Federal Budget 2022/23

Federal Budget 2022/23

The Federal Treasurer Dr Jim Chalmers presented his first federal budget on Tuesday 25th October 2022. We outline some key points below:

Superannuation

  • Eligibility for downsizer contributions to superannuation will expand to those aged 55+ years (reduced from 60 years). This will allow more people to make an additional non-concessional contribution of up to $300,000 per contributor from proceeds of selling their main residence (on top of the existing contribution caps). Other eligibility criteria will apply
  • Proposed measures relating to self-managed super fund (SMSF) residency changes (delayed) and SMSF audits (won’t proceed)

Tax

  • The Low-Middle Income Tax Offset (LMITO) is not extended to 2022-23 and is replaced by the Low Income Tax Offset (LITO). The maximum amount of LITO is $700 for those earning up to $37,500. The amount of the LITO reduces at a rate of 5c per dollar for taxable incomes between $37,500 and $45,000, and 1.5c per dollar for taxable incomes between $45,001 and $66,667
  • No change to tax rates and income thresholds for Australian tax residents for 2022-23
  • From 1st July 2024, there will only be 3 personal income tax rates for Australian tax residents:
  • 19% ($18,201-$45,000);
  • 30% ($45,001-$200,000); and
  • 45% ($200,001+).
  • No change for foreign tax resident’s rates and income thresholds for 2022-23
  • From 1st July 2024, the rates and income thresholds for foreign tax residents will be:
  • 30% ($0-$200,000); and
  • 45% ($200,001+).
  • The tax treatment for off-market buy-backs by listed public companies will be aligned with the tax treatment for on-market buy-backs. No part of the buy-back price is treated as a dividend, and the total amount received by the shareholder is taken to be consideration for the share sale
  • Intangible assets depreciation – there will be no option to self-assess effective lives for certain intangible assets. Effective lives will continue to be set by statute
  • Digital currencies, such as Bitcoin, will continue to be excluded as foreign currency for tax purposes
  • More COVID grants are to be treated as non-assessable non-exempt income (VIC & ACT)

Families

  • From 1st July 2023, either parent will be able to claim the Paid Parental Leave payment (if eligible), and parents can claim the payments and take leave at the same time
  • The Paid Parental Leave scheme will expand from 18 weeks to 26 weeks by 1st July 2026, which will gradually increase from 1st July 2024
  • The maximum Child Care Subsidy rate will increase from 85% to 90% for families for their first child in care
  • The Child Care Subsidy rate will increase for all families earning less than $530,000 in household income

Pensioners

  • The amount age and veteran pensioners can earn from working before their pension is reduced will increase from $7,800 to $11,800
  • The assets test exemption for (pensioner) principal home sale proceeds will be extended from 12 months to 24 months for income support recipients. The income test will also be changed, to apply only the lower deeming rate (0.25%) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home
  • 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 couples. This will allow more seniors access to concessions

Education & Health

  • 480,000 fee-free TAFE and community-based vocational education places will become available
  • $235m will be provided to commence the rollout of Urgent Care Clinics
  • $787.1m over 4 years will be provided to reduce the general patient co-payment for treatments on the Pharmaceutical Benefits scheme from $42.50 to $30 per script

Housing

  • More affordable housing will become available through a new national Housing Accord which brings together governments, investors and industries to boost supply and deliver up to 20,000 new affordable homes

Disaster Support

  • $3b in contingency reserve to meet disaster recovery costs from this year’s floods
  • Up to $200m per year on disaster prevention and resilience through the Disaster Ready Fund

 

Budget reports are available at Budget documents | Budget October 2022–23