With the Federal Government preparing for the upcoming election this year, the Federal Budget was pushed forward from its usual May date. As expected, the Budget offered some short-term handouts and relief but outside of these there was little change for small business, superannuation or individuals on the tax front. Here is a summary of the relevant change.
– The low- and middle-income tax offsets for the 2022 income year have increased by $420. The maximum offset available previously was $1080 so this now increases to $1,500. The offset is only available to offset tax payable and the benefit will be received when an individual lodges their tax return. Interestingly the budget made no mention of extending this measure so from 1 July 2022 this offset will be removed.
– A once of payment of $250 to be made next month for recipients of certain Centrelink benefits such as the age pension, disability support pension, care payment, parenting payment, JobSeeker payment, Austudy and Youth Allowance as well as Pensioner Concession, Commonwealth Seniors Health and Veterans Gold card holders.
– All work-related costs associated with purchasing COVID tests from 1 July 2021 will be tax deductible. This was announced earlier but was once again confirmed last night.
– For small business the main announcement related to incentives for businesses with turnovers less than $50 million that spend money on training and/or digital technology. For every $1 spent on eligible expenditure from 29 March 2022 to 30 June 2023 businesses will be able to claim a deduction of $1.20. The catch is the claim is made in the 2023 tax return so any expenditure incurred between now and 30 June 2022 will not be able to be claimed until the following year.
– The other main benefit for individuals was the cut in the fuel excise which should see petrol prices drop over the next 6 months.
– Finally for superannuation funds the only relevant announcement was the continuation for another 12 months until 30 June 2023 in the 50% reduction in the annual minimum pension drawdowns. This ensures members can retain their tax-exempt pensions by withdrawing a lower amount than usual and this is done to avoid funds needing to sell assets in the current volatile markets.
As always these are only Budget announcements and will need to pass through Parliament and become law to be enacted. However, given most of these measures are not controversial, it is expected most of these will pass through without any debate or change. If you would like to know more, please do not hesitate to contact us on 9720 6811 or at firstname.lastname@example.org