As we enter a new financial year, you may have started the process of lodging your 2023 Income Tax Return (ITR). There have been several key changes to the tax landscape, so it is important to understand what you are eligible to deduct in your upcoming ITR.

What Tax Offset Am I Eligible For?

A crucial change to consider this tax time is the change the tax offsets. The 2022 financial year was the last year for taxpayers eligible to receive the LMITO. In the 2023 income tax returns, the LMITO of up to $1,500 has been removed and will not be available. This will cause many taxpayers’ 2023 income tax return refunds to be significantly less than the past couple of years.

The main tax offsets still available to eligible taxpayers are:

Low Income Tax Offset (LITO)
Seniors and Pensioners Tax Offset (SAPTO)
Private Health Insurance Offset

1. Low Income Tax Offset (LITO)

In 2023 there will be an offset of $700 for those taxpayers with a taxable income of less than $37,500 and a pro-rata payment up to a taxable income of $66,667.

For example, if your taxable income is $37,000 you will get the full $700 LITO or if your taxable income is $65,000 you would get $25 LITO.

This is a non-refundable tax offset, meaning it can only help reduce your tax payable to $0 and cannot create a refund.

2. Seniors and Pensioners Tax Offset (SAPTO)

To be eligible for SAPTO, you must:

Be eligible for an Australian Government pensions or allowance; and
Meet income limits of a rebate income of $50,119 or less if single or a combined rebate income of $83,580 if you had a spouse.

Rebate income is your taxable income plus any reportable super contributions, total net investment loss, or adjusted fringe benefits total.

If your rebate income is less than the above thresholds, then you may be eligible for the below SAPTO:

Single – maximum tax offset of $2,230 if your rebate is less than $32,279 and a pro rata amount if your rebate income is between $32,280 and $50,119; or
Couple (each partner) – maximum tax offset of $1,602 if your rebate is less than $28,974 and a pro rata amount if your rebate income is between $28,975 and $41,790.

This is a non-refundable tax offset, meaning it can only help reduce your tax payable to $0 and cannot create a refund.

3. Private Health Insurance Offset

To be eligible you must have Private Health Insurance (PHI), as this offset is an amount the Government contributes towards your PHI. You may take it as a reduced premium or a refundable offset when you lodge your tax return.

Your entitlement depends on:

The age of the oldest person on the policy;
Your single of family income threshold; and
Rates for the Medicare Levy Surcharge (MLS) depending on your family status.

If you have a higher income, the amount you receive is reduced and not available if your income is more than the threshold.

This is a refundable tax offset, meaning that it can be refunded even if you do not have a liability to pay tax.

Can I Claim WFH Deductions in My Tax Return?

The ATO is focused on ensuring taxpayers understand the changes to the Working From Home (WFH) methods and are able to back up their claims.

Methods for claiming WFH deductions changed from 1 July 2022. For the 2023 financial year you can claim:

A revised fixed rate method of $0.67 per hour worked from home. This includes electricity, gas, phone, internet, computer consumables, and stationery. You can also claim a separate deduction for depreciation of assets such as office furniture and technology; or

An actual cost method, calculating the actual expenses incurred as a result of WFH, claimed on the percentage of your office area.

A key change to making WFH deductions is you must keep a daily log of hours worked at home to be able to claim WFH. To assist you in this logging your hours, we created a downloadable WFH Deduction Diary.

For further information on claiming WFH deductions, please refer to our article ‘Changes to WFH Tax Deduction Methods – What You Need To Know‘.

Can I Use Last Year’s WFH Deductions in This Year’s Tax Return?

The ATO are cracking down on those who recycle the same deductions in their tax return, meaning it is crucial that you avoid claiming the same WFH deductions each year.

When including WFH deductions on your tax return, it is important to ask yourself:

Do my claims reflect my current working arrangements?
Have I incurred the cost?
Have I not been reimbursed for the cost?
Do the expenses relate directly to my income?
Do I have a record to support my claim (such as a receipt, invoice, bank statement record, diary entries, or a log book)?

You could include the deduction in your tax return if you answered ‘yes’ to the above questions.

It is important that you keep records to support your claims for a minimum of 5 years.

Do I Include Cryptocurrency in My Tax Return?

You may not be aware that the ATO has a number of data collection processes in place that allow them to identify taxpayers that have crypto activity to declare. They receive information from share registries and crypto asset exchanges and have had a cryptocurrency data-matching program operating since April 2019.

Therefore, it is important that you review your crypto activity and ensure you disclose this activity in your tax return. We can help with calculating what needs to be declared to show any capital gains or losses that you have incurred through your cryptocurrency dealings.

To learn more about how your cryptocurrency is taxed, please refer to our article ‘Do you know how your cryptocurrency is taxed?‘.

Do I Include Income From Selling Goods Online?

Online selling has become more popular over the last few years. The ATO has been running a data matching program on online selling since 2008. The ATO developed the program to ensure businesses and individuals selling goods and services online are:

Registering correctly with the ATO, having an ABN and registered for GST if applicable;
Lodging their returns;
Reporting the payments they receive; and
Paying the correct amount of tax.

The ATO obtains data from sources including eBay, Amazon, Square and other online platforms. For more information on online selling and the ATO’s data matching program, please visit the ATO Online Selling webpage.

How Can Davidsons Support Me This Tax Time?

At Davidsons, we strive to make lodging your tax return as stress free as possible. To assist you prepare your 2023 ITR, we encourage you to download and use our following free resources:

How Davidsons can help you with your tax return

Book an appointment with our tax return specialists

Our team of personal income tax return specialists are here to support you, either virtually or at our Geelong or Torquay offices.

Contact our team by completing an enquiry form, calling us on 03 5221 6399 or emailing via info@davidsons.com.au.

Download our income tax return checklist

Use our checklist to ensure you include all the required information for your 2024 tax return and make the most of any available tax benefits.

Download our income tax return checklist for individuals

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Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.

What Can I Claim in My 2023 Tax Return?