The global boom in solar energy… it is worth chasing?
With the focus of the Labor Government on boosting our solar production capability I was interested in a story in the Bondi Partners newsletter (Joe Hockey’s consultancy group).
According to energy think tank Ember, renewable energy accounted for 30 percent of global electricity production in 2023, setting a new record. While the majority of renewable energy generation came from hydropower, solar power was the fastest growing source following a record surge in installations at the end of 2023.
Despite the record-setting growth in clean energy power generation, fossil fuels remained the number one source of global electricity generation. However, forecasts indicate that 2023 was a “pivot point” and growth and adoption of renewable energy would continue increasing at its current pace or even faster.
According to Ember’s current analysis, electricity generated from solar was expected to double by this same time next year, while fossil fuels are expected to drop by 2 percent.
From an investment point of view, fossil fuels will be used for a long time to come but solar power is leading the renewable transformation.
Source: Ember
Tax Office targets for your returns this year
Every year, ahead of tax time, the ATO releases its target areas – what it’s going to pay extra attention to. It is always a timely warning.
This year they will be taking a close look at three common errors being made by taxpayers:
- Incorrectly claiming work-related expenses
- Inflating claims for rental properties
- Failing to include all income when lodging
Work-related expenses
In 2023 more than 8 million people claimed a work-related deduction, and around half of those claimed a deduction related to working from home.
Last year, the ATO revised the fixed rate method of calculating a working from home deduction to broaden what is included. They increased the rate you use to calculate your expenses and adjusted the kind of records you need to keep.
These changes are in full effect this financial year, meaning you must have comprehensive records to substantiate your claims as you would for any other deduction.
To use this method, you need records that show the actual number of hours you worked from home (like a calendar, diary or spreadsheet), and the additional running costs you incurred to claim a deduction (like a copy of your electricity or internet bill).
Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.
Remember, there are three golden rules for claiming a deduction for any work-related expense:
- You must have spent the money yourself and weren’t reimbursed
- The expense must directly relate to earning your income
- You must have a record (usually a receipt) to prove it
Rental properties
Rental properties continue to remain in the ATO’s sights. Their data shows nine out of 10 rental property owners are getting their income tax returns wrong.
They often see landlords making mistakes when it comes to repairs and maintenance deductions on rental properties, so the ATO is keeping a close eye on this.
They’re particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit.
Performing general repairs and maintenance on your rental property can be claimed as an immediate deduction. However, expenses which are capital in nature (like initial repairs on a newly purchased property and any improvements during the time you hold the property) are usually not deductible as repairs or maintenance.
You can typically claim an immediate deduction for general repairs like replacing damaged carpet or a broken window. But if you rip out an old kitchen and put in a new and improved one, this is usually considered a capital improvement and is only deductible over time as capital works.
Get it right – wait to lodge
As part as its third focus on keeping accurate records, the ATO is also warning against rushing to lodge your tax return on 1 July. If you have received income from multiple sources, you need to wait until this is pre-filled in your tax return before lodging.
They see lots of mistakes in July where people have forgotten to include interest from banks, dividend income, payments from other government agencies and private health insurers.
For most people, this information will be automatically pre-filled in their tax return by the end of July. This will make the tax return process smoother, save you time, and help you get your tax return right.
By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.
