2022-23 Federal Budget Highlights

The 2022-23 Federal Budget is a safe, ballot box friendly Budget as expected with a focus on cost of living, home ownership and health.

Key Initiatives as well as tax, superannuation and social security highlights are set out in this months blog.

Key initiatives include:

• A 6 month, 50% reduction in fuel excise with effect from midnight Budget night
• A $420 cost of living tax offset for low and middle income earners from 1 July 2022
• A one-off $250 economic support payment to some social security payment recipients
• For small business, a $120 tax deduction for every $100 spent on training employees and digital adoption

But, it is also a Budget that drives digitisation. Not just to support innovation but to streamline compliance, create transparency and more readily identify anomalies. Single touch payroll was the first step, the PAYG instalment system, trust compliance, and payments to contractors are next.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

The tax, superannuation and social security highlights are set out below.

Individuals

• The low and middle income tax offset will be increased by $420 in the 2021–22 income year to ease the current cost of living pressures.
• A one-off payment of $250 will be made to individuals who are currently in receipt of Australian government social security payments, including pensions, to ease cost of living pressures.
• Additional funding will be provided over 5 years to support older Australians in the aged care sector with managing the impacts of the COVID-19 pandemic.
• Costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals and exempt from fringe benefits tax from 1 July 2021.
• A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing system of 2 separate payments.
• CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors and pensioners for the 2021–22 year announced.
• The number of guarantees under the Home Guarantee Scheme will be increased to 50,000 per year to assist home buyers who have a lower deposit.

Business

• Additional state and territory COVID-19 business support grant programs will be eligible for tax treatment as non-assessable non-exempt income until 30 June 2022.
• Small and medium businesses will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.
• Small and medium businesses will be able to deduct an additional 20% of eligible expenditure supporting digital adoption.
• The Boosting Apprenticeship Commencements wage subsidy will be extended by 3 months.
• Access to employee share schemes in unlisted companies will be expanded.
• The PAYG instalment system is set for a structural overhaul with a set GDP uplift of 2% to apply for the 2022–23 income year.
• Additional funding will be provided to further reform insolvency arrangements, including the insolvent trading “safe harbour”.
• Business registry fees will be streamlined over 3 years from 2023–24.

Excise and customs duty

• Excise and excise-equivalent customs duty on petrol and diesel will be reduced by 50% from 30 March 2022 for 6 months.
• The temporary tariff concession for COVID-19 related medical and hygiene products will be made permanent.
• Administration of fuel and alcohol excise, and excise-equivalent customs duty will be streamlined.

Superannuation

• The 50% reduction of the superannuation minimum drawdown requirements for account-based pensions will be extended for an additional year.

Tax administration

• Companies will be able to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments.
• Businesses will be allowed the option to report taxable payments reporting system data (via accounting software) on the same lodgment cycle as their activity statements.
• Trust and beneficiary income reporting and processing will be digitalised.
• IT infrastructure will be developed to allow the ATO to share single touch payroll data with state and territory revenue offices.
• The ATO will be given funding to extend the operation of the Tax Avoidance Taskforce by 2 years.
• The start date of the 2019–20 Budget measure for holders of Australian Business Numbers will be deferred by 12 months.

Remember, some of these measures don’t commence immediately and will depend on the outcome of the upcoming Federal Budget.

We will continue to keep you up to date as the detail of these measures come to hand if you are affected!