Car Expenses

Cents per kilometre rate for 2022-2023

Date of effect: 1 July 2022

Up from 72c/km

The ATO has registered the Income Tax Assessment – Cents per Kilometre Deduction Rate for Car Expenses Determination 2022.
The determination sets the rate of work-related car expense deductions at 78 cents per kilometre for 2022-2023.

ATO Guidance

on trust reimbursement agreements

On 20 June 2022, the ATO issued a guide on trust reimbursement agreements,
Managing section 100A for the 2021-2022 income year.

Section 100A of the income tax assessment act 1936 is an anti-avoidance rule. It applies to an agreement (called a ‘reimbursement agreement’), where one person receives a benefit from the trust but another person is made presently entitles to income and assessed.

The ATO’s latest guide makes the following key points:

• Section 100A does not apply where the beneficiary simply receives or enjoys the benefit of their distribution. The ATO adds that an arrangement is considered low risk (or in the “Green zone”) if the beneficiary uses the entitlement to benefit themselves, their spouse and dependents;

• most small business trust arrangements involve “nothing more” than presently entitled beneficiaries receiving their entitlement, or controllers reinvesting the profits of the trust into the working capital of the business. The ATO says these arrangements present a very low risk of section 100A applying;

• high risk (“Red Zone”) arrangements commonly have elements of contrivance, undue complexity, or other features that do not demonstrate a family or commercial-based reason, but

•  instead a motivation to shelter income from higher tax rates. The ATO give the TA 2022/1 example of a university student with no other income sources who is made presently entitled to $180,00 but who agrees to pay the $180,000 less tax to reimburse the parents for costs incurred when the student was a child.

Tax Scam Myth

Scams aren’t always easy to spot

Don’t be fooled, scams aren’t always easy to spot and these days, they aren’t always full of typos and bad grammar. In fact, you’ll come to find most scammers use ‘official’ language to seem more legitimate. Tech advancements make this easier for scammers, you should always stop and think before clicking a link when you get an SMS or email and remember, messages from the ATO will never include links that direct you to a login page for online services such as myGov.

Ready, Set, Lodge!

Lodging your Tax Return

Did you know?

After lodging your tax return, you can keep an eye on how it is progressing through ATO online services, the ATO app or by phone.

The majority of taxpayers can now lodge their returns as more than 80 million pieces of information are available in pre-fill with the Australian Taxation Office. Although there’s all this data ready to go, you still need to check that the ATO details are accurate and ensure any other information that hasn’t been pre-filled is manually added. Some things that may be forgotten as they need to be entered manually are:

• Income from rentals
• Side hustles
• Pandemic Leave Disaster Payment from Services Australia

Cryptocurrency

Not a foreign currency

Government to legislate to provide ‘certainty’

The Treasurer has announced that the government will legislate to ensure that cryptocurrencies continue to be excluded from foreign currency tax arrangements. This will ensure that the current treatment is unchanged and that cryptocurrency will not be regarded as a foreign currency. As a result, CGT will continue to apply to crypto assets that are held as investments.

The ATO’s broad approach is that if taxpayers acquire cryptocurrency as an investment, they may have to pay tax on any capital gain they make on disposal of the cryptocurrency. Conversely, if the disposal is part of a business a taxpayer carriers on, the profits the taxpayer makes on disposal will be assessable as ordinary income and not as capital gain.

Some more interesting aspects are highlighted below.

CGT

A disposal can occur when taxpayers:

• sell of gift cryptocurrency;
• trade or exchange cryptocurrency (including this disposal of one cryptocurrency for another cryptocurrency);
• convert cryptocurrency to fiat currency (a currency established by government regulation or law), such as Australian dollars; or
• use cryptocurrency to obtain goods or services.

If the cryptocurrency is held as an investment for 12 months or more, taxpayers may be entitled to the CGT discount.