By Ben Spiers, Director.
It's that time of year again! With cost of living pressures increasing across the country on the back of the constant interest rate rises, we are expecting the early period of Tax Time 2023 to be quite busy. Here are a few key questions that we think are relevant as we quickly approach the end of the financial year.
Q: When can I start lodging my 2023 tax return?
A: Technically, late June if lodging by yourself, however most employers and private health insurers have not finalised their end of year information by this time. The Australian Tax Office (ATO) generally starts processing Income Tax Return lodgments at the end of the first week of July, however it is our recommendation that clients start a little later, and we will be taking appointments from Monday 10th July.
Q: How long will it take to get my refund?
A: The ATO turnaround time is approximately 10 business days, however this may be longer in July due to the volume of lodgments that they receive. Where there are other factors involved like childcare subsidy balancing, the ATO communicates with Services Australia/Centrelink which can extend the processing time.
Q: I’m likely to have a tax bill this year as I have sold an investment or had a good year in business. When is the latest I can lodge my return?
A: For individuals on a tax agent lodgment list, the Income Tax lodgment due date may be as late as May 2024. We would recommend that you have your return prepared at the normal time, or even early so that you can have certainty in planning for the amount you may need to pay. We can still hold the lodgment if you wish to wait until the latest date.
Q: What has changed this year?
A: The major change that people will notice is the removal of the low and middle income tax offset (LMITO). The LMITO was an offset of up to $1,500 that applied to individuals earning less than $126,000. This offset was removed from 1 July 2022, however the withholding tax tables were not updated to reflect this. Accordingly, it’s likely that individuals earning under $126,000 will see a reduction in their refunds this year.
Q: Should I buy more things before the end of June so that I can claim a tax deduction?
A: Generally, we would advise not to buy things just to claim a tax deduction as at most you will get 47% of the amount back (if you are in the top tax bracket). However, if you are going to purchase any work-related items anyway, then it can be worth bringing the expense forward prior to the end of the financial year, to enable it to be claimed this year.
Q: Does this apply to businesses as well?
A: Yes, with some exceptions. The 2023 financial year is the final year of the Temporary Full Expensing (the remaining COVID accelerated deprecation rates), so if you need any equipment then there may be additional benefits in purchasing prior to 30 June 2023. With assets and equipment, they need to be delivered, installed and ready for use prior to 30 June 2023, so simply ordering them won’t be sufficient. Small businesses may also be able to claim a deduction in the current year for prepaid expenses so get in touch with us if this is something that you are considering and we can provide you with more specific guidance.
Q: I keep hearing about Stage 3 tax cuts, what are they and when do they commence?
A: The Stage 3 tax cuts are currently scheduled to commence on 1 July 2024, and remove the 37% tax bracket that currently exists for income between $90,000 - $180,000. The tax bracket for income between $45,000 and $90,000 will also be reduced from 32.5% to 30%. These tax cuts will see income between $45,000 and $200,000 being taxed at 30%. The benefit of these tax cuts will depend on your income, however an individual earning $120,000 will see an estimated tax saving of $1,875, with an individual earning $200,000 saving an estimated $9,075 per annum.
Q: How can I keep on top of what Team Lee Green are doing?
Q: Where do I go if I have any questions?
A: Contact your Lee Green advisor directly or contact our Administration team and they can direct your enquiry to the appropriate person.
The information provided in this article is general in nature and does not take into account any person or entity's particular financial situation or needs. Please contact us for advice specific to your circumstances.
This information is current at the time of publication and further updates may have occurred since that date.