Australia Federal Budget 2022-23 Summary of tax and superannuation measures

Tax measures

The major tax-related measures announced in the Budget included:

Low- and middle-income tax offset (LMITO)LMITO increased by $420 for 2021-22 but not extended to 2022-23- 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.

Low-income tax offset (unchanged) The low-income tax offset (LITO) will also continue to apply for the 2021-22- and 2022-23-income years. The LITO was intended to replace the former low income and low- and middle-income tax offsets from 2022-23, but the new LITO was brought forward in the 2020 Budget to apply from the 2020-21 income year. The maximum amount of the LITO is $700. The LITO will be withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000 and then at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

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. The Stage 3 tax changes commence from 1 July 2024, as previously legislated. From 1 July 2024, the 32.5 per cent marginal tax rate will be cut to 30 per cent for one large tax bracket between $45,000 and $200,000. This will more closely align the middle tax bracket of the personal income tax system with corporate tax rates. The 37 per cent tax bracket will be entirely abolished at this time. Therefore, from 1 July 2024, there will only be three personal income tax rates – 19 per cent, 30 per cent and 45 per cent. From 1 July 2024, taxpayers earning between $45,000 and $200,000 will face a marginal tax rate of 30 per cent. With these changes, around 94 per cent of Australian taxpayers are projected to face a marginal tax rate of 30 per cent or less.

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 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 Australian 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).

AYG 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.

Superannuation measures

The superannuation measures include:
Super pension drawdown 50 per cent reduction extended to 2022-23 – the temporary 50 percent 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.

Other measures

Fuel excise temporary reduction – the fuel excise will be reduced by 50 per cent for six months,
starting from midnight on Budget night.
One-off $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.The $250 payment will be tax-exempt and not count as income support for the purposes of any Government income support. A person can only receive one economic support payment, even if they
are eligible under two or more of the categories outlined below. The payment will only be available to Australian residents who are eligible recipients of the following payments and to concession card holders:
 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 and Veteran Gold 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.
COVID-19 test expenses to be deductible
The Budget papers confirm that the costs of taking a COVID-19 test to attend a place of work are tax deductible for individuals from 1 July 2021. In making these costs tax deductible, the Government will also ensure FBT will not be incurred by businesses where COVID-19 tests are provided to employees for this purpose. The changes will take effect from 1 July 2021 (i.e., last year). It was previously announced on 8
February 2022. The cost to revenue is stated to be “significant but unquantifiable”.

More COVID-19 business grants designated non-assessable non exempt income
The Government has extended the measure which enables payments from certain State and Territory COVID-19 business support programs to be made non-assessable non-exempt (ie NANE) for income tax purposes until 30 June 2022. This measure was originally announced on 13 September 2020. Consistent with this, the Government has made the following State and Territory grant programs eligible for this treatment since the 2021-22 MYEFO:
 New South Wales Accommodation Support Grant
 New South Wales Commercial Landlord Hardship Grant
 New South Wales Performing Arts Relaunch Package
 New South Wales Festival Relaunch Package
 New South Wales 2022 Small Business Support Program
 Queensland 2021 COVID-19 Business Support Grant
 South Australia COVID-19 Tourism and Hospitality Support Grant
 South Australia COVID-19 Business Hardship Grant
The changes are part of an ongoing series of announcements which will continue to have effect until
30 June 2022 (subject to further extension).

Read further details under each heading here Australia-federal-budget-summary-2022

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