Hien Hoang: 0448 012 728 and Brian Spurrell: 0412 011 946

Part A – Tax Changes

There are two tax changes relating to claiming work related expenses relevant for most taxpayers that will apply from July 1st 2022.

1) Cents per hour claim for car expenses
Earlier in the year the ATO proposed that the cents per kilometer method of calculating your deduction for work related car expenses would be increased from 72c per km to 75c per km. We have now been advised that this rate has been increased to 78c per km. I presume this revision is in recognition of the huge increase in fuel prices.

You are reminded that claims using this method are capped at 5000 business or work related kilometers annually amounting to a maximum deduction of $3,900.

If you expect your work related use of your car to exceed 5000 km or alternatively the total of deductible expenses under the log book method is likely to exceed $3,900 you should keep a logbook record of your total kms travelled for a representative 12 week period together with a record each day of the kms travelled for work related purposes. This will enable you to claim the work related percentage of all costs relating to your car usage. I recommend you google ato compliant logbook app and use it as both your guide and record.

2) Cessation of the 80c per hr shortcut method for claiming home office expenses
The ATO has recently advised that the all-encompassing claim of 80c per hr which covered electricity and gas for heating, cooling and lighting, depreciation of equipment and furniture, phone, internet and office consumables will not be extended beyond 30 June 2022.

Those of you who will continue to utilize a home office for work related purposes and relied upon the 80c per hr short-cut method face the challenge of not only recording all of your related expenses but also maintaining a record of how you have apportioned expenses between work related usage and private usage.

You will still have a choice of the 52c per hr rate covering all running expenses which include gas, electricity and depreciation of office furniture but you will also need to have compliant records of all other home office related expenses.

Alternatively you may elect to use the Actual Expenses Method whereby you will need records of all home office related expenditure including running expenses.
You may wish to refer to my May 2022 column titled ‘Time to Prepare for Tax Time 2022 – Part 2 which explains the above two methods in more detail.

Part B – Changes to Superannuation

1) The Super Guarantee Rate (SG)
As from the 1st July 2022, the employer super guarantee rate will increase from 10% to 10.5% and subsequently to 12% by 2025. This increase will apply from the first pay period in July even if it includes days prior to 1st July. It is possible some employers may reduce employee’s salaries to accommodate the increased cost of $5 per $100 of salary so you may need to review your salary package with your employer to avoid any misunderstandings.

2) Removal of the $450 per month Super Guarantee Threshold
Prior to 30th June 2022 employees who earned less than $450 per month from an employer were not eligible for the employer super guarantee contribution. From 1st July some employees may be eligible for the SG contribution regardless of how much they earn per month.

Employers are not required to pay super for employees under 18 unless they work more than 30 hours per week.

Employers who pay a contractor mainly for their labour must also pay the super guarantee contribution regardless of how much they are paid.

3) Changes to Super Contributions
In addition to the above, the following changes to super contributions announced in the 2021 Federal Budget have now been legislated and apply from 1st July 2022.

  • Individuals up to age 74 will no longer need to meet the work test in order to make voluntary non-deductible contributions.
  • Individuals up to age 75 with a total super balance under $1.7 million, will have the opportunity to make large non-concessional contributions, possibly up to a maximum of $330,000.
  • The minimum age to make a downsizer contribution has been reduced to 60 allowing more individuals to use the proceeds from the sale of their home to fund their retirement.
  • Under the First Home Super Super Scheme (FHSSS) eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit.

Each of these changes were explained in more detail in my March 2022 column and have now received Royal Assent.

The content of this article is not intended to be relied upon as professional advice and should not be used as such. If you have any questions you should consult a registered tax agent or your financial adviser.
Brian Spurrell BA, B Com, Dip Ed, FCPA, Registered Tax Agent.
Director, Personalised Taxation & Accounting Services Pty Ltd
PO Box 143 Warrandyte 3113 Ph: 0412 011 946
Web: www.ptasaccountants .com.au