The Federal Treasurer, Mr Josh Frydenberg, handed down the 2022–23 Federal Budget at 7:30 pm (AEDT) on 29 March 2022.
In an economy emerging from the pandemic, the Treasurer has confirmed an unemployment rate of 4% and an expected budget deficit of $78 billion for 2022–23. As international uncertainties add pressure on the cost of living, key measures in the Budget provide cost of living relief in the form of an increased Low and Middle Income Tax Offset, a one off $250 payment for welfare recipients and pensioners and a 6-month fuel excise relief.
Other measures for business seek to promote innovation, with expanded “patent box” tax concessions proposed, and provide tax incentives for small business to invest in the skills of their employees. A lower GDP uplift rate for PAYG and GST instalments has also been proposed to support cash flows of small and medium businesses.
The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au. The tax, superannuation and social security highlights are set out below.
Individuals
- The low and middle income tax offset will be increased by $420 in the 2021–22 income year to ease the current cost of living pressures.
- A one-off payment of $250 will be made to individuals who are currently in receipt of Australian government social security payments, including pensions, to ease cost of living pressures.
- Additional funding will be provided over 5 years to support older Australians in the aged care sector with managing the impacts of the COVID-19 pandemic.
- Costs of taking a COVID-19 test to attend a place of work will be tax deductible for individuals and exempt from fringe benefits tax from 1 July 2021.
- A single Paid Parental Leave scheme of up to 20 weeks paid leave will replace the existing system of 2 separate payments.
- CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors and pensioners for the 2021–22 year announced.
- The number of guarantees under the Home Guarantee Scheme will be increased to 50,000 per year to assist home buyers who have a lower deposit.
Business
- Additional state and territory COVID-19 business support grant programs will be eligible for tax treatment as non-assessable non-exempt income until 30 June 2022.
- Small and medium businesses will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees.
- Small and medium businesses will be able to deduct an additional 20% of eligible expenditure supporting digital adoption.
- The Boosting Apprenticeship Commencements wage subsidy will be extended by 3 months.
- Concessional tax treatment will apply from 1 July 2022 for primary producers selling Australian Carbon Credit Units and biodiversity certificates.
- Access to employee share schemes in unlisted companies will be expanded.
- The PAYG instalment system is set for a structural overhaul with a set GDP uplift of 2% to apply for the 2022–23 income year.
- Additional funding will be provided to further reform insolvency arrangements, including the insolvent trading “safe harbour”.
- Business registry fees will be streamlined over 3 years from 2023–24.
- Wholly owned Australian incorporated subsidiaries of the Future Fund Board of Guardians will be exempt from corporate income tax.
Excise and customs duty
- Excise and excise-equivalent customs duty on petrol and diesel will be reduced by 50% from 30 March 2022 for 6 months.
- The temporary tariff concession for COVID-19 related medical and hygiene products will be made permanent.
- Administration of fuel and alcohol excise, and excise-equivalent customs duty will be streamlined.
Superannuation
- The 50% reduction of the superannuation minimum drawdown requirements for account-based pensions will be extended for an additional year.
Innovation
- Corporate income from the commercialisation of patents, issued from 29 March 2022, in respect to agricultural and veterinary (agvet) chemical products will be taxed at an effective rate of 17% for income years starting from 1 July 2023.
- The effective tax rate of 17% for the “patent box” regime will also be expanded to include patents that have the potential to lower emissions.
- Following on from the 2021 Federal Budget announcement of the “patent box” regime for medical and biotechnology innovations, the concessional tax treatment will be expanded to include certain overseas jurisdictions with equivalent patent regimes.
Tax administration
- Companies will be able to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments.
- Businesses will be allowed the option to report taxable payments reporting system data (via accounting software) on the same lodgment cycle as their activity statements.
- Trust and beneficiary income reporting and processing will be digitalised.
- IT infrastructure will be developed to allow the ATO to share single touch payroll data with state and territory revenue offices.
- The ATO will be given funding to extend the operation of the Tax Avoidance Taskforce by 2 years.
- The start date of the 2019–20 Budget measure for holders of Australian Business Numbers will be deferred by 12 months.
Not-for-profits
- Melbourne Business School Ltd, Advance Global Australians Ltd, Leaders Institute South Australia Inc, St Patrick’s Cathedral Melbourne Restoration Fund, and various entities related to Community Foundations Australia, have been added to the list of specifically DGRs for a period beginning 1 July 2022.
Indirect tax
- The Indirect Tax Concession Scheme (ITCS) has been granted or extended to various diplomatic and consular representations.
The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.