2022–23 Federal Budget Highlights - ALK Financial Group Pty Ltd

On Tuesday 29 March 2022, The Federal Treasurer, The Hon. Josh Frydenberg, handed down the 2022–23 Federal Budget.

As our economy emerges from the pandemic, the Treasurer confirmed an unemployment rate of 4% and an expected budget deficit of $78 billion for 2022–23.

As international uncertainties add pressure on the cost of living, key measures in the Budget provide cost of living relief in the form of an increased Low-and Middle-Income Tax Offset; a one off $250 payment for welfare recipients and pensioners; and a 6-month fuel excise relief.

Other measures for business seek to promote innovation and provide tax incentives for small business to invest in the skills of their employees.

A lower GDP uplift rate for PAYG and GST instalments has also been proposed to support cash flows of small and medium businesses.

Individuals

One-off cost of living tax offset

The government will provide a one-off $420 cost of living tax offset via an increase to the existing low- and middle-income tax offset (LMITO) for 2021-22.
The government will provide a one-off Cost of Living Payment of $250 in April 2022 to eligible recipients who are currently in receipt of Australian government social security payments, including pensions, to ease cost of living pressures.

Coronavirus tests to be tax deductible

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.

Enhanced Paid Parental Leave

A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing system of 2 separate payments (previously split between Parental Leave Pay – 18 weeks and Dad and Partner Pay – 2 weeks).

Increasing the Medicare Levy low-income thresholds

The government will increase the Medicare Levy low-income thresholds for singles, families, seniors and pensioners from the 2021-2022 income year. This is a routine increase and applies retrospectively form the beginning of the financial year.

Expansion of Home Guarantee Scheme

The Home Guarantee Scheme is being expanded to help more first home buyers purchase their first home. A new Regional Home Guarantee Scheme for non-first home buyers is also being introduced.
Under the scheme(s) the government guarantees part of a home loan. This allows the purchase of a home with a smaller deposit without needing to pay Lender’s Mortgage Insurance.
Under the expanded Home Guarantee Scheme, the government will make available 50,000 guarantees each year to assist home buyers who have a lower deposit.

20 free Rapid Antigen Tests (RATs) for concession card holders

The Rapid Antigen Test Concessional Access Program will deliver up to 20 free RATs over seven months until 31 July 2022 to all Australians with a concession card – including Department of Veterans’ affairs card holders

Safety net threshold lowered for the Pharmaceutical Benefits Scheme

Effective 1 July 2022, the Pharmaceutical Benefits Scheme (PBS) safety net threshold will be lowered, which will allow patients to reach the safety net sooner. Concessional patients will require approximately 12 fewer scripts while general patients will require approximately 2 fewer scripts.
On reaching the PBS safety net, concessional patients will receive their PBS medicines at no cost for the remaining calendar year while general patients will receive their PBS medicines at the concessional co-payment rate.

Aged Care

$468.3 million will be invested over 5 years to further implement the government’s response to the Royal Commission into Aged Care Quality and Safety. This will include spending in five key areas as follows:
- Home Care
- Residential Aged Care Services and Sustainability
- Residential Aged Care Quality and Safety
- Workforce
- Governance
The government will provide additional funding to support older Australians in the aged care sector while managing the impacts of the COVID-19 pandemic.

Business

Making Coronavirus business grants non-assessable non-exempt

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 business technology investment boost

The government has announced that it will introduce a skills and training boost to support small businesses to train and up-skill their employees. The boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024.
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.

Expanding access and further reducing red tape for employee share schemes

Access to employee share schemes in unlisted companies will be expanded and further reduce red tape so that employees at all levels can directly share in the business growth they help to generate

Where employers make larger offers in connection with employee share schemes in unlisted companies, participants can invest up to:

$30,000 per participant, per year plus 70% of dividends and cash bonuses
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

Excise and customs duty

From 12.01am on 30 March to 11.59pm on 28 September 2022, the Government will reduce the fuel excise (and excise-equivalent customs duty care) that applies to petrol and diesel by 50% for six months. The excise (and excise-equivalent customs duty rate) that applies to all other fuel and petroleum-based products (including LPG and Biodiesel), except aviation fuels, will also be reduced by 50%

Superannuation

Extension of temporary reduction in superannuation minimum drawdown rates

The government has announced a 12-month extension of the temporary 50% reduction in superannuation minimum drawdown rates for account-based pensions and similar products to cover the 2022-23 income year. This will apply to:

Account based pensions and annuities
Transition to retirement pensions
Term allocated pensions and annuities

Key Superannuation Announcements

Removal of work tests for personal and voluntary employer contributions for members aged 67-75
Requirement for members aged 67-75 to satisfy a work test (or work test exemption) to claim a deduction for a personal contribution
Reducing the eligibility age for downsizer contributions from 65 to 60
Removing the $450 per month superannuation guarantee eligibility threshold
Maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme increased from $30,000 to $50,000

Tax administration

Proposed to commence 1 January 2024, companies will be able to choose to have their Pay As You Go (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 lodgement 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.

Individuals

Business

Superannuation

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