Jun 21, 2024
RESIDENT TAX RATES AND THRESHOLDS
| Taxable Income ($) | Rates in 2023-24 (%) | Taxable Income ($) | Rates in 2024-25 (%) |
| 0-18200 | Tax free | 0-18200 | Tax free |
| 18201-45000 | 19 % | 18,201-45,000 | 16 % |
| 45,001-120,000 | 32.5 % | 45,001-135,000 | 30 % |
| 120,001-180,000 | 37 % | 135,001-190,000 | 37 % |
| 180,000 + | 45 % | 190,001 + | 45 % |
COMMON INDIVIDUAL INCOME TAX MINIMISATION STRATEGIES
- Personal superannuation contributions - making additional tax deductible personal contributions within your annual concessional contribution cap and/or taking advantage of any unused concessional cap from the last five years
- Private hospital insurance - ensuring you have private hospital insurance cover if your income for medicare levy surcharge purposes is above $97,000 for singles and $194,000 for families (subject to number of dependent children)
- Negative gearing or borrowing to acquire investments, most common with residential property or listed shares, such that the interest and other investment costs outweigh the related income
- Car expenses - if you use your own car for work purposes there are two methods for claiming a tax deduction
- Working from home - if you work from home there are also two different methods for claiming these costs as a tax deduction
- Donations to charities - making tax deductible donations to a charity that is registered as a deductible gift recipient
- Income protection insurance to cover for loss of income in the event of illness or accident, these premiums are tax deductible
WORKING FROM HOME
To be eligible to claim a deduction for working from home there are essentially two available methods to use.
The easiest and most simplest method is to claim using the fixed rate method. Under this method you can claim a tax deduction of 67 cents per hour whilst working from home. This method does not require you to have a designated working area or home office. Importantly it is an all inclusive method as it generally denies claiming for any other costs. You cannot additionally claim the costs for using your mobile phone, use of internet, any percentage of utilities (electricity and gas) nor any computer consumables. You can however under this method claim a separate deduction for the decline in the value of assets used while working from home (computers & office furniture), repairs & maintenance of these assets and cleaning (but only if you have a dedicated home office).
Working from home is more than checking emails or text messages, it is fulfilling your employment duties and not just completing minimal tasks. You need to keep records to show the hours that you worked from home during the year, such as diary records, calendar, time tracking apps, timesheets, logbooks or rosters. These records should cover at least a four (4) week period reflecting a regular work pattern.
An alternative method to claim a deduction for working from home is the actual cost method. This method requires more detailed record keeping but it allows you to claim a deduction for the actual expenses that you incur as a result of working from home. The eligible expenses include but are not limited to the following:-
- mobile or home phone
- data & internet
- computer consumables
- utilities (electricity and gas)
- depreciation of equipment used for work (computers & office furniture)
- cleaning (but only if you have a dedicated home office area)
You need to keep records of relevant tax invoices to prove you incurred the cost, and have records of the cost per unit of electricity &/or gas and average units used per hour. A useful tool to keep a record of the expenses and tax invoices is the myDeductions tool in the ATO app. Note that bank statements alone are generally not sufficient evidence to support a deduction.
Note that employees are generally unable to claim any deductions for occupancy costs such as mortgage interest, insurance, rates & taxes or rent.
We are here to help so if you have any queries please feel free to ask us.