Tax

Australian Federal Budget 2022

Pre-election Cash Splash!

Tuesday’s 2022 Federal Budget represents the last pre-election Budget for the incumbent LNP Government, with it looking increasingly likely the election will be called for 14 May 2022.

The post-Budget analysis across the board has labelled this Budget a cynical pre-election cash splash with very little of substance and many of the promises dated far into the future.

The key measures are summarised below:

Individuals

·        Fuel Levy Cut - for the next 6 months fuel levy will be cut from 44c per litre to 22c per litre in an effort to reduce fuel prices at the pump – whether this is successful remains to be seen but the Treasurer has pledged ACCC support to monitor pricing and seek to enforce the saving being passed on to consumers

·        The Low and Middle Income Offset (LMITO) will be increased by $420 for 2022 – this equates to a tax saving of between $675 and $1,500 for people with taxable income below $126,000

·        A one-off $250 tax exempt payment will also be made to eligible pensioners, veterans, welfare recipients and concession-card holders to assist with the skyrocketing cost of living

·        The low-income thresholds for Medicare Levy reduction or exemption have been increased for 2022 as follows:

o   Individuals $23,365 (from $23,226)

o   Families $39,402 (from $39,167) with additional $3619 for each dependent child or student (from $3,597)

o   Single Seniors and Pensioners $36,925 (from $36,705)

·        The Home Guarantee Scheme has been extended:

o   A further 35,000 guarantees per year from 1 July 2022 under First Home Guarantee

o   10,000 from 1 Oct 2022 to 30 June 2025 under Regional Home Guarantee

o   5000 from 1 July 2022 to 30 June 2025 under Family Home Guarantee

·        Paid Parental Leave – this is being restructured to allow more flexible use of the scheme between male and female partners and to allow access to the scheme for single parents

·        The reduction in the Annual Minimum Pension has been extended to 30 June 2023

Small Businesses

·        Technology Investment Boost:

o   From Budget night 29 March 2022 to 30 June 2023 and additional 20% deduction will be available on business expenditure and purchases of depreciable assets to support digital adoption

o   Examples of qualifying expenditure include: portable payment devices, cyber security systems, adoption of e-invoicing and subscriptions to cloud-based services

o   An annual expenditure cap of $100k will apply

o   Expenditure between now and 30 June 2022 will be deductible in income year ended 30 June 2023

o   Expenditure between 1 July 2022 and 30 June 2023 will be deductible in year of payment

·        Skills and Training Boost:

o   An additional 20% deduction will be available for small businesses for qualifying expenditure between 29 March 2022 and 30 June 2024 on external training courses for employees

o   To qualify the training must be:

§  Provided by entities registered in Australia

§  Provided to employees in Australia or online

o   Expenditure on in-house training and training for non-employees is excluded

o   Deduction for expenditure between now and 30 June 2022 can be claimed in 2023 tax return

o   Deduction for expenditure between 1 July 2022 and 30 June 2024 will be claimable in year of expenditure

·        Australian Apprenticeships Incentive Scheme – this will replace the Boosting Australian Apprenticeship Scheme which ends on 30 June 2022.  This is not as generous as its predecessor offering:

o   10% wage subsidies for years 1 and 2 and 5% for year 3 but only for listed “priority occupations” or

o   One-off payment of $3,500 for apprentices in “non-priority” occupations

o   So far there is no list of “priority” occupations

 

Should you need any advice on how these matters may benefit you, please contact either Joanne Lamberth lamberthj@tax.uk.com or Trudi Feehan (feehant@tax.uk.com) in our Sydney office.