Last night we saw the Federal Budget handed down by the Treasurer and Prime Minister. In the Budget, there were a number of changes that we’d like to make you aware of. We’ve broken these down in to two main categories: Individuals and Small Business.
Individuals
- Low and middle tax offset will be extended for another year meaning those earning up to $126,000 will receive up to $1,080 after they have submitted their tax returns. In addition, there will be a further payment of $420 for the current year taking the payment up to $1,500 for those eligible. Those earning above $126,000 will receive neither payment.
- Eligible pensioners, welfare recipients, veterans and eligible concessional card holders will receive a one off income tax exempt payment of $250.00 in April 2022.
- The Pandemic leave Disaster payment will continue for those who are unable to work and earn income because they (or someone they’re caring for) must self isolate or quarantine due to COVID -19. The payment is valued at $750 (if 20 hours or more work lost) or $450 payment (if 8 or more hours are lost, but less than 20 hours are lost)
- Paid Parental Leave Scheme – will be amended by rolling Dad and Partner Pay to create a single scheme of up to 20 weeks, fully flexible and shareable for eligible working parents as they see fit. Can be taken any time within 2 years from date of date of birth or adoption of the child. Income test will be broaden to have an additional household income threshold of $350,000, however existing recipients will not be worse off.
- Affordable Housing and Home ownership – Home Guarantee scheme extended to 50,000 places for 3 years from next financial year and include 35,000 a year ongoing. These include 35,000 guarantees per year for the First Home Guarantee previously called the “First Home Loan Deposit Scheme”; 5,000 places per year for the Family Home Guarantee; and 10,000 places per year for a new regional Home Guarantee to support eligible citizens and permanent residents who have not owned a home for 5 years to purchase a new home in a regional location with a minimum of 5% deposit.
- Extension of temporary 50% reduction in superannuation income streams draw down rate has been extended to 30 June 23
- Pharmaceutical Benefit Scheme (PBS) – From 1 July 2022 the safety net threshold will reduce from $1,542.10 to $1,457.10 for general patients and from 4326.40 to $244.80 for concessional patients.
- The excise and excise equivalent customs duty rate that applies to petrol and diesel and all other fuel and petroleum-based products except aviation fuels will be halved for six months. This measure will commence on 30 March 2022.
- Announcements around superannuation were very minimal in this year’s Federal Budget. With no announcements on superannuation guarantee, the rate should increase 0.5% in line with legislation to 10.5% from 1 July 2022.
- 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.
- Whilst the announcements this year were minimal for super, it is important to remember a number of announcements from last year’s Budget will take effect from 1 July 2022, including allowing a downsizer contribution to be made to super if you sell your principal residence at age 60 or above (currently age 65 or above) and the ability to make contributions between 67 and 75 without the need to meet the work test which currently applies. A financial adviser can assist you to determine which of these and other super changes may be of benefit to you.
Have questions? We’re hosting an interactive webinar on Wednesday the 6th of April where we’ll address everything in further detail. You can register here.
Small Business
- The Government will ensure 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 Government will introduce a skills and training boost to support small and medium-sized businesses to train and upskill their employees. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (i.e., Budget night) until 30 June 2024. Small and medium-sized businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees. The external training courses will need to be provided to employees in Australia or online and delivered by entities registered in Australia. Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees. For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2024,
the boost will be claimed in the income year in which the expenditure is incurred.
- The Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (i.e., Budget night) until 30 June 2023. Small and medium-sized businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support their digital adoption (such as portable payment devices, cyber security systems or subscriptions to cloud-based services). An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year. For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year in which the expenditure is incurred.
- The Government has extended the measures that enable payments from certain state and territory COVID-19 business support programs to be made non-assessable non-exempt income (‘NANE’) for income tax purposes until 30 June 2022. This measure was originally announced on 13
September 2020. The Government has made the following state and territory grant programs eligible for this treatment since the 2021-22 Mid-Year Economic and Fiscal Outlook:- NSW Accommodation and Support Grant
- NSW Commercial Landlord Hardship Grant
- NSW Performing Arts Relaunch Package
- NSW Festival Relaunch Package
- NSW 2022 Small Business Support Program
- QLD 2021 COVID-19 Business Support Grant
- SA COVID-19 Tourism and Hospitality Support Grant
- SA COVID-19 Business Hardship Grant
The Government will provide funding over three years from 2021/22 to deliver initiatives to support small businesses, including:
- $10.4 million over two years from 2022/23 to enhance and redesign the Payment Times Reporting Portal and Register to improve efficiency and reporting;
- $8.0 million in 2022/23 to the Australian Small Business and Family Enterprise Ombudsman to work with service providers to enhance small business financial capability;
- $4.6 million over two years from 2021/22 to support the New Access for Small Business Owners program delivered by Beyond Blue to continue to provide free, accessible, and tailored mental health support to small business owners; and
- $2.1 million over two years from 2021/22 to extend the Small Business Debt Helpline program operated by Financial Counselling Australia to continue to provide financial counselling to small businesses facing financial issues.
Have questions? We’re hosting an interactive webinar on Wednesday the 6th of April where we’ll address everything in further detail. You can register here.
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