On Tuesday, Treasurer Josh Frydenberg presented the 2022/2023Federal Budget containing a suite of changes to personal and business taxpayers alongside some other items of note. The announcement included the expansion of home buyer incentives, short-term fuel excise cuts and boosts for businesses looking to train staff or invest in tech and more.
While the Attune team digest and dive deeper into some of the meatier elements of the announcement to share with you, we thought we’d share our brief snapshot of the budget as it applies to our clients and broader community.
Personal income tax changes
1: Increase to low and middle income tax offset (LMITO)
- Government has announced a once-off $420 ‘cost of living tax offset’ for the 2022 income year, which will be provided in the form of an increase to the existing LMITO
2: Increasing the Medicare levy low-income thresholds
- Government will increase the Medicare levy low-income thresholds for seniors and pensioners, families and singles from 1 July 2021
3: Tax deductibility of COVID-19 test expenses
- costs of taking a COVID-19 test to attend a place of work are tax deductible for individuals from 1 July 2021
Changes affecting business taxpayers
1: Skills and training boost
- Skills and training boost to support small and medium-sized businesses to train and up skill their employees
- Small and medium-sized businesses will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees
2: Technology investment boost
- Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses.
- Small and medium-sized businesses will be able to deduct an additional 20% of expenditure 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
3: Modernising the PAYG instalment system
- Government will enable companies to choose to have theirPAYG instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments. This measure is set to commence on 1 January 2024, for application to periods starting on or after that date
4: Reporting of Taxable Payments Reporting System data
- Provide businesses with the option to report TaxablePayments Reporting System data (via accounting software) on the same lodgement cycle as their activity statements. This is measure set to commence on 1January 2024, for application to periods starting on or after that date
5: Making COVID-19 business grants non-assessable non-exempt
- Government has extended the measures that enable payments from certain state and territory COVID-19 business support programs to be made non-assessable non-exempt income (‘NANE’) for income tax purposes until 30 June2022
Other Budget Announcements
1: Cost of living payment
- Government will provide a one-off $250 cost of living payment to help eligible recipients with higher cost of living pressures. The payment will be made in April 2022 to eligible recipients.
2: Temporary reduction in fuel excise
- Government will help reduce the burden of higher fuel prices by halving the excise and excise equivalent customs duty rate that applies to petrol and diesel. This measure will commence from 12.01am on 30 March 2022 and will remain in place for six months (we expect to see the change at the pump within the fortnight).
3: Extending the reduction in minimum drawdowns
- Government will extend the 50% reduction of superannuation minimum drawdown requirements for account-based pensions (‘ABPs’) and similar products for a further year to 30 June 2023.
4: Varying the GDP uplift factor for tax instalments
- Government has decided to set the GDP uplift factor for PAYGand GST instalments at 2% for the 2023 income year. This uplift factor is lower than the 10% that would have applied under the statutory formula.
5: Digitalising trust income reporting and processing
- Government will digitise trust and beneficiary income reporting and processing by allowing all trust return filers the option to lodge income tax returns electronically, increasing pre-filling and automatingATO assurance processes. This is proposed to commence from 1 July 2024.
6: Expanding access to employee share schemes
- Government will expand access to employee share schemes and further reduce red tape so that employees of all levels can directly share in the business growth they help to generate.
For a closer look at some key elements of the budget announcement, please access these links via the Chartered Accountant AustraliaNew Zealand website:
Cost Of Living Specifics | Superannuation
If you’d like to discuss what this years Federal Budget means for you in detail and how it fits with your financial strategy, get in touch with theAttune team today on 1300 866 113 or send us an email.
