On Tuesday, 29 March 2022, Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget, his fourth Budget.
In an election Budget, the Treasurer announced a range of cost-of-living measures, including a one-off $420 cost of living tax offset for low- and middle-income earners, and a $250 payment for pensioners and welfare recipients. The fuel excise will also be reduced by 50 per cent for six months, starting from midnight on Budget night.
For small businesses, a Skills and Training Boost will provide a new 20 per cent bonus deduction for eligible external training courses for upskilling employees from Budget night. In addition, businesses will receive a similar 20 per cent bonus deduction for expenditure on digital technologies (e.g., cloud computing, elnvoicing, cyber security and web design) for investments of up to $100,000 per year.
The Treasurer said a strong economic recovery is well underway, notwithstanding the COVID-19 pandemic and new shocks, such as the recent floods and the Russian invasion of Ukraine. Mr Frydenberg said economic growth forecasts have been revised upwards, driven by stronger-than expected momentum in the labour market and consumer spending. The unemployment rate has also fallen to 4 per cent and is expected to reach 3.75 per cent in the September 2022 quarter.
Since the Mid-Year Economic and Fiscal Outlook (MYEFO) in December 2021, the underlying cash balance has improved by $103.6 billion over the five years to 2025-26. Nevertheless, the Government is expected to record a deficit of $79.8 billion for 2021-22 and $78.0 billion for 2022-23 (down from $134.2 billion in 2020-21). Net debt of $714.9 billion for 2022-23 is forecast to rise to $864.7 billion in 2025-26.
The major tax-related measures announced in the Budget included:
Low- and middle-income tax offset (LMITO) increased by $420 for 2021-22 - a one-off $420 cost of living tax offset for the 2021-22 income year will see the low- and middle-income tax offset (LMITO) increased up to a maximum of $1,500 for 2021-22 only (up from $1,080). Importantly, the Government did not announce an extension of the LMITO beyond 2021-22 when it is legislated to cease.
No changes to the personal tax rates for 2022-23 - the Stage 3 personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.
Small business 20 per cent deduction boost for skills training and digital adoption businesses with turnover less than $50 million will receive a 20 per cent uplift on deductions for eligible expenditure on external training courses and digital technology. The 20 per cent boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption).
Patent box income extended – the concessional tax treatment for eligible corporate income associated with new patents in the medical and biotechnology sectors will be extended to corporate taxpayers who commercialise their: (i) eligible patents linked to agricultural and veterinary chemical products; and (ii) patented technologies which have the potential to lower emissions.
Employee share schemes (ESS) – for company law purposes, the investment thresholds for unlisted companies will be changed so that ESS participants can invest up to $30,000 per participant per year (accruable for unexercised options for up to five years), plus 70 per cent of Federal Budget 2022-23 dividends and cash bonuses. Participants will also be able to invest any amount if it would allow them to immediately take advantage of a planned sale or listing of the company.
Carbon credit and biodiversity certificate income - the proceeds from the sale of Australia Carbon Credit Units (ACCUs) and biodiversity certificates generated from on-farm activities will be treated as primary production income for the purposes of the Farm Management Deposits (FMD) scheme and the tax averaging provisions from 1 July 2022.
Digitalising trust income - all trust tax return filers will be given the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes. The measure is proposed to apply from 1 July 2024 (subject to advice from software providers).
PAYG instalments options - from 1 January 2024, companies will be allowed to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software (with some tax adjustments).
Taxable payments data reporting option - from 1 January 2024, businesses will be provided with the option to report Taxable Payments Reporting System data on the same lodgment cycle as their activity statements, via accounting software.
The superannuation measures include:
Super pension drawdown 50 per cent reduction extended to 2022-23 - the temporary 50 per cent reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to the 2022-23 income year.
Super Guarantee rate unchanged - the Budget did not contain any change to the legislated.
Super Guarantee rate rise from 10 per cent to 10.5 per cent for 2022-23.
Fuel excise temporary reduction - the fuel excise will be reduced by 50 per cent for six months, starting from midnight on Budget night.
$250 cost of living payment - the Government will make a $250 one-off cost of living payment in
April 2022 to eligible pensioners, welfare recipients, veterans and concession card holders
Apprentice wage subsidy extension - the Budget confirmed the extension of the Boosting
Apprenticeship Commencement (BAC) and Completing Apprenticeship Commencements (CAC) wage subsidies by three months to 30 June 2022.