularly in claiming deductions for repairs and maintenance.
The ATO is prioritising scrutiny of rental expense claims that seem inflated, as well as excessive repairs that may actually constitute initial repairs or improvements.
Early lodged returns that are incomplete
The ATO is also warning against rushing to lodge your tax return on 1 July.
By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.
Therefore, if you have received income from multiple sources, you need to wait until this is pre-filled in your tax return before lodging. Waiting for a few weeks after 1 July will ensure you get the right income amounts.