Implications for Individuals, Families and Retirees
The Low and Middle Income Tax Offset has been increased by $420 per person to a maximum of $1,500 per person. This offset will apply to those earning $126,000 or less. This offset is only available in the 2022 year. The following table outlines the changes:
|
| Pre Budget-Night Low and Middle Income Tax Offset | Additional Cost of Living Tax Offset |
| $0 - $37,000 | $255 | $420 |
| $37,001 - $48,000 | $255 + 7.5% of excess over $37,000 | $420 |
| $48,001 - $90,000 | $1,080 | $420 |
| $90,001 - $125,999 | $1,080 – 3% of excess over $90,000 | $420 |
| $126,000 and above | Nil | Nil |
Medicare Levy Low Income thresholds for seniors, pensioners, families and singles have been increased.
COVID-19 test expenses incurred so you can attend your workplace are now tax-deductible.
Superannuation Pension minimum drawdown requirements will have the 50% reduction extended to 30 June 2023. The pension drawdown rates are shown below:
|
| Minimum % of your opening balance for the year | Reduced minimum % of your opening balance for the year |
| Under 65 | 4% | 2% |
| 65 - 74 | 5% | 2.5% |
| 75 - 79 | 6% | 3% |
| 80 - 84 | 7% | 3.5% |
| 85 - 89 | 9% | 4.5% |
| 90 - 94 | 11% | 5.5% |
| 95 and above | 14% | 7% |
Temporary Reduction in Fuel Excise (Tax) the excise/duty/tax that applies to fuel will be temporarily halved for 6 months from midnight on 30 March 2022. This will lead to savings at the petrol bowser of 22c per litre. Of course, the price will still be subject to market forces and will fluctuate from time to time.
Cost of Living Payment – a one-off payment of $250 will be made in April 2022 to eligible low-income recipients. The eligible categories include Age Pension, Commonwealth Seniors Health Card, Parenting Payment, Austudy/Abstudy/, Youth Allowance, Carers Payment or Allowance and other Government benefits.
Home Guarantee Scheme for First Home Buyers – additional places in this scheme have been announced. This is style of limited use in Capital Cities as in order to qualify for the loan you need an income in excess of the threshold for the threshold to qualify for the scheme. It is more useful in regional areas.
Paid Parental Leave Scheme – This has integrated the two schemes together so each family unit is entitled to 20 weeks leave total and can be utilised/allocated in the way which best suits them.
Implications for Business
Skills and Training Boost will be introduced to assist business in training and upskilling their employees. This is only applicable to external programs and is not available for inhouse programs.
Technology Investment Boost will be introduced to encourage the adoption of digital technologies by small business. This will apply to business expenses incurred to support digital adoption in the workplace. For most small business subscription to cloud based technologies or cyber security expenses will form the basis of this claim.
For these two Boost packages for every $100 you spend you will get a $120 tax deduction. This will apply to expenditure from 7:30pm on Tuesday 29 March 2022 until 30 June 2024. For expenditure incurred in the 2022 Financial year you will carry forward the extra deduction and claim in the 2023 year.
On a practical note, I would suggest adding an additional category to your profit and loss account as from 30 March 2022 for any expenditure you feel may be eligible. When entering your expenditure in your bookkeeping system make sure you add as much descriptive detail as possible and add a copy of the invoices where your system allows.
The PAYG Instalment System Modernisation in theory this is a “new” system however in reality it is a rebadge of the existing system. You have always been able to vary your instalments if you believe the current trading conditions have changed from those used to calculate your instalment.
Taxable Payments Reporting (TPAR) for those who employ contractors and operate within the construction, IT, cleaning or freight areas. You will now be able to report these on the same cycle as your Business Activity Statement rather than just at 30 June. Don’t get too excited though as it is not scheduled to commence until 1 January 2024 to give Software providers a chance to deliver/amend appropriate software.
Apprentice Wage Subsidy Extension the current scheme has been extended by 3 months to 30 June 2022. From 1 July 2022 a New Apprenticeships Incentive System will be introduced for “priority occupations”.
There are a range of other announcements and programs that are applicable to our economy generally but not of general interest. If you would like to know more on these package and announcements email us at leonie@ljackassociates.com.au.
Alternatively you can download our full budget report in PDF Format from our resources area or by following the link: 2022 Full Budget Report.