What does the 2022/2023 Federal Budget mean for you?
Last night’s budget was a cautious budget. Amid a backdrop of almost full employment, natural disasters, the war in Ukraine and the ongoing COVID-19 pandemic, the Treasurer has focussed on Australia’s strong economy and emphasised the need for temporary measures to assist with cost-of-living pressures. Many of the announcements in the budget are adjustments or extensions to existing measures.
We are pleased to provide you with this brief summary of the main impacts for you, and as always, welcome your questions to our team.
- The low and middle income tax offset (commonly called the ‘lamington’), available to taxpayers earning less than $126,000 per year, is here for one more year, and will be increased by $420. This is claimed via your 2022 tax return if eligible.
|Taxable income||Low and middle income tax offset|
|Less than $37,000||$675|
|Between $37,000 and $48,000||Increase 7.5 cents per $1, capped at $1,500|
|Between $48,000 and $90,000||$1,500|
|Between $90,000 and $126,000||Reducing from maximum at 3 cents per $1, tapering to $420|
- Individuals who are currently in receipt of an Australian government allowance or pension will receive a one-off payment of $250 in April 2022 to ease the cost of living pressures. Certain concession card holders will also get the payment.
- Costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals. This measure will be retrospective to 1 July 2021.
- Some minor changes are being made to the Paid Parental Leave scheme, intended to be more flexible in allowing leave to be shared between 2 parents as they choose, and allowing single parents access to the full 20 weeks. The income test will be broadened to have an additional household income eligibility test.
- A temporary reduction in fuel excise of 50% will be implemented with immediate effect. This will reduce the fuel excise component of fuel prices by 22.1c per litre. This will apply to all petroleum-based products except aviation fuel and will apply until 28 September 2022.
Companies and business
- Additional deduction of 20% for expenditure supporting digital adoption for businesses with a turnover of less than $50 million. This includes depreciating assets and subscriptions to cloud-based services, capped to a maximum spend of $100,000. Expenditure incurred after 7.30pm on 29 March 2022 until 30 June 2023 will be eligible. These include portable payment devices, cyber security systems or subscriptions to cloud based services. Effectively, for every dollar you spend on expenses or assets associated with digital take-up, you’re going to get $1.20 worth of deductions. However, be careful as anything spent between budget night and the 30 June 22 will have to be carried forward to the next financial year. So, there’s not necessarily an incentive to go out and do it right now.
- Additional deduction of 20% for expenditure on external training for employees (in Australia and can be online) for businesses with a turnover of less than $50 million. Expenditure incurred after 7.30pm on 29 March 2022 until 30 June 2024 will be eligible. We recommend you set up a separate training account in your software so that any training expenditure can be easily identified.
- The GDP uplift factor applying to PAYG instalments will be capped at 2% for businesses with turnover of less than $50 million.
- Access to the employee share scheme concessions for unlisted companies will be expanded so that participants can invest up to $30,000 per year or any amount, if it allows them to immediately take advantage of a planned sale or listing. This measure will help to reduce some of the red tape around these concessions. We will await further information around the detail surrounding this measure.
- A plan to allow businesses to report taxable payments reporting system data on the same lodgment cycle as their activity statements, with effect from 1 January 2024. For example, businesses that make payments to contractors that have to report these to the ATO such as building, construction, cleaning, road freight, couriers, IT and security industries.
- The Boosting Apprenticeship Commencements wage subsidy will be extended until 30 June 2022 (previously ended on 31 March 2022).
Businesses of any size can claim the wage subsidy. Eligible businesses will be reimbursed up to 50% of an apprentice or trainee’s wages of up to $7,000 per quarter for 12 months.
- The halving of minimum drawdown rates for account based pensions will be extended for another year until 30 June 2023.
|Age||2008-09 to 2010-11 |
|2011-12 to 2012-13|
|2013-15 to 2018-19 |
|2019-20 to 2022-23|
|95 or more||7.0%||10.50%||14%||7.0%|
For a detailed Tax and Accounting Overview on 2022/23 budget click here.
If you would like further information or book an appointment to discuss the impact on your personal or businesses situation please contact the WLF Accounting & Advisory team.