2022-2023 Federal Budget Update
Last night, Federal Treasurer Josh Frydenburg delivered the 2022-2023 budget. Amidst a mountain of government debt incurred over the past few years due to COVID, and in an environment of inflationary pressures, rising bond yields, wages pressure and interest rate pressure, it appears to be a financially responsible budget. It is a budget with some similarities to the 2019 budget in many ways, without a large splashing of money around. That is something of a surprise compared to the media hype in the lead-up and the fact that it is an election budget.
Key headlines from the budget are as follows:
All
Fuel excise tax relief of over 22c per Litre for 6 months is sure to be welcomed by all and will also provide some relief from upward price increases being passed on by other businesses who have to date been absorbing increased fuel costs.
Individuals
A bigger lamington:
- LMITO (Low and Middle Income Tax Offset) is increasing by $420 from $1,080 to $1,500 maximum
- Only received if you’ve actually paid tax through the year (eg at least $1,500 withheld from pay or PAYG instalments paid).
- Only for these with income of $126,000 or less
- Only received on assessment of 2022 tax return, not on 1st July as often misreported by parts of the media.
$250 cost of living payment for people on aged pensions and other qualifying benefits
1 July 2024 previously scheduled tax cuts are still in line to happen (unless there is a government change)
Businesses
Skills training boost: 20% additional deduction for qualifying training undertaken between 29th March 2022 and 30th June 2023. Deduction is claimed on the 2023 tax return for both years, so we urge those with qualifying expenses to track them separately in your bookkeeping so as to avoid a potentially costly exercise to calculate these accurately unless your bookkeeping records clearly separate and identify these costs.
Technology investment boost: 20% additional deduction for qualifying digital expenses such as cloud-based subscriptions, cyber security, and other digitisation between 29th March 2022 and 30th June 2023. Like the Skills training boost, the deduction is all claimed on the 2023 tax return and accurate bookkeeping will be needed to ensure the compliance cost of preparing the tax return does not blow out due to the claim.
Paid parental leave: 20 paid leave weeks are currently allocated 10 weeks to each parent and are now able to be split as decided between parents (and an increase from 10 to 20 weeks for single parents). This is a welcome initiative bound to be appreciated by those dealing with the pressures of juggling work and new babies.
Patent box lower tax rate expansion will be welcomed by those in the innovation space that this expands into.
Apprentices: additional financial support for employers and apprentices will be welcomed in these industries that qualify for them. It’s a shame that this does nothing to address the many other industries that are also facing staff and skills shortages and increased wages pressures from existing skilled staff. These businesses not benefiting from this initiative will be forced to pass on these staff retention and training costs as price increases.
Superannuation
As expected in an election budget, the only Superannuation announcement was an extension of the existing temporary 50% reduction in minimum pensions for another 12 months until 30th June 2023.
Compliance
Some flagged changes to reporting for Taxable Payments, PAYG Instalments, and Trust distributions will no doubt cause some headaches and additional transitional teething pain down the track as they are implemented.
Additional funding of $2.1b for business and high net worth tax debt recovery is likely to trigger more audit and debt collection activity by the ATO. Greater consideration of mitigation steps such as audit insurance may be needed.
All in all, this is a light budget in terms of changes. Expect to see a lot of noise post-election from training organisations and digital technology providers. Should you have any questions regarding the budget and how it may impact you please feel free to contact us at Advivo Business Advisors and Accountants. Call us on 07 3226 1800 or send us a message through our Contact page.
