Federal Budget 2022-23

Last night Treasurer Jim Chalmers delivered the first Albanese Labor Government Federal Budget for 2022/23.

The budget appeals to families, patients accessing medicines, renters, home buyers and those in vocational training setting out a 5-point plan for cost-of-living relief in the areas of:

1. Child care
2. Expanding paid parental leave
3. Medicines
4. Housing
5. Getting wages moving.

While the Budget does not contain major tax changes it does seek to begin some Budget repair work via tax integrity measures.

What you need to know:

Individual Resident tax rates remain unchanged for 2022-23 from the current 2021-2022 rates.

• Stage 3 changes to individual resident tax rates will start from 2024-25 which means from 1 July 2024, as previously legislated, the 32.5 per cent marginal tax rate will be cut to 30 per cent for one big tax bracket between $45,000 and $200,000.

Low Income Tax Offsets

• The LMITO has ceased and been fully replaced by the Low income tax offset (LITO).  The maximum amount of the LITO is $700.

Digital Currency will not be taxed as foreign currency

• The Government will introduce legislation to clarify that digital currencies (such as Bitcoin) continue to be excluded from the Australian income tax treatment of foreign currency, this will maintain the current tax treatment of digital currencies, including the CGT treatment where they are held as an investment.

Election Promises

• The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for a couple.
• The Government confirmed its commitment that the minimum eligibility age for making superannuation downsizer contributions will be lowered to age 55 (from age 60).
• This will allow individuals aged 55 or over to make an additional non-concessional contribution of up to $300,000 from the proceeds of selling their main residence outside of the existing contribution caps.

Paid Parental Leave

• From 1 July 2023 the paid parental leave scheme will be amended.
• Either parent will able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria.
• Parents will also be able to claim weeks of the payment concurrently so they can take leave at the same time.
• From 1 July 2024, the Government will start expanding the scheme by two additional weeks a year until it reaches a full 26 weeks from 1 July 2026.

Overall the Federal Government has taken a “steady as she goes” approach.  This is broadly what we expected but does leave the question – where to next?

For more detailed information please click here to access a concise overview of the Federal Budget and remember – our team is your team!