As we approach the end of the tax year there are some things to bring to your attention. Many of these you will know from prior years however there are some changes. In particular deductions for Home office and associated expenditure. Personal superannuation contributions also have some changes for "catch up" contributions. These are all outlined below.
Resident taxable income thresholds
for the 2019/20 income year tax payable (1)
0 – $18,200 Nil
$18,201 – $37,000 19% of excess over $18,200
$37,001 – $90,000 $3,572 + 32.5% of excess over $37,000
$90,001 – $180,000 $20,797 + 37% of excess over $90,000
$180,001 and over $54,097 + 45% of excess over $180,000
1. The Medicare levy of 2% generally applies in addition to these rates.
Tax saving strategies prior to 1 July 2020
A good strategy to reduce tax payable is normally to accelerate any income tax deductions into the current income year, which will reduce overall taxable income in the current year. Despite this, for the 2020 tax season, tax planning may require consideration of an individual's potentially reduced income as a result of the COVID-19 pandemic (where applicable), in which case a decision may be made to defer expenditure.
Common claims made by individuals
The following outlines common types of deductible expenses claimed by individual taxpayers, such as employees and rental property owners, plus some strategies that may be adopted to increase deductions for the 2019/20 income year.
1. Depreciable plant, etc, costing $300 or less
Salary and wage earners and rental property owners will generally be entitled to an immediate deduction if certain income-producing assets costing $300 or less are purchased before 1 July 2020.
Some purchases you may consider include:
- books and trade journals;
- briefcases/luggage or suitcases;
- calculators or electronic organisers;
- electronic tablets;
- software;
- stationery; and
- tools of trade.
- Clothing expenses
Individuals can purchase or pay for work-related clothing expenses prior to the end of the income year such as:
- compulsory (or non-compulsory and registered) uniforms, and occupation specific and protective clothing; and
- other associated expenses such as dry-cleaning, laundry and repair expenses.
- Self education expenses
Individuals could consider prepaying self education items before the end of the income year:
- course fees (but not HELP/HECS payments), student union fees, and tutorial fees; and
- interest on borrowings used to pay for any deductible self education expenses.
Also they could bring forward purchases of stationery and text books (i.e., those which are not required to be depreciated).
4. Other work-related expenses
Employees can also prepay any of the following expenses prior to 1 July 2020:
- union fees;
- subscriptions to trade, professional or business associations;
- magazine and professional journal subscriptions;
- seminars and conferences; and
- income protection insurance (excluding death and total/permanent disability).
5. Home Office
In previous years we have claimed home office expenditure at a rate of 52c per hour. This has included heating, cooling and lighting the area you use along with depreciation of any furniture utilized. We can then claim in addition to his amount any expenditure on phone & internet (subject to the four week diary), computer consumables and stationery and computer equipment (either depreciation or outright depending on the cost).
This year you can continue do use this method for the whole year OR alternatively use it for the period to 29 February.
For the period 1 March to 30 June you are able to use an increased hourly rate of 80c per hour. However, this rate includes all phone, internet, consumables, stationery and equipment.
It is our suggestion that you keep a record of home office hours for the two periods and we can discuss what suits you best when preparing your return.
6. Personal Superannuation Deductions
The concessional (deductible) superannuation contribution amount remains at $25,000 pa. This includes your employer 9.5% superannuation contribution.
In addition this year for the first time you are permitted to make "catch up" contributions if you did not contribute $25,000 last year. There are some additional conditions for this type of contribution so please ensure you contact our office to clarify your position if you wish to make use of these new provisions.
Remember superannuation contributions MUST by allocated to your account in your Superannuation Fund prior to June 30. If you are going to make an extra contribution we suggest you do so before June 26 to ensure you meet the deadline.
For details that may be specific to your occupation please refer to the occupation specific guides under our resources tab. If your occupation is not there contact us for access to the expanded rage of occupation specific guides.