The 2022-23 Federal Budget announcement was certainly impacted by a recipe of complicated factors; pandemic, rising inflation, low unemployment, geo-political tensions…and a pending election! In summary, it aims to support the economy, without fuelling inflation, whilst delays any substantial tax or fiscal reform. With much of the detail still to come, the following aims to summarise key items.
Cost of Living assistance:
- A win for most Australian families and businesses alike, the fuel excise will be temporarily halved for six months. This equates to 22.1 cents per litre, however bowser prices are still expected to be higher than prior to the Ukraine incident.
- Australian residents who are concession card holders or recipients of certain social security payments will receive a one-off tax-exempt ‘Cost of living payment’ of $250 to assist with higher cost of living expenses. Payments have been promised for April 2022.
Salary and Wage earners:
- A $420 ‘Cost of living tax offset’ has been announced, essentially increasing the existing Low and Middle Income Tax Offset (LMITO). The maximum LMITO benefit will increase to $1,500 for individuals and $3,000 for couples. It applies to the current 2022 financial year and will be paid when tax returns are submitted after 1 July 2022.
- Slight increases were also announced to the low-income threshold that applies to the Medicare levy.
- Further, the costs of taking a COVID-19 test, in order to attend a place of work, will be tax deductible from 1 July 2021.
Incentives for Regional Australians:
- $480 million has been promised to upgrade access to fixed wireless services for faster internet speeds across households and businesses in regional areas.
- Over $6 billion has been announced in flood relief for families, businesses, local governments and local communities impacted by recent flood events.
- $100 million worth of tax concessions have been announced for primary producers selling carbon credit units and biodiversity certificates in an effort to reduce emissions.
Superannuation:
- Superannuation minimum drawdown rates will continue to be reduced to June 2023. This will halve the amounts that must be drawn for another year while still qualifying for tax concessions. Amounts are based on the superannuants age and account balance.
Housing:
- The number of guarantees available for first homebuyers will be increased from July 2022 and will support first homebuyers with deposits as low as five percent.
- Regional Home Guarantees have been proposed from October 2022 to support the purchase or construction of homes in regional areas, including non-first home buyers and permanent residents who have not owned a home for five years.
- The Family Home Guarantee will be extended to support single parents with children to enter or re-enter the housing market.
Jobs and Skills support:
- The Boosting Apprenticeship Commencements wage subsidy will continue to 30 June 2022 (previously due to end this month). A new apprenticeship incentive scheme will then be introduced for ‘priority occupations’, where apprentices and trainees could be eligible for direct payments of up to $5,000 over two years and employers could be eligible for up to $15,000 in wage subsidies.
- Businesses with annual turnover of less than $50 million will be incentivised to invest in upskilling employees with an additional 20% deduction for the cost of external training delivered by registered providers in Australia.
- Increased funding to the VET sector was also announced, as was an expansion to the ‘Transition to Work’ program. A ‘ReBoot’ pre-employment program was announced for young people, as well as training subsidies for people who would like to work in the aged care sector.
Further Business support:
- Small business is set to be supported in the area of technology investment. Additional deductions have been announced for expenses and depreciating assets that support digital uptake, as well as deductions for investment in digital technologies.
- Cash flow relief will be available for some small businesses and sole traders, while several support networks and units will be developed, including a small business unit in the Fair Work Commission, extension to Beyond Blue’s New Access for Small Business Owners program and the Financial Counselling Australia’s Small Business Debt Hotline. Assistance in business planning, capacity building and financial literacy will be available through the Australian Small Business and Family Enterprise Ombudsman.
- Instant asset write off will continue until 30 June 2023.
- The ‘GDP uplift’ factor applied to PAYG instalments for small and medium businesses will be calculated at 2% for the 2023 income year. This is substantially lower than the 10% uplift that would normally have been applied.
- The manufacturing industry will continue to be supported by incentives that help modernise operations and commercialise new ideas and technologies.
- Investment in Australian Defence will see the creation of around 100,000 new jobs, the establishment of a base for nuclear-powered submarines on the east coast of Australia and investment in our offensive and defensive cyber capabilities.
Down the track:
- Welcome measures were also announced to modernise and simplify company PAYG instalment calculations, Taxable Payments Reporting System data, Single Touch Payroll data and Trust and beneficiary income reporting. These measures are proposed to commence in 2024 subject to factors such as capacity and capability of accounting software.
- Reduced red tape and increased capacity for employees to access Employee Share Schemes is also proposed.
The sceptics will say that this is a Budget announcement to win votes, and perhaps so. There is certainly something in there for everyone. Only time will see if the current government have the opportunity to apply these measures!
If you have any questions about how these announcements could apply to you, please don’t hesitate to contact us today at our Orange office on 02 6362 1533 or our Molong office on 02 6366 8049 or fill out our contact form