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Essential Tax Planning Tips for Individuals

As another financial year draws to a close it’s time to do what you can to minimise your tax position before June 2023 arrives.

Here are some of the key tax considerations:

1. Prepaid Expenses

Expenses are deductible when they are incurred. For an individual, this is when the expenses are paid, therefore wherever possible pay for deductible expenses prior to 30 June. This includes insurance and interest on rental properties.

2. Income Protection Insurance

A deduction is available for the cost of insurance to cover loss of income.

3. Superannuation Contributions

The contribution caps are currently:

  • Concessional Contribution: $27,500 pa
  • Non-Concessional Contribution: $110,000 pa

If you have available funds and have not reached your concessional contributions cap it may be prudent to tip some additional funds into super and claim a tax deduction for those contributions.

The ability for a member to contribute is dependent on their age and Total Superannuation Balance (TSB) at the previous 30 June. To make non-concessional contributions, a member’s Total Superannuation Balance must be less than $1,700,000 on the previous 30 June.

4. Eligibility for Super Co-Contribution

You will be eligible for the government super co-contribution (max. of $500 in 2022-23) if you meet the following eligibility criteria:

  • you made personal super contributions to your superannuation account during the financial year (max. $1,000); and
  • your total income is less than $57,016; and

  • 10% or more of your income comes from employment-related activities or carrying on a business; and
  • you were less than 71 years old at the end of the financial year.

5. Working from Home Deduction

The ATO has removed the Shortcut Method as a way to claim your working-from-home deduction. The Shortcut Method was introduced briefly to make claiming a deduction easier during the Covid-19 pandemic.  

So from 1 July 2022 you have two options to choose from:

Updated – Fixed Rate Method

  • This is a fixed rate of 67 cents per hour worked from home.
  • You no longer need a dedicated home office.
  • Covers the claim for electricity and gas, phone and internet usage, computer consumables and stationery.
  • Allows you to separately claim amounts for expenses not covered by the revised fixed rate, such as the decline in value of depreciating assets and the cost to clean a dedicated home office.

  • You must keep a record of all hours worked from home during the financial year.

Actual Cost Method

  • These are the additional expenses you incur as a result of working from home.

  • You no longer need a dedicated home office.

    • Electricity or gas (energy expenses) for heating or cooling and lighting
    • Home and mobile internet or data expenses
    • Mobile and home phone expenses
    • Stationery and office supplies
    • The decline in value of depreciating assets you use for work. For example, office furniture (chairs and desks) and equipment (computers, laptops, and software)
  • The repairs and maintenance of depreciating assets. You must have records that show you incur these expenses.
You have the ability to choose which method you would like to apply, and that will result in the best tax outcome for you. It is important to keep the right records to support this decision.

6. Motor Vehicle

If you use your motor vehicle for work-related purposes, the following two methods can be used to calculate your deduction:

Cents per kilometre

  • 78 cents per km for each business kilometre for the 2023 financial year
  • Claim to a maximum of 5,000 business km

Logbook method

  • Based on the business use percentage as per the log book records
  • Odometer readings are required at the start and the end of the period
  • Written evidence of expenses is required

Of late, the ATO has allocated their resources to audit investigations, particularly on substantiation records and logbooks. Ensure your logbook is up to date. 

There are many cost-effective electronic methods of recording odometer readings for logbook purposes.

7. Travel Expenses

A deduction can be claimed for the expenses incurred in travelling for work-related business purposes. 

If you did not receive a travel allowance:

  • and travel is less than six nights in a row: – written evidence is required (such as receipts for meals, hotels, taxis, etc), but a travel diary is not required.

  • and travel more than six nights in a row: – written evidence is required (such as receipts for meals, hotels, taxis, etc), and a travel diary is required.

8. Depreciation

If you purchase assets which will be used to generate income for a number of years (i.e. purchasing a new oven for a rental property), you can claim a decline in value (depreciation) each year.

We would recommend using a professional quantity surveyor (contact Bizzness Buddy for a recommendation) to prepare a depreciation schedule for rental properties, on your behalf.  

If you have recently purchased a rental property, a depreciation report is essential.

9. Other Important Things to Consider


To claim your personal tax deductions, ensure you can substantiate your expenses:

  • Claims exceeding $300 must be supported by written evidence for the entire amount, not just the amount over $300.
  • The $300 limit does not include award transport payments or car, meal or travel allowance expenses.
  • For expenses, $10 or less, provided in total they do not exceed $200, a written note detailing the same information as on a receipt (in a diary for example) is sufficient where you cannot obtain a receipt.

Personal Income Tax Rates

Current marginal tax rates are shown below:

Taxable income up to $18,200: 0% Rate

Taxable income from $18,201 to $45,000: 19.0% Rate

Taxable income from $45,001 to $120,000: 32.5% Rate

Taxable income from $120,001 to $180,000: 37.0% Rate

Taxable income over $180,001: 45.0% Rate

These rates do not include the Medicare Levy (currently at 2%).

