Australian Federal Budget 2022-23: What You Need to Know

Budget 2022 2023 (2)

On the 29th of March the Treasurer Josh Frydenberg handed down the budget set out for the 2022-2023 financial year. Continue reading for a snapshot of the highlights:

INDIVIDUALS

Increasing the Medicare levy low-income thresholds

The Government announced from 1 July 2021, there will be an increase in the Medicare levy low- income thresholds for singles, families, seniors and pensioners. Individual or families who have a taxable income below the low-income threshold will be exempt from paying the Medicare Levy.

The following table shows the changes to the Medicare low-income threshold:

Medicare low-income threshold As at 30 June 2021 As at 1 July 2021
Singles $23,226 $23,365
Families $39,167 $39,402
Single – seniors and pensioners $36,705 $36,925
Family – seniors and pensioners $51,094 $51,401
Family – for each dependent child or student* $3,597 $3,691

*For each dependent child or student, the family income threshold is increases by the above amount

Low and middle income tax offset increased

One off increase to the low and middle income tax offset (LMITO) of $420 for the 2021-2022 financial year. The maximum LMITO amount will temporarily lift from $1,080 to $1,500.

The benefits of the extension will vary depending on the taxpayer’s relevant income level:

Taxable Income LMITO 2021 – 2022 (Legislated rate) LMITO 2021 – 2022 (Proposed rate)
$0 – $37,000 $255 $675 (i.e. $ 255 + $420)
$37,001 – $48,000 $255 plus 7.5% of the amount of the income that exceeds $37,000 $675 (i.e. $ 255 + $420) plus 7.5% of the amount of the income that exceeds $37,000
$48,001 – $90,000 $1,080 $1,500 (i.e. $1,080 + $420)
$90,000 – $126,000 $1,080 less 3% of the amount of the income that exceeds $90,000 $1,500 (i.e. $1,080 + $420) less 3% of the amount of the income that exceeds $90,000
$126,001 & over Nil Nil

Cost of Living payments

The government has proposed a one-off economic support payment of $250 to aid eligible recipients with the increased cost of living. The cost-of-living payment will be made in April 2022 to the following eligible recipients and concession card holders:

  • Age Pension
  • Disability support pension
  • Parenting payment
  • Carer payment
  • Career allowance
  • Jobseeker payment
  • Youth allowance
  • Austudy and Abstudy living allowance
  • Double orphan pension
  • Special benefit
  • Farm household allowance
  • Pensioner concession card holders
  • Commonwealth seniors’ health card holders
  • Eligible veterans’ affairs payments recipients and veteran gold card holders

Temporary Fuel Excise Reduction

The government has proposed as of the 30th of March 2022, fuel excise will be halved for six months from 44.2 cents per litre to 22.1 cents per litre on all fuel and petroleum-based products (except aviation fuel).

Superannuation and Retirement

Extension of reduced minimum pension draw-down rates

The government has proposed to extend the temporary reduction in the minimum pension draw down rate for a further 12 months. This is to assist retirees who have seen their superannuation account balances negatively affected as a result of the downturn in financial markets following the Covid-19 pandemic.

Age 2019-2020 to 2022-2023 income years
Under 65 2.0%
65 – 74 2.5%
75 – 79 3.0%
80 – 84 3.5%
85 – 89 4.5%
90 – 94 5.5%
95 & over 7.0%

 

BUSINESS AND COMPANIES

Small and medium sized enterprises (SMEs) boost

The government proposes introducing two new boosts for SME businesses with an aggregated turnover less than $50 million dollars.

1. New skills and training boost
  • This will allow SMEs to claim an extra 20% (120% in total) on expenditure for external training courses for employees in Australia or online through an Australian registered entity.
  • The boost will be claimable on expenses incurred from budget night to 30 June 2022 in the following year’s tax return.
  • The boost will be claimable on expenses incurred between 1 July 2022 and 30 June 2024 in the same income year as the expenses were incurred.
2. New technology investment boost
  • This boost encourages SMEs to adopt digital technologies by allowing them to claim an extra 20% (120% in total) on both expenses and depreciating assets which support the business embracing a digital adoption up to an annual cap of $100,000 of expenditure.
  • The boost will be claimable on expenses incurred from budget night to 30 June 2022 in the following year’s tax return.
  • The boost will be claimable on expenses incurred between 1 July 2022 and 30 June 2023 in the same income year as the expenses were incurred.

Varying GDP uplift factor for PAYG & GST instalment

The government proposes to aid in cash flow support for SMEs through lowering the GDP factor for both PAYG & GST instalments. The proposal outlines a decrease from the 10% statutory formula to 2% for the 2022-2023 financial year. This will be applicable to businesses with up to a $10 million dollar aggregated turnover for GST instalments and $50 million dollar aggregated turnover for PAYG instalments.

Employee Share scheme 

The government proposes to expand access to employee share schemes (ESS) to allow employees to share in the business growth they’ve helped to generate. The proposal allows employers in unlisted companies to make larger offers in connection with an ESS;

  • $30,000 per participant per year (with unexercised options being accruable for up to 5 years), plus 70% of dividends and cash bonuses; OR
  • any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit

Extension of patent box regime

The government has announced it will continue and expand on the patent box scheme announced last year. From 1 July 2022, income derived from eligible patents is subject to an effective concessional tax rate of 17%. The expansion will allow for:

  • Australian medical and biotech innovations to allow for patents granted or issued after 11 May 2021, and various patents issued by the US and Europe to become eligible.
  • To include the agricultural sector innovations that commercialise their eligible patents linked to certain agricultural and chemical products. It will apply to patent issued after 29 March 2023.
  • To include certain low emissions technology patents as identified by the government. It will apply to patents issued after 29 March 2023.

Modernisation of the PAYG instalment system

Subject to capacity from accounting software providers, from the 1st of January 2024, the PAYG instalment calculations will be extracted from business accounting software based on current financial performance.

Reporting of Taxable Payments

The government aims to give businesses the option of reporting Taxable Payments Reporting System (TPRS) data on the same cycle as their business activity statements by 1 January 2024. Implementation through accounting software aims to allow businesses to lodge their TPRS data on either a monthly or quarterly basis alongside their BAS.

ATO’s Tax avoidance taskforce

The government proposes to invest another $652.6 million dollars into its tax avoidance taskforce over the next two years to continue to address corporate and trust tax avoidance.

Enhanced sharing of Single Touch Payroll data

The government has committed $6.6 million dollars to IT infrastructure which will allow the ATO to share single touch payroll data with both state and territory revenue officers to reduce compliance costs for businesses.

Apprenticeships

The government has announced it will continue to support employers who opt to onboard and retain apprentices through;

  1. Extending wage subsidies by 3 months to 30 June 2022.
  2. Introducing a new Australian apprenticeship incentive system from 1 July 2022, focusing on supporting priority occupations.
  3. Adding an additional 2,500 places for apprenticeship In-training support for Australians aged 15-20 in the 2022-2023 financial year.

 

Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice. The information in this news post has been sourced from The Tax Institute – Federal Budget Report 2022-23. 

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