Federal Budget - 2022

This Federal budget was not very eventful but there were a few changes announced. We have summaries the tax changes below:

**please be advised that these are all proposed and need to be passed as law which will also depend on whether the government gets voted back in next month**

LOW & MIDDLE INCOME EARNER TAX OFFSETS

When: From 1 July 2022

What: In addition to the low and middle income offset of up to $1,080, the Government have announced that there will be a $420 cost of living tax offset for individual taxpayers for the 2022 financial year only. This means the proposed new rates for individuals are:

• $37,000 or less – they will benefit by up to $675;

• $37,000 and $48,000 – the value of the offset will increase at a rate of 7.5 cents per dollar to the maximum offset of $1,500;

• $48,000 and $90,000 – they will be eligible for the maximum offset of $1,500.

• $90,000 to $126,000 – the offset phases out at a rate of 3 cents per dollar.

This is a non refundable tax offset which means it can only reduce tax paid.

PLEASE NOTE THAT FOR THE 2023 FINANCIAL YEAR THIS WILL COMPLETELY BE REMOVED AND THERE WILL BE NO $1,500 TAX RELIEF.

MEDICARE LEVY THRESHOLD INCREASE

When: From 1 July 2021

What: Increase to the Medicare levy low-income thresholds for singles, families and seniors and pensioners.

Under this measure, low-income taxpayers will generally continue to be exempt from paying the Medicare levy.

The thresholds will be increased:

• for singles – from $23,226 to $23,365

• for families - from $39,167 to $39,402

• for single seniors and pensioners - from $36,705 to $36,925; and

• for family seniors and pensioners - from $51,094 to $51,401.

For each dependent child or student, the family income thresholds increase by a further $3,619 (previously, $3,597).

$120 DEDUCTION FOR EVERY $100 SPENT ON TECHNOLOGY

When: 29 March 2022 until 30 June 2023

What: The Government has announced intends to provide 120% tax deduction for expenditure incurred by small businesses on expenses that support their digital adoption. ie Xero subscription.

The eligible expenditure incurred to 30 June 2022 will be claimed in the 2023 tax return.

$120 DEDUCTION FOR EVERY $100 SPENT ON SKILLS AND TRAINING

When: 29 March 2022 until 30 June 2023

What: The Government has announced intends to provide 120% tax deduction for expenditure incurred by small businesses on external training courses provided to employees. These courses will need to be provided to employees in Australia and delivered by entities registered in Australia.

The eligible expenditure incurred to 30 June 2022 will be claimed in the 2023 tax return.

APPRENTICE WAGE SUBSIDY SUPPORT EXTENDED

When: Extended to 30 June 2022

What: Any employer who takes up an apprentice/trainee will receive a subsidy for 50% of their wages up to $7,000 per apprentice, per quarter for the first year of their employment. In the second year, the employer will receive 10% wage subsidy up to $1,500 per quarter, and in the third year, they will receive 5% wage subsidy up to $750 per quarter.

TAX DEDUCTIBILITY OF COVID-19 TEST EXPENSES

When: From 1 July 2021

What: Work related COVID-19 test expenses incurred by individuals will be tax deductible.

TAX STATUS OF COVID-19 GRANTS

When: Extended to 30 June 2022

What: Payments from certain states and territory COVID-19 business support programs to be treated as non-assessable non-exempt (NANE) income have been extended until 30 June 2022.

TEMPORARY TARIFF CONCESSION ON COVID-19 PRODUCTS PERMANENT

When: From 1 July 2022

What: The concession in place and the range of products for medical and hygiene products to treat, diagnose and prevent the spread of COVID-19 will be made permanent.

LOWER TAX INSTALMENTS FOR SMALL BUSINESSES

When: 2023 income year

What: The government is uplifting the GDP Adjustment for GST and PAYG instalments by only 2% rather than the past 10% for small businesses.

LINKING PAYG INSTALMENTS TO FINANCIAL PERFORMANCE

When:From 1 January 2024

What: Companies will be able to choose to have their pay as you go instalments calculated using current financial performance. This aligns the instalment liability with the businesses’ cash flow.

TEMPORARY REDUCTION IN FUEL EXCISE

When: From 30 March 2022

What: Temporary reduction in the excise and excise-equivalent customs duty rate that applies to petrol and diesel by 50% for 6 months. That is, the current 44.2 cents per litre excise rate will reduce to approximately 22.1 cents per litre.

DIGITISING TAXABLE PAYMENTS REPORTING SYSTEM

When: From 1 January 2024

What: Businesses will be required to report Taxable Payments Reporting System data via their accounting software on the same lodgement cycle as their activity statements.

HOME GUARANTEE SCHEME EXTENDED

When: From 1 July 2022

What:

First Home Guarantee: an increase from 10,000 to 35,000 guarantees to support eligible first homebuyers

What:

Introduction of Regional Home Guarantee: support eligible citizens and permanent residents who have not owed a home for 5 years to purchase or construct a new home in regional areas with a minimum 5% deposit.

When: 1 July 2022 to 30 June 2021

What:

Single Parent Family Home Guarantee: Family Home Guarantee helping 5,000 single parents to purchase a home with a 2% deposit.

COST OF LIVING PAYMENT

When: From April 2022

What: A one-off payment of $250 for the cost of living will be provided to the following residents who receive:

Age Pension; Disability Support Pension; Parenting Payment; Carer Payment; Carer Allowance (if not in receipt of a primary income support payment); Jobseeker Payment; Youth Allowance; Austudy and Abstudy Living Allowance; Double Orphan Pension; Special Benefit; Farm Household Allowance; Pensioner Concession Card (PCC) holders; Commonwealth Seniors Health Card holders; Eligible Veterans’ Affairs payment recipients; or Veteran Gold card holders.

REDUCTION IN MINIMUM SUPERANNUATION DRAWDOWN RATES EXTENDED AGAIN

When: to 30 June 2023

What: temporary 50% reduction in super minimum drawdown requirements has been extended to 2023, meaning for the appropriate age group, the rates are:

· Under 65 – 2%

· 65 - 74 – 2.5%

· 75 - 79 – 3%

· 80 - 84 – 3.5%

· 85 - 89 – 4.5%

· 90 – 94 – 5.5%

· 95 or more – 7%

Natalie Lennon

Founder & Director

Two Sides Accounting

02 9030 0269

www.twosides.com.au

@twosidesHQ

natalie@twosides.com.au https://au.linkedin.com/in/natalielennon