Claiming tax deductions for personal concessional super contributions – compliance with notice requirements & work test
Taxpayers who wish to claim a personal tax deduction for concessional super contributions must provide a Notice of Intent to their superannuation fund.
The tax rules require taxpayers to provide this Notice on or before whichever of the following days occurs earliest:
- the day the taxpayer lodges their tax return for the year in which the contributions were made.
- the last day of the income year after the income year in which the contributions were made.
The taxpayer must also receive an acknowledgment from their super fund.
If the Notice of Intent has already been lodged but the taxpayer has made a mistake or no longer wishes to claim the deduction, then the Notice must be varied with the super fund before the tax return is lodged.
Failure to comply with these eligibility rules may result in the tax deduction being disallowed upon a review by the ATO.
Note the work test needs to be satisfied for individuals aged between 67 and 74 to claim a deduction for personal concessional super contributions. The work test requires an individual to work a minimum of 40 hours in a 30 consecutive day period at any time during the financial year.
Personal concessional super contributions can be accepted up to 28 days after the month in which the person reaches the age of 75.
2023-24 car threshold amounts
From 1 July 2023 the following car threshold amounts apply:
(1) Income tax
An upper limit applies to the value of a car that a taxpayer is able to claim depreciation based on the business use of the car - the car limit applies to the year the car is first used for business or work purposes.
The car limit for 2023–24 is $68,108 – this amount is exclusive of GST so it applies net of any GST credits claimed.
Example:
If a taxpayer purchases a car for $70,000, the maximum depreciation that can be claimed is based on the cost limit of $68,108.
(2) Goods and services tax (GST)
Where the purchase price of the car exceeds the cost limit of $68,108, the maximum GST credit that can be claimed is one-eleventh of the car limit amount which in 2023–24 is $6,191.
A GST credit cannot be claimed for any luxury car tax paid upon purchase of a luxury car regardless of any business use.
(3) Luxury car tax (LCT)
From 1 July 2023, the LCT threshold has increased to $76,950.
The LCT threshold for fuel efficient cars has increased to $89,332 for the 2023–24 year.
The LCT value of a car generally includes, the value of any parts, accessories or attachments supplied or imported at the same time as the car.
Cars with a LCT value over the LCT threshold attract a LCT of 33%.
The LCT amount payable is calculated according to this formula: (LCT value – LCT threshold) × 10 ÷ 11 × 33%
When does a side hustle constitute a business?
The distinction between something you do on the side (e.g. content creator and Uber driving) and carrying on a business can be a fine line. There is no one test to determine whether you are carrying on a business versus a hobby, but the following factors go toward determining whether what you are doing is a business or merely a hobby:
- regularity of your transactions;
- whether or not you are promoting yourself as a business (developing a brand name);
- if you engage in marketing activities:
- whether you intend to develop a business and make a profit (or have the capacity to generate a profit over time);
- the size, scale and permanency of your activities; and
- whether you operate in a business-like manner.
If your activities are just a hobby then the income is not assessable, and the expenses are not deductible. If you are carrying on a business, then you need to declare the income earned but you also get to claim deductions for the cost of the business activities (although an analysis is required to determine whether some expenses can be deducted upfront or over a period of time).
Generally, once you earn or expect to earn $75,000 or more per annum, you will need to register for GST. The exception to the $75,000 threshold is ride-share drivers who must have an ABN and be registered for GST regardless of how much they earn.
The ATO has put together a webpage with lots of information about side hustles and what you may need to bear in mind when it comes to the tax obligations – click here to read.
Paying reasonable travel allowances to employees
The ATO has recently issued Tax Determination TD 2023/3 which sets out the reasonable allowances for the 2023/24 year for meals, domestic and overseas travel paid to employees, company directors or office holders.
The reasonable allowance for overtime meals is $35.65, while the reasonable allowances for domestic and overseas travel is set out in various tables in the Determination.
Where the amount paid falls within the relevant reasonable allowance, the person is not required to substantiate the expenses. However, the ATO still requires some written records be kept to show the allowance was expended.
Note any expenditure on accommodation overseas must be fully substantiated.
ATO continues to cancel inactive ABN’s
The ATO regularly review Australian business numbers (ABN) to identify inactive ABNs for cancellation. The ATO may select a taxpayer’s ABN for review if they haven’t reported business income in their tax return, and there are no other signs of business activity in their lodgements or third-party information.
The ATO will contact the taxpayer or their tax agent in writing if the taxpayer’s ABN is at risk of being cancelled. If the taxpayer is:
- carrying on a business – use the automated phone system to tell the ATO you still require your ABN. This service is easy and available 24/7. This is the fastest way to respond, other methods of contacting the ATO may not be received in time and can result in the ABN being cancelled.
- no longer in business – you don’t need to do anything and the ATO will cancel the ABN.
If the ATO has cancelled your ABN and you are still entitled to one, you’ll need to re-activate the ABN – click here for the relevant link.
