Federal Budget 2022-23

Treasurer Josh Frydenberg unveiled his fourth Budget on the 29th of March 2022. It is important to note the Budget announcements are still only proposed at this stage and to be legislated. Changes can also be made prior to these proposals becoming law.

 

Temporary reduction in fuel excise

The Government is halving the excise and excise-equivalent custom duty rate that applies to petrol and diesel from Budget night and ends on 28 September 2022. This will result in a 22.1 cent per litre reduction in petrol and diesel prices flowing through to the majority of service stations within a few weeks as stations replenish their stocks. This measure is estimated to provide $300 in savings per car per household.

 

Tax

Cost of Living Tax offset

To assist with the cost of living, taxpayers when lodging their 2021-22 tax returns after 1 July 2022 can pocket an extra $420 under a Cost of Living Tax Offset available to Australian’s earning up to $126,000 a year. This will be paid on top of the Low and Middle Income Tax Offset (LMITO), ceasing 30 June 2022. Singles and each member of a couple eligible for the full amount of LMITO and the Cost of Living Tax Offset will receive a total $1500 offset at tax time.

COVID-19 Test expenses to be deductible

The costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals from 1 July 2021. The Government will also ensure Fringe Benefit Tax (FBT) will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose.

Increase in Medicare Levy low-income thresholds

Effective 1 July 2021, the following table compares the level of taxable income below which no Medicare levy becomes payable.

Social security

One-off $250 Cost of Living Payment

Pensioners and welfare recipients will automatically receive a one-off cash bonus of $250 in April 2022 to help with the cost of living pressures.

The payments are exempt from taxation and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under 2 or more of the categories outlined below and will only be available to Australian residents.

Superannuation

Minimum pension drawdown relief extended to 2022-23

The Federal Government has granted a temporary 50% reduction in the minimum pension drawdown of account based pensions for 2022-23.

Business

Support for small businesses

Small businesses with aggregated annual turnover of less than $50 million can:

  • Deduct an additional 20%of expenditure incurred on external training courses provided to their employees. Eligible expenditure incurred by 30 June 2022 can be claimed in tax returns for the following income year. Eligible expenditure incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred. Exclusions apply.
  • Deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services. An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost.

Extra support for businesses

The Government announced several measures to support businesses. Notable measures include:

  • Extension of COVID-19 Business Support Payments and access to Pandemic Leave disaster payments.
  • Enhancement and redesign of the Payment Times Reporting Portal and Register.
  • Extra funding for the Australian Small Business and Family Enterprise Ombudsman to work with service providers to enhance small business financial capability.
  • Delivered by Beyond Blue, the New Access for Small Business Owners program continues to provide free, accessible, and tailored mental health support to small business owners.
  • Operated by Financial Counselling Australia, extension of the Small Business Debt Helpline program continues to provide financial counselling to small business facing financial issues.
  • Delivering the new ReBoot initiative and support up to 5,000 disadvantaged young Australians to develop employability skills, providing a pathway to employment services and training opportunities.
  • Adding 15,000 low and fee-free training places in aged care courses under the JobTrainer Fund.
  • Continued support for business who employ mature-aged Disability Employment Services program participants through the Restart Wage Subsidy.
  • Extending the:
    • Time to Work Employment Services program for 12 months to provide continued in-person pre-employment services for Aboriginal and Torres Strait Islander prisoners.
    • Trial of career coaching for job seekers of all ages participating in Digital Services under Workforce Australia.
    • Pension suspension period and Pension Concessional Card access period to 2 years for pensioners who receive a nil payment due to their partner’s employment income or working hours, where this has also resulted in a suspension of their partner’s pension for up to 2 years.

 

Other

Additional 50,000 scheme places for first home buyers

  • 35,000 guarantees each year, up from the current 10,000, from 1 July 2022 under the First Home Guarantee, supporting first homebuyers to purchase a new or existing home with a deposit of as little as 5%.
  • 10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee, supporting homebuyers, including non-first home buyers and permanent residents, to purchase or construct a new home in regional areas, subject to the passage of enabling legislation.
  • 5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee scheme, supporting single-parent homes with children in purchasing their first home or to re-entering the housing market with a deposit of as little as 2%.

For more information on these schemes, visit the National Housing Finance and Investment Corporate website at https://www.nhfic.gov.au/

Enhancement to Paid Parental Leave Scheme

From 2021-22 spanning five years, Dad and Partner Pay will be rolled into Parental Leave Pay, creating a single scheme of up to 20 weeks. This leave is fully flexible and shareable for eligible working parents as they see fit.

Paid Parental Leave can be taken anytime between 2 years of the birth or adoption of a child. The income test will also broaden to have an additional household income eligibility test.

The Government is also making adjustments to the income test to further support women’s workforce participation.

Currently, mothers who earn up to $151, 350 can access Parental Leave Pay even if their partner earns a higher income, but a family in which the mother earns more than $151,350 – even where the partner has no income or the partner income is much lower – is not entitled to Parental Leave Pay. To remedy this, the Government is broadening the income test to include a household income threshold of $350,000 per year. This change will particularly support women who are the primary earner and do not currently have access to employer-funded parental leave.

Important information

The information provided is current as at 29 March 2022 and is subject to change. This article is not personal financial, taxation or legal advice and should not be relied on as such. Any advice in this document is general advice only and does not take into account the objectives, financial situation or needs of any particular person. You should obtain specialist financial, taxation or legal advice relevant to your circumstances before making investment decisions. Whilst every care has been taken in the preparation of this information, Australian Unity Personal Financial Services Ltd (‘AUPFS’) does not guarantee the accuracy or completeness of it. Where an article is provided by a third party any views in that article are the views of the author and not of AUPFS. AUPFS does not guarantee any particular outcome or future performance. Australian Unity Personal Financial Services Ltd ABN 26 098 725 145, AFSL No. 234459. This document produced in March 2022. ©

Dennis Souksamlane and Defined Financial Advice Pty Ltd are Authorised Representatives of Australian Unity Personal Financial Services Limited (ABN 26 098 725 145), AFS Licence no. 234459. The information provided on this website is general in nature. Any advice on this website is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making investment decisions. AUPFS is a registered tax (financial) adviser and any reference to tax advice contained in on this website is incidental to the general financial advice it may contain. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Nothing on this website represents an offer or solicitation in relation to securities or investments in any jurisdiction. Where a particular financial product is mentioned, you should consider the Product Disclosure Statement before making any decisions in relation to the product and we make no guarantees regarding future performance or in relation to any particular outcome. Whilst every care has been taken in the preparation of this information, it may not remain current after the date of publication and AUPFS and its related bodies corporate make no representation as to its accuracy or completeness.

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