2023 TAX UPDATES

Self-education removal of deduction limitation

Individuals will now have the ability to claim a higher deduction for self-education expenses. From the 2022–23 income year, legislation that limited the self-education deduction to costs above $250 each income year has been repealed. In order to claim a self-education deduction, an individual must demonstrate a necessary connection of the expense with their assessable income.

The announcement, which recently became law after receiving royal assent, originally came from the 2021 Federal Budget and is somewhat related to a Treasury discussion paper released in December 2020. However, other matters addressed in the paper, such as deductions for expenses unrelated to current employment, have not been taken further at this stage.

Announcement(11-May-2021)

Consultation

Introduced(3-Aug-2022)

Passed(28-Nov-2022)

Royal Assent(12-Dec-2022)

Date of effect(1-Jul-2022)

Sharing economy - expansion of reporting regime now in effect

Starting from 1 July 2023, operators of sharing economy platforms will be required to report transactional information to the ATO. The Taxable Payments Reporting System already applies to some businesses in industries where non-compliance is deemed to be high risk. By adding operators of sharing economy platforms to the regime, taxpayers who hold or use assets for short-term lease or contract work will also have their information collected.

The identification of users of sharing economy platforms means that, as an adviser, you should be informing taxpayers who earn income off these platforms about their tax obligations. This includes operators of shortterm accommodation, ride-sharing transport and food delivery platforms. Also, other task or time-based service platforms will be required to report for income years beginning on 1 July 2024.

ABNs to be cancelled for late lodgments

Australian Business Number (ABN) holders will now be required to be more accountable and comply with annual income tax lodgment obligations.

First announced in the 2018–19 Federal Budget as an integrity measure, this exposure draft legislation seeks to strengthen disruptions to black economy and tax avoidance behaviour.

Currently, ABN holders are able to retain their ABNs regardless of whether or not they meet income tax obligations. This measure will provide more accountability on enterprises by giving the regulator the ability to cancel ABNs. This means advisers need to ensure clients keep their lodgments up to date, or at least keep a clear line of communication with the ATO.

ATO scrutiny of s 100A family trust arrangements

The ATO has finalised TR 2022/4 and PCG 2022/2 in relation to distributions made by trustees of discretionary trusts. This was complemented by TA 2022/1, which discusses parents benefitting from the trust entitlements of the adult children. All 3 documents focus on schemes where income is diverted from an intended beneficiary in order to reduce tax liabilities.

The rulings discuss these at detail and include significant attention to an important carve out for dealings that are “ordinary family or commercial dealings”. These dealings are excluded from the anti-avoidance provisions. Along with these regulatory resources, the ATO has reiterated its stance in many areas relating to s 100A. In particular, where situations would generally come under an ordinary family or commercial dealing. Trustees need to make sure that their distributions are in accordance with the expectations of the ATO, otherwise they may be subject to an audit. Helping them understand their obligations is paramount coming up to the end of the current income year.

Announcement(25-Aug-2021)

Consultation

Introduced(3-Aug-2022)

Passed(28-Nov-2022)

Royal Assent(12-Dec-2022)

Date of effect(1-Jul-2023)

Announcement(12-Apr-2019)

Consultation(29-Nov-2022)

Introduced

Passed

Royal Assent

Date of effect

Announcement(23-Feb-2022)

Consultation period(29-Apr-2022)

Released(8-Dec-2022)