Here are the highlights from the 2022-23 federal budget, handed down by Treasurer Josh Frydenberg on 29 March 2022.
In an economy emerging from the pandemic, the Treasurer has confirmed an expected budget deficit of $78 billion for 2022-23 and an unemployment rate of 4%. As Australians begin to feel the pinch of international issues and added pressure on the cost of living, key measures in this budget have been provided to relieve the cost of living. Low and Middle income earners will be eligible for the Low and Middle Income Tax Offset, a one off $250 payment for welfare recipients and pensioners and a 6-month fuel excise relief.
A lower GDP uplift rate for PAYG and GST instalments has also been proposed to support cash flows of small and medium businesses. Other measures for business seek to promote innovation, with expanded “patent box” tax concessions proposed, and provide tax incentives for small business to invest in the skills of their employees.
You can find the full Budget papers available at www.budget.gov.au and the tax, superannuation and social security highlights are set out below.
Individuals
A one-off payment of $250 will be made to individuals who are currently in receipt of Australian government social security payments, including pensions, to ease cost of living pressures.
The low and middle income tax offset will be increased by $420 in the 2021–22 income year to ease the current cost of living pressures.
The number of guarantees under the Home Guarantee Scheme will be increased to 50,000 per year to assist home buyers who have a lower deposit.
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.
Additional funding will be provided over 5 years to support older Australians in the aged care sector with managing the impacts of the COVID-19 pandemic.
A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing system of 2 separate payments.
Business
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 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.
The Boosting Apprenticeship Commencements wage subsidy will be extended by 3 months.
Concessional tax treatment will apply from 1 July 2022 for primary producers selling Australian Carbon Credit Units and biodiversity certificates.
The PAYG instalment system is set for a structural overhaul with a set GDP uplift of 2% to apply for the 2022–23 income year.
Additional funding will be provided to further reform insolvency arrangements, including the insolvent trading “safe harbour”.
Business registry fees will be streamlined over 3 years from 2023–24.
Fuel
Businesses who use heavy vehicles with a gross vehicle mass greater than 4.5 tonnes on public roads will have a corresponding adjustment to their fuel tax credits over the next 6 months. This is because the fuel tax credit is intended to be a refund of the fuel excise paid by businesses when acquiring fuel.
For heavy vehicles on public roads, the fuel tax credit is reduced by the road user charge. The road user charge is a partial payment of excise made by businesses and currently sits at 26.4 cents per litre.
As the temporary excise is being reduced to 22.1 cents, which is below the road user charge, this effectively reduces the fuel tax credit to zero.
Superannuation
The 50% reduction of the superannuation minimum drawdown requirements for account-based pensions will be extended for an additional year.
Excise and customs duty
Excise and excise-equivalent customs duty on petrol and diesel will be reduced by 50% from 30 March 2022 for 6 months.
Administration of fuel and alcohol excise, and excise-equivalent customs duty will be streamlined.
The temporary tariff concession for COVID-19 related medical and hygiene products will be made permanent.
Innovation
Corporate income from the commercialisation of patents, issued from 29 March 2022, in respect to agricultural and veterinary (agvet) chemical products will be taxed at an effective rate of 17% for income years starting from 1 July 2023.
The effective tax rate of 17% for the “patent box” regime will also be expanded to include patents that have the potential to lower emissions.
Tax administration
Companies will be able to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments.
Trust and beneficiary income reporting and processing will be digitalised.
Businesses will be allowed the option to report taxable payments reporting system data (via accounting software) on the same lodgment cycle as their activity statements.
IT infrastructure will be developed to allow the ATO to share single touch payroll data with state and territory revenue offices.
Please contact us if you wish to discuss any of these measures any further. We would be delighted to speak with you about the latest Federal Budget.