Attention all small business owners! As we navigate through another tax year, it’s essential to be well-informed about the alterations to deduction claims, particularly if you conduct your business from home or utilise a vehicle for business-related purposes.
Cents per Kilometre Method
A noteworthy change this tax year is the adjustment in the cents per kilometre method for car expense claims. The rate has been elevated from 72 to 78 cents per kilometre during the 2022–23 income year.
This approach is accessible to sole traders and partnership members, provided at least one partner is an individual. It functions by applying a predetermined rate for every kilometre travelled for work-related motives. You can claim up to a maximum of 5,000 kilometres per vehicle annually.
Opting for this method means the 78-cent rate encompasses a comprehensive array of vehicle running expenditures, including registration, fuel, servicing, insurance, and depreciation. It’s important to note that separate claims for these specific costs aren’t permissible.
The car limit has seen an increase as well, now set at AUD 64,741 for the 2022–23 income year.
This limit is the maximum value that can be used to compute the depreciation of passenger vehicles intended for loads under one tonne and accommodating fewer than 9 passengers. Please note that this limit doesn’t apply to motorcycles or similar vehicles.
Work from Home Business Expenses
For those conducting their business operations from home, even occasionally, there’s news for you too.
In the 2022–23 income year, the fixed-rate method has been revised from 52 cents to 67 cents per hour spent working from home, and the prerequisite for a dedicated home office space has been waived.
The fixed-rate method covers a range of expenses including electricity, gas, stationery, computer consumables, internet, and phone usage. Additionally, you’re entitled to separate deductions for expenses not covered in the hourly rate, such as the depreciation of assets like laptops or office furniture.
Furthermore, the records you need to maintain for your work from home deductions have also undergone changes.
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