Last night’s federal budget was somewhat of a lacklustre affair with regards to substantive changes. This is arguably a good thing, after many years of tinkering with the superannuation and tax systems, this year minimal change has been proposed.
It is worth noting that many of the announcements made on budget night are just that (announcements) and will need legislation to pass both houses to become law and effective.
The fuel excise will drop by 22.1 cents a litre for 6 months – the Government’s fuel excise tax which normally sits at 44.2 cents per litre of fuel will temporarily reduce by half. This measure is aimed at reducing cost of living pressures in the near-term.
This year’s Low and Middle Income Tax Offset will increase by $420 – The Low and Middle Income Tax Offset (LMITO) will increase, providing an additional $420 to reduce tax payable for eligible taxpayers in the 2021/22 financial year. This offset is non-refundable and available to those earning up to $126,000 per annum. However, individuals earning over $126,000 per annum will not benefit. Further, LMITO was not extended, meaning it will not apply for the 2022/23 or later financial years.
Additional deduction for assets supporting digital adoption Date of effect: 29 March to 30 June 2023 Businesses with an aggregated turnover of less than $50 million can deduct an extra 20% (i.e. 120%) of the cost of business expenses and depreciating assts that support the business’ digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services. An annual cap of up to $100,000 for eligible expenditure will apply.
Small business training deductions: The Government is proposing to allow a deduction of 120% of eligible costs incurred in training staff in small businesses (ie businesses with an aggregated annual turnover less than $50 million). Generally, training must be delivered by an external registered training organisation in Australia and is only deductible if it relates to employees. For example, if an employer pays an external training company $5,000 to deliver eligible training to its employees, the employer can deduct $6,000 in its tax return. This measure is proposed to apply from 29 March 2022 to 30 June 2024
Electronic lodgement of trust tax returns Date of effect: 1 July 2022 Trustees of trusts will be able to opt to lodge income tax returns electronically. Electronic lodgement will enable the pre-filling of beneficiaries’ tax returns and reduce errors and processing times.
No new changes of any materiality were announced.
The previously announced increase to the Super Guarantee Contribution rate of 10.5%pa should therefore take effect from 1 July 2022.
Income Streams – Super Pensions
The 50% reduction in the minimum drawdown for super pensions will be extended to 2022/23. – If you are in receipt of an account based pension or similar income stream from a superannuation fund, the existing arrangements where the legislated minimum draw-downs have been halved will be extended another 12 months into 2022/23.
One-off $250 cost of living payment will be made to eligible income support recipients (incl. but not limited to age pension, JobSeeker, disability support pensions and youth allowance. It is also payable to holders of the Commonwealth Seniors Health Card and Pensioner Concession Card holders). These payments are tax-free and are proposed to be made in late April 2022.
The Government will expand the Home Guarantee Scheme (available to first homebuyers and single parents entering or re-entering the housing market) and a newly introduced Regional Home Guarantee available to non-first home buyers purchasing or constructing a new home in regional areas, making up to 50,000 places available each year. Under these schemes, the Government provides support to enable homes to be purchased with deposits as low as 5% and, in some cases, as low as 2%.
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