HELP, SSL, ABSTUDY SSL, TSL and SFSS Repayment Threshold

The repayment threshold for the 2022-23 financial year is $48,361. Once an individual’s taxable income is above this threshold, repayment of the debt is payable on the lodgement of the individual’s tax return.

Medicare Levy – low-income thresholds

The Medicare levy low-income threshold is $23,226 for individuals, $39,167 for families (with no children) and $36,705 for seniors and pensioners for the 2022-2023 income year.

Private Health Insurance and Medicare Levy Surcharge

The rebate levels for 2022-2023:

Threshold Base tier Tier 1 Tier 2 Tier 3
Single threshold $90,000 or less $90,001 – $105,000 $105,001 – $140,000 $140,001 or more
Family threshold $180,000 or less $180,001 – $210,000 $210,001 – $280,000 $280,001 or more
Medicare levy surcharge 0% 1% 1.25% 1.5%

The family income threshold has increased by $1,500 for each dependent child after the first child.

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Top 12 Tax Planning Tips for 2023

As the end of the financial year approaches, it’s now time to focus on tax planning before 30 June 2023 arrives.

Here are my top 12 tax planning tips:

1. Trust Distribution Major Update

The ATO has recently issued a series of documents that will have a significant impact on how family trusts operate, especially in relation to distributions to adult children who are on lower marginal tax rates.

You need to have your trust distribution minute in place and signed before 30 June.

Contact your Bizzness Buddy to discuss potential strategies for trust distributions.

2. Asset Disposals

Consider deferring the disposal of assets that will generate a capital gain until after 30 June.

When selling assets with potential capital losses, consider selling those assets before selling assets with potential capital gains. This will allow the capital loss to be used to offset the capital gain.

3. Company Tax Rate

The tax rate for a small business is 25% for the 2023 financial year, compared to 30% for large companies.

To qualify for the lower tax rate a company must have both:

  • aggregated turnover of less than $50 million, and
  • 80% or less of the assessable income is passive income.

4. Super Contributions

To receive a tax deduction for super contributions they must be paid and received by the super fund by 30 June.

Don’t forget to allow time for the contributions to be processed through the clearing house (if the contribution is not in the fund’s bank account, it is not treated as being received).

The contribution caps are currently:

  • Concessional Contribution: $27,500 pa
  • Non-Concessional Contribution: $110,000 pa
The ability for a member to contribute is dependent on their age and Total Superannuation Balance (TSB) at the previous 30 June. To make non-concessional contributions, a member’s Total Superannuation Balance must be less than $1,700,000 on the previous 30 June.

5. Instant Asset Write Off for Eligible Businesses

Currently, there are three temporary tax depreciation incentives available to businesses with a turnover of up to $500 million:

  • Temporary full expensing

  • Increased instant asset write-off

  • Backing business investment

In broad terms, depreciating assets purchased and installed ready for use before 30 June 2023 could be written off under one of the above rules.

Note: Be careful the amount that can be written off has been reduced in the May 2023 budget to $20,000 – so it might be worthwhile bringing forward capital purchases in certain circumstances. Also, take care of the exclusions and limits that apply to car purchases!

6. Wages or Divident

In certain circumstances, it may be beneficial for a business owner to receive fully franked dividends from the company rather than wages.

In particular, a dividend may be preferred when the company is in a break-even or loss situation. We encourage you to discuss this topic with Bizzness Buddy as soon as possible.

7. Bonuses/Director Fees

Bonuses/Directors Fees that have been incurred and committed to (by minute) by the business before 30 June (and are not subject to discretion) may be claimed as a tax deduction by the business, as long as they are promptly paid (ideally in the next quarter).

8. Company Loans to Shareholders

Company loans to shareholders (and their associates) may become a deemed unfranked dividend (resulting in additional tax to be paid by the shareholder) if not repaid before the end of the financial year or put on loan terms.

These rules also extend to:

  • trusts, where there has been a loan to a beneficiary/shareholder and the trust owes money to a company, and

  • distributions a trust makes to a company, which have not been paid.

These loans either need to be repaid or documented in an appropriate loan agreement (with repayments) to avoid the application of Division 7A rules.

If you already have a Div 7A Loan Agreement in place from prior years make sure the minimum loan repayment has been received by the company before 30 June.

9. Income in Advance

Where you have received income that relates in part or in full to services or goods you have not provided before 30 June, record that income so that it can be taken up as income in advance rather than as earned, taxable income. This will defer the recognition of the income until the next financial year.

10. Bad Debts

Analyse your list of debtors before 30 June to identify those debtors you consider unlikely to be collected. To claim a tax deduction for these bad debts, you need to physically write them off before 30 June.

11. Valuation of Trading Stock

Businesses can value their stock at the lower of the actual cost, replacement cost, or market selling value. In addition, different methods can be applied to different stock lines. A reduction in the holding value of the stock will reduce the profit of the business by the same amount.

12. Appropriate Structuring

One of the most effective and underrated tax planning tools is to ensure that your business operations are correctly structured through the use of companies, discretionary trusts, and individual beneficiaries. Call us to discuss whether your current structure is right for you.

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