Blog Layout

What changed on 1 July 2022 - For business and individuals

Aug 11, 2022

Some substantial changes were made to taxation and superannuation for individuals and businesses from the beginning of the 2022-2023 financial year. We summarise the main changes below.


Business


  • Superannuation guarantee increased to 10.5%.
  • $450 super guarantee threshold removed for employees aged 18 and over.
  • Small business GST and PAYG tax instalments lowered (the total tax liability remains the same, just the amount the business needs to pay through the year is lowered).
  • ATO guidance on how profits of professional firms are structured comes into effect, introducing new risk criteria.
  • New guidance on unpaid trust distributions to corporate beneficiaries comes into effect that may treat some unpaid distributions as loans and trigger tax consequences.


Four wooden blocks spelling out 2023

Individuals


  • Superannuation guarantee increased to 10.5%.
  • Work test repealed for people under 75 to receive non-concessional or salary sacrifice super contributions (the work test still applies to personal deductible contributions).
  • Age for downsizer super contributions reduced to 60 years and older.
  • Value of voluntary super contributions that can be withdrawn under the First Home Saver Scheme increased to a total of $50,000.
  • New ATO guidelines on trust distributions come into effect primarily impacting distributions to adult children.
  • Home loan guarantee scheme extended to 35,000 per year for first home buyers and 5,000 per year for single parents.


Guidance on COVID-19 related deductions


In completing individual tax returns for the 2022 income year, taxpayers should be aware that there have been some changes with respect to claiming deductions for expenses relating to COVID-19.

 

One of the key things to remember is that individuals can claim a deduction for the cost of COVID-19 tests that were required for work-related purposes (e.g., to determine if they can attend or remain at work).

 

Further, some individuals may be able to claim a deduction for the cost of protective items that protect against the risk of illness or injury while performing work duties. This can apply for workers in close proximity to customers and at risk of contracting COVID-19, who may be able to claim a deduction for protective items such as gloves, face masks or sanitiser.

 

The ATO also confirms the tax treatment of various support payments that may have been received by individual clients including:

 

  • JobSeeker: this is included in assessable income.
  • COVID-19 disaster payment (delivered through Services Australia): this is not taxable.
  • Pandemic Leave Disaster Payment: this is assessable income.

 

ATO refocus on debt collection


The ATO has not pursued many business tax debts during the pandemic and allowed tax refunds to flow through even if the business had a tax debt. That position has now changed and the ATO has resumed debt collection and offsetting tax debts against refunds.


If you have a tax debt that has been on-hold, expect the ATO to offset any refunds against this debt, and take steps to actively pursue the payment of the debt. Small businesses account for around two-thirds of the total debt owed to the ATO. If you have a tax debt, it is important that you engage with the ATO to work out how this debt will be paid.


Need help?



If you need some assistance navigating these changes, please get in touch. Email us or phone our friendly team on (02) 9899 3044.

 


A team of professional workers from different backgrounds in a modern office

Non-compete clauses and worker restraints under review

09 Apr, 2024
A new issues paper from Treasury’s Competition Review questions whether non-competes and other restraints are limiting job opportunities and movement. A recent Australian Bureau of Statistics (ABS) survey found that 46.9% of businesses surveyed used some kind of restraint clause, including for workers in non-executive roles. The survey also found 20.8% of businesses use non-compete clauses for at least some of their staff and 68.2% for more than three-quarters of their employees.  Over the last 30 years, Australia has seen a decline in job mobility. Australia is not alone in this and other advanced economies have experienced the same issue. While restraint clauses are not the only factor contributing to the decline – an ageing population and a rise in post-pandemic market concentration in some industries has also contributed - i t is specifically the role of restraints that is the focus of the Competition Review issues paper (s ubmissions close 31 May 2024).
Image of a person with business graphs indicating income and profits

The assault on professional services

09 Apr, 2024
The ATO is willing to pursue professional services firms who divert profits to avoid tax. The ATO can potentially challenge arrangements involving the distribution of profits from a professional practice.
Young couple out the front of their retail business

How much is my business worth?

09 Apr, 2024
For many small business owners, their business is their largest asset and expected to help fund their retirement. But what is your business really worth and what sets a high value business apart?
More Posts
Share by: