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Quarterly Newsletter: September 2022

FBT exemption for electric cars: Bill introduced


The introduction of the Treasury Laws Amendment (Electric Car Discount) Bill 2022 provides an FBT exemption for the private use of electric cars by employees.


To be eligible for this exemption the car must fall within the following categories:

  • The value of the car must be lower that the luxury car tax threshold at the first retail sale ($84,916.00 for the 2022-23 year);

  • The car must be a "zero or low emissions vehicle" (such as battery electric, hydrogen fuel cell electric, and plug-in hybrid electric vehicles); and

  • The car must use at least one electric motor for propulsion and it must be fueled by a battery, an electric generator, a hydrogen fuel cell, or an off-vehicle electrical power (or a combination of these).

The Bill will apply to fringe benefits on or after 1 July 2022 for electric cars held and used from 1 July 2022.



Tax time focus on rental property income and deductions


The ATO is focusing on four major concerns this tax season when it comes to rental properties.


Concern 1: Include all rental income


When preparing tax returns, make sure all rental income is included, such as from short-term rental arrangements, renting part of a home, and other rental-related income like insurance payouts and rental bond money retained.


Concern 2: Accuracy of expenses


Not all expenses are the same – some can be claimed straight away, such as rental management fees, council rates, repairs, interest on loans and insurance premiums.


Other expenses such as borrowing expenses and capital works need to be claimed over a number of years.

Depreciating assets such as a new dishwasher or new oven costing over $300 are also claimed over their effective life.


Concern 3: Capital Gains Tax upon sale of a rental property


When selling a rental property, capital gains tax (‘CGT’) needs to be considered and any capital gains or capital losses need to be reported.


When calculating a capital gain or capital loss, it’s important to get the cost base calculation right.


It is also important to note that when selling any property for $750,000 or more, vendors/sellers must have a clearance certificate otherwise 12.5% will be withheld.


These clearance certificate applications can take up to 28 days to process so to avoid delays, sellers should apply as early as practical using the online form.


Concern 4: Record keeping


Records of rental income and expenses should be kept for five years from the date of tax return lodgements or five years after the disposal of an asset, whichever is longer.



New Thresholds and Rates for 2022-23

Category

2022-23 Threshold/Rate

2021-22 Threshold/Rate

CGT improvement threshold

$162,899

$156,784

Division 7A benchmark interest rate

4.77%

4.52%

Maximum invalid and invalid carer tax offset (IICTO)

$2,943

$2,833

Upper limit where IICTO phases out entirely

$12,054

$11,614

SMSF related party LRBAs - ATO safe harbour interest rate

5.35% (real property)

7.35% (listed securities)

5.1%

7.1%

Car depreciation limit

$64,741

$60,733

Input tax credit limit (1/11 of car limit)

$5,885

$5,521

Luxury car tax - fuel efficient

$84,916

$79,659

Luxury car tax - other

$71,849

$69,152

Superannuation guarantee rate

10.5%

10%

Super - untaxed plan cap amount

$1.65 million

$1.615 million

Super - low rate cap amount

$230,000

$225,000

Government co-contributions for low-income earners

$57,016

$56,112

Cents-per-kilometre rate

78

72

GDP adjustment factor (PAYG instalments & GST)

2%

nil

 

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

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