Your tax return is going to look different this year. These are the changes you need to know about

With the end of the financial year almost upon us, the opportunity to get an extra few hundred (or even thousand) dollars from a tax return is a welcome prospect for the millions of Australians struggling with the cost of living crisis.

However, there are a few changes to personal tax returns for the 2022-23 financial year that the Australian Tax Office (ATO) has outlined – and they could mean you'll actually end up with a smaller return than the year before.

These are the changes, and the impact they'll have on your return.

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End of the LMITO

Let's start with the bad. Confirmed in this year's budget is the end of the low and middle-income tax offset (LMITO) – sometimes referred to as the "lamington".

The LMITO was a temporary tax cut for anyone earning up to $126,000, with the greatest benefit of $1500 going to those taking home between $48,000 and $90,000 in 2021-22.

This is how much of a tax cut it provided those low and middle-income earners:

The ATO says the end of the lamington is one of the key reasons millions of Australians will get a smaller tax return this year – around ten million people claimed the offset in 2020-21.

However, the standalone low-income tax offset (LITO) for people earning up to $66,667 remains, with the biggest cut of $700 going to anyone with $37,500 or less in taxable income.

This is how the LITO is calculated:

For Australians earning between $66,668 and $90,000, this alone will add $1500 to their tax return.

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Changing work-from-home deductions

In better news, there's more of a rebate on offer for Australians who work from home and claim relevant tax deductions using the fixed rate method, although the quickest and easiest way to claim those expenses has ended.

Previously, this fixed rate was set at 52 cents for every hour worked from home. For the 2022-23 financial year, it has been increased to 67 cents.

For someone working 40 hours per week for 48 weeks, that makes for an increased deduction of $288.

The exact expenses the fixed rate covers have also changed.

Previously it covered energy costs, furniture depreciation and cleaning costs, with the likes of phone and internet fees, stationary, and depreciation of non-furniture assets like computers able to be claimed separately.

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Now, the fixed rate covers phone and internet fees, power expenses, and stationary and computer consumable costs, with all other work-from-home-related expenses able to be claimed separately.

The changes have also altered record-keeping requirements, which you can find out more about at the ATO's website, and removed the requirement to have a dedicated home office to claim the fixed rate.

However, if you ever used the "shortcut method" to claim work-from-home tax deductions, you're out of luck.

That method, which allowed people to claim a flat rate of 80 cents per hour worked from home but barred them from claiming any other such expenses, has now ended.

So while the increased fixed rate is good news for taxpayers who work from home, those who used the 80 cents per hour may actually find they're able to claim back less than in previous years.

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Self-education expenses threshold removed

This is a fairly simple measure.

Previously, if you had paid to undertake a study course or training exercise for work, you could claim the cost of that as a tax deduction, minus the first $250.

That $250 threshold has now been removed, meaning you can now claim the entire expense of an eligible work-related educational course as a tax deduction.

READ MORE: Millions hit by extra student debt - here's what you need to know

Landlord crackdown

This isn't a change as such, but earlier this year the ATO warned it would be cracking down on landlords who incorrectly claim expenses - whether deliberately or accidentally.

That came after a report found nine in every 10 landlords either made mistakes in their returns or wrongfully claimed expenses, costing the nation $1.3 billion in missing tax revenue.

We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return," Assistant Tax Commissioner Tim Loh said in May.

"You can only claim interest on a loan used to purchase a rental property to earn rental income – don't forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income."

Loh also warned the ATO would be on the lookout for incorrectly claimed work-from-home expenses, and that capital gains tax was its third key focus area for the year.

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

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