Last night (25th October 2022), the Federal Treasurer, Dr Jim Chalmers, handed down the Labor Government’s first Federal Budget with a projected deficit of $36.9 billion for the 2022/23 financial year, with an improvement of $41.1 billion coming off the back of high-income tax receipts and high commodity prices.
The Labour 2022-23 Budget is relatively low-key and does not contain any significant changes to tax or superannuation that will impact individuals, superannuation or small to medium businesses. Most of the key policies were released in the lead-up to the budget, including extending the paid parental leave scheme, removal of fringe benefits tax for electric cars, reducing the age for downsizer contributions and changes to the work test for age pensioners.
Following are the highlights of the tax and accounting measures announced:
- The amount pensioners can earn in 2022-23 will increase by $4,000 before their pension is reduced, supporting pensioners who want to work more hours without losing their pension.
- To incentivise pensioners to downsize their homes, the assets test exemption for principal home sale proceeds will be extended from 12 to 24 months, and the income test will be changed.
- The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
- The Paid Parental Leave Scheme will be amended so that either parent is able to claim the payment from 1 July 2023. The existing scheme (currently 20 weeks) will also be expanded by 2 additional weeks a year from 1 July 2024 until it reaches 26 weeks.
- The maximum Child Care Subsidy (CCS) rate and the CCS rate for all families earning less than $530,000 in household income will be increased.
- A New Housing Accord will see an initial $350 million investment to kickstart the delivery of one million new homes across the country over five years from 2024.
- The maximum co-payment on prescription drugs of $42.50 will drop to $30 a script from January at a cost of $787.1 million over four years.
- An investment of $852 million to provide 480,000 fee-free TAFE places.
- Power costs to rise by 20 per cent this year and 30 per cent next year due to the war in Ukraine, ageing electricity infrastructure and investment uncertainty in renewable generation.
- Inflation is expected to rise by 0.1 of a percentage point in both the December and March quarters.
- Eligibility to make a downsizer contribution to superannuation will be expanded by reducing the minimum age from 60 to 55 years.
- Legislation will be introduced to clarify that digital currency (or cryptocurrencies) will not be treated as foreign currency for income tax purposes. (This is important for all taxpayers that hold cryptocurrencies, not just SMSFs).
- The 2021-22 Budget measure that proposed relaxing residency requirements for SMSFs and small APRA-regulated funds (SAFs) from 1 July 2022 has been deferred.
- The 2018-19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs) will not proceed.
- A requirement for retirement income product providers to report standardised metrics in product disclosure statements, originally announced in the 2018-19 Budget, will not proceed.
- Grants will be provided to small and medium-sized businesses to fund energy-efficient equipment upgrades.
- Electric vehicles with a retail price under the luxury car tax threshold will be exempt from fringe benefits tax and import tariffs.
- $2.4 billion will be spent on the national broadband network to expand full fibre access to 1.5 million homes and businesses by 2025.
- Heavy Vehicle Road User Charge rate increased from 26.4 to 27.2 cents per litre of diesel fuel, effective from 29 September 2022.
- The proposed measure from the 2018-19 Budget to impose a limit of $10,000 for cash payments will not proceed.
- Fines for breaching federal laws raised to $275, up from $222, from 1 January 2023.
- Personal Income Taxation Compliance Program extended a further 2 years to 30 June 2025.
- The ATO tax avoidance task force will receive additional funding and is being extended to 30 June 2026.
- The proposed extension of reportable transactions relating to the sharing economy was deferred by 12 months to 1 July 2024.
If you have any questions or would like to know more information about any of these measures, please do not hesitate to contact our office.
This article does not constitute financial, legal or tax advice. For specific advice applicable to your business, please contact the team at Kennedy Cross.