2022-23 Federal Budget Highlights

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On 29 March 2022, the Federal Treasurer, Mr Josh Frydenberg, handed down the Government's 2022-23 Budget.  In an election year, and in an economy emerging from the pandemic, it was a Budget that primarily focused on providing relief to the current cost of living pressures. Targeted small business tax incentives, increases in tax offsets, a one-off cash payment to welfare recipients, and fuel excise relief for 6-months, were some of the key budget announcements (subject to legislation being passed).

The tax, superannuation and social security highlights are set out below.  You can access the full budget papers at www.budget.gov.au

 

Business

  • Small and medium business will be able to deduct an additional 20% of expenditure on cost of external training courses provided to their employees. A $1 spend will equate to a $1.20 deduction.
  • Small and medium business will be able to deduct an additional 20% expenditure on costs and purchase of depreciating assets that support digital uptake.  This includes portable payment devices, cyber security systems or subscriptions to cloud-based services. A $1 spend will equate to a $1.20 deduction.
  • Changes to the PAYG instalment system with a set GDP uplift of 2% to apply for the 2022-23 income year.
  • The Boosting Apprenticeship Commencements wage subsidy will be extended by 3 months.
  • To increase take up and completion rates for apprenticeships, payments of $5,000 to new apprentices, and up to $15,000 in wage subsidies for employers who take them on.
  • Employee share schemes for unlisted companies will be expanded.
  • Additional state & territory COVID-19 business support programs will be eligible for tax exempt treatment until 30 June 2022.


Individuals

  • The Low & Middle Income Tax Offset (LMITO) will be increased by $420 in the 2021-22 income year.  Eligible individuals could be entitled to a maximum Offset of $1,500 (up from $1,080), or $3,000 for a dual income household, depending on income levels. This Offset will be available through lodgement of the 2022 income tax return.
  • A one-off tax-exempt payment of $250 will be made to eligible individuals currently receiving Australian Government social security payments.  This payment will be made in April 2022.
  • 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 for employers, from 1 July 2021.
  • A single paid parental leave scheme of up to 20 weeks paid leave, which will replace the existing 2 separate payments.
  • A doubling of the number of guarantees under the Home Guarantee Scheme to 50,000 per year.  This is to further assist home buyers into the property market who have a lower deposit.
  • The medicare levy low-income thresholds to be CPI indexed for the 2021-22 income year.


Superannuation

  • Extension of the 50% reduction of the superannuation minimum drawdown requirements for a further year to 30 June 2023.


Tax Administration

  • Companies can choose to have their PAYG instalments calculated based on current financial performance, extracted from their business accounting software with some tax adjustments.
  • Businesses will be allowed the option to report taxable payments reporting data from their accounting software on the same lodgement cycle as their activity statements (eg monthly or quarterly).
  • Extra funding given to the ATO to extend the operation of the Tax Avoidance Taskforce by 2 years.


If you have any queries or would like to know more about how the budget announcements may impact you or your business, please get in touch with us.

 

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