2022/23 Federal Budget Highlights
On 29 March 2022 the Budget for 2022-23 was released. The measures announced as part of the 2022–23 Budget are subject to receiving royal assent and are not yet law.
There are a number of changes that may have an impact on your personal, business or superannuation situation. The key points are:
Individuals
strong> 1. Low and middle income tax offset ('LMITO') to be increased by $420
The LMITO will include a cost of living tax offset in the 2021–22 income year. The cost of living tax offset is a flat $420 to be applied to all recipients of LMITO when they lodge their tax return.
The maximum offset proposed for the 2022 income year is $1,500 per annum. However, the amount you receive depends on your income and how much tax you've paid throughout the year. It doesn't mean that you will automatically get an extra $1,500 in your tax return.
strong> 2. One-off payment to ease cost of living pressures
Individuals who are currently in receipt of an Australian government allowance or pension will receive a one-off payment of $250 in April 2022 to ease the cost of living pressures. Certain concession card holders will also get the payment.
The cost of living payment will be exempt from tax and will not count towards an individual's income for social security income test purposes.
Businesses
strong> 1. Temporary full expensing
Maintained until 30 June 2023 and other elements of temporary full expensing will remain unchanged, including the alternative eligibility test based on total income, which will continue to be available to businesses.
strong> 2. Increased deductions for digital adoption by small businesses
Small and medium businesses will be able to deduct an additional 20% of eligible expenditure supporting digital adoption.
The additional deduction will apply for businesses with aggregated turnover of less than $50 million. Eligible expenditure will include the cost of depreciating assets and business expenses supporting digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services. An annual cap of $100,000 will apply to expenditure eligible for the additional deduction.
The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023.
For eligible expenditure incurred between 7:30 pm AEDT 29 March 2022 until 30 June 2022:
- claim the expenditure as usual in your 2021–22 tax return, and
- claim the additional 20% bonus deduction for this period in your 2022–23 tax return.
For eligible expenditure incurred from 1 July 2022 until 30 June 2023:
- you can deduct the entire 120% in your 2022–23 tax return.
strong> 3. Increased deduction for small business external training expenditure
Small and medium businesses will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.
The additional deduction will apply for businesses with aggregated turnover of less than $50 million. The external training course must be delivered by an Australian entity and provided to employees in Australia or online. In-house or on-the-job training and expenditure for persons other than employees will be excluded.
The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2024.
For eligible expenditure incurred between 7:30 pm AEDT 29 March 2022 until 30 June 2022:
- claim the expenditure as usual in your 2021–22 tax return, and
- claim the additional 20% bonus deduction for this period in your 2022–23 tax return.
For eligible expenditure incurred from 1 July 2022 until 30 June 2023:
- you can deduct the entire 120% in your 2022–23 tax return.
For eligible expenditure incurred from 1 July 2023 until 30 June 2024:
- you can deduct the entire 120% in your 2023–24 tax return.
strong> 4. Apprenticeship wage subsidy extended
The Boosting Apprenticeship Commencements wage subsidy will be extended to support businesses and Group Training Organisations that take on new apprentices and trainees. The subsidy will now be available to 30 June 2022. This measure will provide for an additional 35,000 apprentices and trainees. Eligible businesses will be reimbursed up to 50% of an apprentice or trainee's wages of up to $7,000 per quarter for 12 months.
Superannuation
Extension of the temporary reduction in superannuation minimum draw down rates
The Government has extended the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023. The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their superannuation in order to qualify for tax concessions.
Given ongoing volatility, this change will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.
Please feel free to contact us on 1300 885 761 if you have any questions or would like further information in regards to any of the above changes.
