The 2022-23 Federal Budget released last night was mostly as expected – a budget designed to avoid rocking the boat in an election year! We have summarised the key changes that may impact our clients below:
Superannuation Income Stream – minimum drawdown requirements
The government has extended the 50% reduction in the minimum drawdown requirements for account based pensions to 30 June 2023. This doesn’t impact the maximum you are able to take out of your super fund, just the minimum.
Low and Middle Tax Offset (LMITO) increased
The Low and Middle Tax Offset (LMITO) has been increased from $1080 to $1500, with the increase of $420 being referred to as the ‘cost of living tax offset’. The offset is available to taxpayers whose taxable income is between $37,000 and $126,000, but only those between $48,000 and $90,000 will receive the full $1500. This offset will be received as part of your 2021-2022 tax return. The 2021-2022 financial year is the last year that the LMITO will be available.
Cost of Living Payment
A one off, tax free payment of $250 will be made to eligible concession card holders and those in receipt of payments such as the Aged Pension, Disability Support Pension and JobSeeker. The payment will be automatically paid to eligible recipients in April 2022.
Temporary Reduction in Fuel Excise
The fuel excise will be reduced by 50% for 6 months to try and combat the rising cost of fuel. This will see the excise reduce from 44.2 cents per litre to 22.1 cents per litre from now until 28 September. We expect that this will also result in the fuel tax credit rebate being reduced, however nothing has been announced at this stage.
The Boosting Apprenticeship Commencements and Completing Apprenticeship Commencements wage subsidies have been extended to 30 June 2022. This program provides wage subsidies of up to $15,000 to eligible employers and was originally due to finish on 31 March 2022.
Small Business Skills and Training Boost
Businesses with a turnover of less than $50M will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees between budget night and 30 June 2024. The course needs to be provided by a training organisation registered in Australia and excludes in-house and on the job training. The additional deduction for any eligible expenditure up to 30 June 2022 will be claimed in the 2023 financial year tax return (none in the 2022 financial year tax return). Eligible expenditure therefore leads to $1.20 tax deduction for every $1 spent.
Small Business Digital Boost
Businesses with a turnover of less than $50M will be able to deduct an additional 20% of business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud based services. Expenditure needs to be between budget night and 30 June 2023, but all of the additional deduction will be available in the 2023 financial year tax return (none in the 2022 financial year tax return). The limit is $100,000 expenditure per annum. Eligible expenditure therefore leads to $1.20 tax deduction for every $1 spent.
We note that the legislation still needs to pass through government before these changes come into effect. However, if you have any questions or require any further information on any of these topics, please don’t hesitate to contact our office.
– Renee Crane
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.