Tax Changes for 2023/24

It was announced that starting the 2018/2019 income year, singles, pensioners, families, and seniors in the low-income thresholds would stay exempted from paying Medicare. 

To know your Medicare levy, use this online calculator.

For 2022/23, low-income and other partial or full Medicare exemptions are available. It should be noted that a Medicare Levy Surcharge may also be applied on a progressive basis. That is if citizens do not maintain their private health insurance coverage. 

But what is a Medicare Levy Surcharge (MLS)? It is a type of federal government tax collected to pay for public healthcare. Everyone benefits from Medicare, which allows even those who cannot afford to obtain services from hospitals and medical professionals. However, Medical Levy Surcharge only applies to Australians taking out private companies’ health insurance.

Almost all people with a full-time job are required to pay the Medicare Levy, which is at two per cent. As stated above, the exception is for those who do not meet the income threshold. People whose income is more than $90,000 and $180,000 for singles and couples, respectively, will have to pay the Medicare Levy Surcharge. However, they should not have any private health insurance.

For the 2023-24 income year, the rate for claiming work-related car expenses using the cents per kilometre method has increased to 85 cents per kilometre.

This rate is comprehensive and covers all eligible car expenses, including registration, insurance, repairs, maintenance, fuel, and depreciation. Consequently, you cannot claim deductions for these costs separately elsewhere in your tax return.

Increased Rate Per Hour: The rate per hour you can claim has increased from 52 cents to 67 cents for each hour you work from home. Additionally, you no longer need a designated working area or home office.

While this seems beneficial at first glance, there are some drawbacks to consider.

Absorbed Deductions: The new fixed rate of 67 cents per hour now includes several deductions that you previously claimed separately, potentially reducing your overall tax benefit.

Items You Can’t Claim Separately When Using the 67 Cents Per Hour Rate:

• Internet expenses
• Home and mobile phone expenses
• Electricity and gas used for heating, cooling, and lighting
• Stationery and computer consumables (e.g., printer ink, paper)

Additional Deductions Allowed Alongside the 67 Cents Per Hour: While many common deductions are now absorbed into the fixed rate, you can still claim:

• Depreciation of assets costing more than $300, such as office furniture, computers, and mobile phones.
• Expenses for work-related purchases up to $300, like desk chairs and monitors.
• Costs for cleaning your home office and repairing office furniture.

The age at which an individual can make a downsizer contribution to their superannuation has been revised.

Eligible individuals who have reached the appropriate age can contribute up to $300,000 from the proceeds of selling their home into their superannuation fund. The eligible age requirements are as follows:

• From 1 January 2023, 55 years or older
• From 1 July 2022, 60 years or older
• From 1 July 2018, 65 years or older

The fringe benefits tax (FBT) exemption introduced last year eliminates the tax for electric vehicles (EVs) under $89,332, the luxury car tax threshold for fuel-efficient vehicles. This policy makes EVs more affordable and attractive for fleets and eligible individuals by reducing the cost to be comparable with petrol or diesel cars, already driving significant demand for EVs.

This incentive lowers the cost of owning an eligible EV and covering running costs through a novated lease by thousands of dollars per year. EVs and plug-in hybrid electric vehicles (PHEVs) valued up to $89,332 in FY 2023/24 qualify for the FBT exemption. However, the exemption for PHEVs is set to expire on 1 April 2025.