When preparing clients’ 2023 tax returns, the ATO has issued significant revisions and new methods. The elimination of the self-education expense level, working from home, and the low and middle income tax offset are significant developments for individuals this year.
The Small Business Technology Investment Boost, Franked Distributions Supported by Capital Raising, Small Business Skills and Training Boost, and Other Significant Enhancements for Businesses Shares purchased off-market, tax credit for digital games, 2024: Offshore Banking Unit Regime Interest on Early Payments, an increased Commonwealth penalty unit, new items in the Company tax return for 2023, and removed items from the Company tax return for 2023 are all examples of such items.
Small company technology investment and small business skills and training investment are two major shifts for super funds and rollover funds.
Corporate Collective Investment Vehicles (CCIVs), Small Business Technology Investment Boost, Small Business Skills and Training Boost, and Interest on Early Payment are significant changes for trust.
The Small Business Technology Investment Boost, Eligibility for Downsizer Contributions, and Small Business Skills and Training Boost are three major improvements to SMSF.
Enhancing small business technology investment and small business skills and training are important changes for partnerships.
Car expenses: cents per km rate to increase for 2023-24
Concerns raised by the ATO surround insurance settlements obtained in connection with investment properties that are not recorded as income. It has disclosed more details regarding the sources from which it gathers data about rental homes, and improved data matching methods are now in place:
- Landlord insurance – Data will provide details on insurance plans covering rental properties, including premium payments and claim settlements.
- Residential investment property loan – Data will assist in ensuring that the deductions for interest and borrowing costs are accurate.
Inaccurate reporting of rental income and expenses, such as interest payments, insurance premiums, claim payouts, maintenance costs, and capital works deductions, is a major cause of the $1.3 billion rental tax gap. These errors account for 14% of the overall individual tax shortfall.
Income protection insurance data matching
For its new data matching methods, the ATO will obtain information about income protection insurance policyholders from insurers for the years 2021-2022 through 2025-2026. Income protection insurance payouts from either personal insurance policies or super fund policies raise difficulties with the ATO because they are not reported as income on tax returns.
Among the data points are:
- policy owner details (names, addresses, phone numbers, dates of birth, account name, BSB, account number etc.)
- policy details (policy name, year, policy type, policy brand, start/end dates, premiums, payouts etc.)
- insured person details (names, addresses, phone numbers, dates of birth, account name, BSB, account number etc.).
