2023 TAX UPDATES

Electric vehicle home charging expenses – compliance guideline

The ATO has released a draft practical compliance guideline to assist taxpayers with calculating electricity costs relating to charging electric vehicles at home. In response to the surge in use of electric vehicles in Australia, provision of electric vehicles to employees or associates was recently made exempt from FBT (conditions applied). From 1 April 2022 and 1 July 2022 for FBT and income tax purposes respectively, taxpayers can calculate home charging electricity expenses at 4.20 cents per kilometre. This guideline does not apply to plug-in hybrid electric vehicles which have internal combustion engines or are not considered low-emission vehicles.

Transitional rules for the 2023 FBT and 2023 income year apply.

A new Property Tax coming for NSW

The NSW state government has released details of its much anticipated revamping of NSW state taxes in the 2022–23 state budget.

From 16 January 2023, the First home buyer property tax option will enable first home buyers to choose between:

• paying an upfront stamp duty, or • an annual property tax.

Originally, the option was to replace stamp duty with the annual property tax in New South Wales. This announcement came as part of the 2020–21 NSW state budget. The property tax option will be available to first home buyers on purchases of land worth up to $1.5 million, or $800,000 in the case of vacant land. Also, if the first home buyer chooses to pay the stamp duty instead of the annual property tax, other stamp duty concessions may still be available. Transitional arrangements are also available for contracts entered into from 11 November 2022 (date of announcement) and 15 January 2023.

Announcement(31-Mar-2023) Consultation period

Announcement(17-Nov-2020) Consultation(21-Jun-2022)

Introduced(11-Oct-2022)

Passed(10-Nov-2022)

Royal Assent(11-Nov-2022)

Date of effect(16-Jan-2023)

Large superannuation balances will have tax concession removed

The federal government has announced its intention to change tax concessional treatment of very large superannuation account balances. From 1 July 2025, superannuation balances over $3 million will have earnings on that portion of the balance taxed at 30%. The 30% tax rate will be the same as the company tax rate and the individual tax bracket of $45,000 to $200,000 in that income year. This change will require legislative approval, and the legislative process is currently as consultation phase. However, members with large balances currently have 2 years to plan for its inclusion in the tax law.

Residential investment property loans - ATO’s data matching program

The ATO has announced the commencement of a data-matching program for property investors to acquire residential investment property loan data from authorised financial institutions. Sample audits conducted under the ATO random enquiry program indicate a net tax gap of $9 billion for the 2019–20 income year attributable to incorrect reporting of rental property income and expenses.

Incorrect apportioning of loan interest costs where the loan was refinanced or redrawn for private purposes has been identified as a significant driver of this gap. In addition to compliance action, the ATO will also be using the data it collects to obtain insights which will help develop and implement treatment strategies to improve voluntary compliance. This data matching program will run from 2021–22 to the 2025–26 income years.

Announced: 27-Apr-2023

Updated: 27-Apr-2023