Tax time! What will your taxes look like under a Labor Government?
It's that time of year again, tax season. This time around we also have a change of government, so many of you might be wondering what this will mean for your taxes.
Let’s go over some key points ahead of June 30, using some handy advice from Mark Chapman, director of tax communications at H&R Block:
- Tax reductions- To refresh our memory, the tax cuts will see the 32.5% marginal tax rate cut to 30% to make one big tax bracket between $45,000 and $200,000 from 1 July 2024.
- Who will this affect? This will be particularly helpful for higher income earners, with gains of $1,125 per year for an individual on $90,000, rising to $9,075 per year for a person on $200,000 or more.
- Tax Increases- With the removal of the Low- and Middle-Income Tax Offset also locked in, those who currently receive it will notice a tax increase when they submit their 2023 tax returns.
- What does this mean? This could mean a rise of up to $1,500 for those entitled to the full LMITO. There are no announced proposals for the Labor party to reverse Frydenberg’s decision, yet.
- Taxes on property- There are no changes to “negative gearing” or any other taxes on investment property. The general 50% discount for Capital Gains Tax is also secure, for now.
- First home buyers-Labour has announced the introduction of an 'equity contribution scheme' to help first homeowners get a foot on the property ladder. Eligible home buyers will need a minimum deposit of 2 per cent, with an equity contribution from the Federal Government of up to a maximum of 40 per cent of the purchase price of a new home and up to a maximum of 30 per cent of the purchase price for an existing home. You can read more about this scheme in our latest article covering it.
That brings us to the EOFY: Time to do your taxes! (It’s really not that bad).
Fear not, you've got time to maximise your refund for the year. So, what are five things should you be doing as we head towards June 30?
Gather your records- Put some time aside to gather all the information you’ll need to help you prepare your tax returns. These might include invoices and receipts for work-related expenses and any bank/credit card statements that contain items of work-related expenses you no longer have (or never had) a paper trail for. Essentially, you need a paper trail for everything you wish to claim.
Calculate your home office costs- Many of us are still working from home, either part time or full time. Did you know that you’re entitled to deductions for costs arising from working at home? The expenses you’re eligible to claim include:
- Heating, cooling and lighting
- Cleaning costs
- Decline in value (depreciation) of home office furniture and fittings, office equipment and computers (for items over $300)
- Computer consumables, stationery, telephone and internet costs
- Items of capital equipment (such as furniture, computers and associated hardware and software) which cost less than $300 can be written off in full immediately.
Log your mobile phone usage-If you’ve used your personal mobile phone for work purposes, you can claim a deduction for the business related use. Make sure you’re organised and have phone bills ready. Make sure you're keeping a log of your business/personal use over a four-week period, if claiming more than $50. This period is then applied to the whole income year.
Buy a new handbag- exciting, right? If you use a bag for work to carry papers or a laptop, you are eligible to claim a tax deduction for the cost. These items could include a briefcase, a backpack or a handbag. Pretty much whatever suits your commuting needs.
Prepay some of your expenses- You're allowed to claim a tax deduction this year for expenses which wholly or partly relate to next year. For example, if you have spare money lying around, consider paying items like professional subscriptions and annual insurance premiums in advance, in order to accelerate the deduction.
Make a charitable donation- With everything going on in the world, now’s a good time to make a positive difference to someone's life with a last minute charitable donation. You can claim a deduction for donations of more than $2 to a registered charity provided you have a receipt for the donation.
Wondering how much tax you may be paying this year? Head over to our income tax calculator, and we’ll crunch the numbers for you.