Happy New Year
Welcome to the Personal Tax Specialists 2013 Tax Time Update.
Your 2013 tax return
It’s hard to believe that another financial year is nearly over, but that means it’s time to start getting your records together again for this year’s tax return. We will be emailing your ‘2013 Quick Update Form’ to you early next week to make sure that we have all of your details up to date. On this form you can also indicate which month you would like us to get started on your tax return this year.
Major changes in 2013
This year there have been lots of changes in the tax world. Some that you might need to be aware of are:
1. Medical expenses – make sure you claim this year if you are eligible
For the 2013 financial year, if your adjusted taxable income is more than $84,000 for singles or $168,000 for couples or families, then you will only be allowed to claim the Medical expenses tax offset once you have spent $5,000 on eligible medical expenses. The offset is then calculated at 10% of the eligible expenses above $5,000.
If your income is below these thresholds you will still be able to claim the medical expenses tax offset once your eligible expenses exceed $2,060 and the rate you can claim remains at 20% of the excess expenses.
Please also note that if you don’t claim the medical expenses offset in your 2013 return you will be ineligible to claim it in future years! So, if you think you might have spent close to the minimum amount this year make sure you check the figures so you can claim anything you are eligible to (even if it’s only a few dollars).
2. Your employer super contributions are about to increase
There is actually some good news this year! From 1st July 2013 your employer will be required to contribute 9.25% of your salary to your superannuation fund. The government has announced that the superannuation guarantee rate will gradually increase from 9% to 12% over the next 7 years. The full 12% will not be required until 1st July 2019.
3. ATO will be reviewing claims for internet, home office and mobile phones this year
The ATO are seeing many more claims for these types of expenses in tax returns each year and therefore they will be putting more attention on individuals’ claims in these areas.
To ensure you are able to claim all that you are entitled to, you should make sure you have kept all receipts in relation to your internet and phone accounts as well as a minimum of a 4 week diary, which shows your work usage of your internet and mobile phone during that period.
For home office expenses we normally claim on an hourly basis. So you will only need a diary record showing how many hours you are required to work from home (over a 4 week period each year). You can then make a claim for 34c for every hour you work during the year. You can also choose to make a claim based on your actual home office expenses. If you would prefer to claim this way, please speak with your accountant about the records you will need to keep when we prepare your return this year.
4. Superannuation contributions caps
Once again the government has decided to limit the amount you can contribute to super each year without paying excess contributions tax. In the next financial year (2013-14), if you are under 60, the maximum tax deductible (or concessional) contributions that can be made into your super fund are $25,000. If you are 60 or older, the maximum you can contribute this year is $35,000. These limits include any compulsory superannuation contributions made by your employer or salary sacrificed contributions you make.
If your concessional contributions exceed these limits, you will be required to pay a total of 46.5% tax on the excess contributions. If you think this may apply to you, it may be worth speaking with your financial adviser about possible alternative options.
5. If you own a rental property, make sure you maximise your deductions this year
If you own a rental property you may be missing out on some large deductions if you haven’t organised to get a quantity surveyors report yet. These reports outline how much you are entitled to claim for the cost of your building and also the fixtures and fittings within the building each year. These deductions can add up to thousands of dollars each year. If you don’t have one yet, it’s not too late! Just get in touch with a quantity surveyor in your area before you get your return lodged this year. The report will only cost a few hundred dollars, which is always less than the benefit you get in your tax return.
Don’t forget you can also claim for many other expenses in relation to your rental property. For a full list refer to our website.
6. Is your spouse unable to work due to disability or carer responsibilities?
If your spouse doesn’t work (and you don’t have any dependent children) you have always been able to claim an offset in your tax return (which reduces your tax bill). However from the 2013 year you will be restricted to claiming this only if your spouse was born before 1/7/1952.
There is some good news though. If your spouse is unable to work because they have a disability or because they are required to care for another person (such as an elderly parent) you may still be eligible for this offset. If you think this situation may apply to you, please let your accountant know when we are preparing your return this year.
This year’s audit targets
This year the Tax Office will be paying close attention to tax returns that include claims for:
- Travel for work, including while ‘on call’ and while carrying heavy or bulky equipment,
- Home office expenses
- Work related tools
- Self-education expenses
As well as anyone who has large or unusual tax deductions for their occupation.
So what does this mean for you and your tax return? The most important thing is that if you want to claim for your work expenses, you must have the right records in case the Tax Office wants to check them.
At the very minimum, the records you need to keep for your work expenses are:
- receipts for all work expenses costing $10 or more
- a diary record of any minor work expenses (costing $10 or less and up to a total of $200 for the year) where you haven’t kept the receipt
- a diary record of any work related trips you have made in your personal car
- a diary record of your internet use for work for one month during the year
- a diary record of your telephone use (mobile and home) for work for one month during the year
If you are unsure about what expenses you can claim for in your occupation have a look at the updated ‘what deductions can you claim’ page on our website or organise a time to speak with one of our accountants.
If you know of anyone who might find any of the information in this email useful, please feel free to forward it on to them.
Thanks for your support over the last year and as always, if you have any tax related questions, please just ask. We look forward to catching up with you over the next few months.
The Personal Tax Specialists team