Tax Planning for Individuals 2022

As the end of the financial year approaches, it is important that you take the time to focus on tax planning and tax issues that affect you before 30 June 2022 arrives. We have outlined some of the key tax considerations below:

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.

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

Superannuation Contributions
The contribution caps are currently:


The ability for a member to contribute is dependent on their age and Total Superannuation Balance (TSB) at the previous 30 June. Total Superannuation Balance is measured at $1,700,000.

Eligibility for Super Co-Contribution
You will be eligible for the government super co-contribution (max. of $500 in 2022-23) if you made personal super contributions to your superannuation account during the financial year (max. $1,000), your total income is less than $57,016 and 10% 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.

Home Office
If you use a home office for ‘income producing activities’ you may be able to claim a proportion of some expenses as a tax deduction (e.g. telephone, electricity, gas). A temporary shortcut method is available until 30 June 2022 to work out your working from home deduction by applying the number of hours you worked from home times 80 cents per hour. This method covers all your working from home expenses such as phone, internet, depreciation of equipment and furniture, electricity and gas. As such, if this method is chosen, you can’t claim any other expenses for working from home. You can still use fixed rate method and actual cost method to calculate your eligible deductions for the 2022 financial year and beyond. With fixed rate method, you can claim 52 cents per hour that you worked from home. This method does not cover expenses such as phone, internet, stationery and depreciation on equipment and furniture.

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

    • 72 cents per km for each business kilometre for the 2022 financial year
    • Claim to a maximum of 5,000 business kms

Log book 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.

Personal Income Tax Rates
Current marginal tax rates are shown below:


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

Low Income Tax Offset
From 1 July 2020, the government has brought forward stage 2 of the personal income tax plan. This means the low income tax offset has increased from $445 to:


Low and Middle Income Tax Offset
The low and middle income tax offset is available to the following individual taxable income threshold:


HELP, SSL, ABSTUDY SSL, TSL and SFSS Repayment Threshold
The repayment threshold for the 2020-21 financial year is $47,014. Once an individual’s taxable income is above this threshold, a repayment of the debt is payable on the lodgement of the individual’s tax return.

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; and travel diary not required.
    • and travel more than six nights in a row: – written evidence is required; and travel diary is required

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 2021-2022 income year.

Private Health Insurance
The rebate levels applicable remain unchanged for the 2021-2022 income year:


Rebate for premium paid 01/07/2021 – 30/06/2022

Medicare Levy Surcharge

Depreciation
If you purchase assets to be used for a number of years you can claim a decline in value each year.

‘Depreciator’ is a business that specialises in the preparation of depreciation schedules for rental properties and can be used to:

    • Obtain a Quantity Surveyor’s report on any rental property Australia wide; or
    • Obtain a report listing depreciation entitlements for that property on a yearly basis.

Therefore, if you have recently purchased a rental property, please contact us to discuss the preparation of a depreciation schedule.

Substantiation
To claim your personal tax deductions, ensure you are able to substantiate your expenses:

    • Claims exceeding $300 must be supported by written evidence for the entire amount, not just the amount over $300.
    • $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.

      Any questions?
      If you have questions or need any assistance, please do not hesitate to contact us on 9886 0800 or via email.

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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2022. Please do not reproduce without the expressed written consent of the author.