As mining industry employees all over Australia prepare their 2023 tax returns, we ask a tax accountant for their hot tips.
With the arrival of the new financial year, it’s time for FIFO workers and other mining industry employees—and all working Australians—to think about submitting their tax return.
Whether it’s a job you look forward to, or one you dread, it’s always best to go into the tax return process as informed as possible. So, we asked Senior Advisor Ben Mears, from Westcourt Family Business Accountants in Perth, for his insights into the kind of things mining industry workers should know as they prepare their returns this year.
Here’s what he had to say.
There have been some big changes this year
Ben said the Australian Taxation Office had introduced three big changes in the past year which FIFO workers and other industry employees might need to consider.
Low and middle income tax offset changes
“Last year, there was a low and middle income tax offset up to a certain threshold in earnings for the year,” Ben said. “Some people got around $1,500 refunded for that, but that’s been removed this year, so we’re probably going to see quite a few returns actually have a lower refund or payable position.”
Working From Home Deduction
There were also major changes to the Working From Home Deduction, since more people have begun working remotely in the post-pandemic era. While this is less likely to affect FIFO workers, plenty of other people in the industry will be affected.
“There have been some changes to the records required, as well as the hourly rate that you can claim,” Ben said. “Previously, there were two types of Working From Home Deduction: actual costs or the fixed rate method.
“They’ve revised the fixed rate method and changed the hourly rate from 52 cents to 67 cents, which includes the electricity and gas for the home, your phone and internet, as well as computer consumables and things like that.
“They’ve also removed the requirement to actually have a dedicated home office space. Previously, you had to have an office or some sort of set-up in your house to be able to claim this, which is gone.
“The new reporting requirements kicked in from February 2023 and mean taxpayers are required to not just keep a record of the hours they’ve worked from home, but that you as an individual have paid the expenses (like phone and internet) you’re claiming.”
So, keep a clear diary and hold onto it, in case you’re ever audited!
Self-education expenses
Ben said the rules around self-education expenses had also changed.
“Previously, for self-education and upskilling, there used to be a threshold for the first $250 of expenses being non-deductible,” he said. “That threshold has actually been removed. It is going to be the entire expense that’s deductible now.”
That’s going to be very handy for many in the mining industry, who pay for their own tickets and training to either get their start or get a promotion.
Take care on crypto
Beyond those three big changes, Ben also cautioned anyone investing in crypto currency to make sure they’re following the tax rules and reporting any sales, because the ATO is paying close attention to those transactions.
“People being aware that they need to report any sales of their crypto, even if it does result in a loss it should be reported and carried forward,” he said.
“There are a lot of airdrops and sacrificing that goes on in crypto. You can sometimes get a dividend reinvestment. So, it would be the equivalent in shares. People need to be reporting that as other income rather than waiting until they sell those shares to report them.
“Also, if any are held for more than 12 months on capital account, it’s worth noting that then you get that 50% discount, which actually reduces the taxable income that you need to pay.”
A note on super contributions
Ben also urged miners to pay close attention to their superannuation contributions.
A few years ago, the Australian Government introduced the ability to increase the amount of your super contribution if you weren’t able to contribute the full amount during the previous couple of years. It meant workers could put extra money into their superannuation as a tax deduction.
Super contributions were normally capped at about $25,000 but the new rule meant if you’d hadn’t put in the full amount in the last five years, you could top it up to catch up to your full allowance.
“Because that rule has been in place for roughly five years now, if your contributions aren’t meeting the cap from earlier years, you’re not starting to lose the ability to add those amounts now,” he said.
The good news is, the cap is now $27,500.
“If you do make contributions on top of your employer contributions but stay below the cap, then your accountant can lodge a Notice of Intent to Deduct claim with your super fund,” Ben said. “Then you’ll receive an acknowledgement back and then that’s when your accountant can claim the deduction in your tax returns.
“That’s a good way to also grow your super as well as get deductions for it. So if you have the spare cash, which a lot of FIFO people do, it’s definitely a good option.”
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Disclaimer: MPI is not a tax and/or accounting advisory agent, and the comments contained do not represent MPI. Talk to your accountant for tax advice.