Tax Time 2022

As we have now entered a new financial year, it is a good time to reflect on what developments have occurred over the past year and to also look at what might affect us for 2023 as well.


Here are a few key items of interest to consider when starting to prepare for your 2022 income tax return:


Pre fill reports won’t be accurate until the end of July

If you are expecting a tax refund this round, many of you would be keen to get your tax returns done as soon as possible. Just keep in mind that the pre fill reports we receive from the ATO will not be entirely complete until late July at the earliest, and possibly even later if you have cash invested in managed funds. This means that your usual hmh advisor will not be able to fully rely on the information from these reports for now, so please let us know beforehand if you received any additional forms of income (new investments etc) that were not present in the prior year.


Pandemic leave disaster payments are taxable

These payments will be taxable to those who received them during the 2022 financial year. We have also been advised by the ATO that these payments won’t appear in pre fill reports, so we’ll be relying on you to provide us with the information necessary to include in your tax return.


Work related Covid 19 tests are deductible

If you needed to get tested for work related purposes during the year, please let us know what your out of pocket expenses were so that we can include them as a deduction.


Cryptocurrency trades and capital gains/losses

We have seen a stark increase in the number of clients trading in crypto over the past couple of years. The ATO’s current stance is that any gain made on crypto trades must be included in your tax return as taxable income, so please make sure that you keep good records of these. Keep in mind that a capital gains event also occurs when you simply trade one coin for another, transfer crypto to another person’s wallet, purchase goods or services with crypto or simply convert coins to AUD and leave it in the exchange. In other words, you may have a declarable capital gain even if you haven’t pulled out any cash. On the other hand, any losses made can also be included as a capital loss in your return. The ATO are getting incredibly good at data matching with many of the major crypto exchanges in Australia, so it’s a good bet they will already know if you’ve made trades during the year.


BHP Merger with Woodside Petroleum

If you held BHP shares on 1 June 2022, you would have received an additional dividend as consideration for the new Woodside shares that you received on the same date as part of a demerger arrangement. This dividend will be taxable to you in your 2022 income tax return, even though you did not receive any cash directly.


The Low and Middle Income Tax Offset (LMITO)

This may be the last time the LMITO is available for taxpayers, but the good news is that it has been increased by $420 to a maximum of $1,500 for 2022. Taxpayers earning between $48,000 to $90,000 will be eligible for the maximum offset. This offset will be calculated as part of your final tax payable/refund due on the completion of your 2022 tax return.


ATO Items of interest

As usual, the ATO are always on the lookout for taxpayers claiming deductions for things they should not be. Things like double dipping (claiming a deduction for an expense that has already been reimbursed to you by your employer), negative gearing on properties that haven’t been available for rent and simply claiming expenses that aren’t related to your work activities are all high on the ATO’s target list for 2022. If you are not sure if a particular expense is claimable, simply let us know and we’ll determine what you can and can’t claim for you.


Electric vehicles and FBT

The labour government wants to introduce legislation that will make electric vehicles costing less than the luxury car limit ($84,916 for the 2023 financial year), exempt from Fringe Benefits Tax from 1 July 2022. This is potentially a huge development, and while nothing has been passed by law yet, it is definitely something to keep an eye on. We could see a huge shift to electric cars in the next few years if this does go ahead.


Extension of the instant asset write off

This has now been extended to 30 June 2023, so businesses will continue to have the option to completely write off new equipment and other capital assets as a tax deduction until then.


Section 100a and trust distributions to adult children

This new development has been making waves in the accounting industry for the last couple of months now. The ATO are now turning their attention to trusts which make distributions to adult children, AND do not transfer the monetary value of said distribution to the children, AND the parents receive a tax advantage by doing so. While this has never been an issue before, the commissioner has changed his opinion on this particular piece of legislation and it will affect trusts from the 2022 financial year onwards. Please contact your usual hmh advisor if this is of particular concern for you, as there are some workarounds available.


If you want to discuss any of the above items in more detail, or if you are simply unsure of anything, please do not hesitate to contact your usual hmh Advisor on +61 3 9840 2200. We also encourage you to get your information to us as soon as you can so that either you get your refund sooner, or so that we can plan for any tax payables well in advance.