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Key takeaways – 2022/23 Federal Budget

By 30/03/2022June 2nd, 2023No Comments

Below is a summary of key measures from the 2022-2023 Federal Budget (handed down on Tuesday 29th March).

Tax-relevant measures

LMITO once-off increase $420

LMITO eligible taxpayers will be entitled to an additional once-off $420 cost of living tax offset for the 2021-22 income year.

Note:

  • taxpayers with over $126k taxable income will not be entitled to any LMITO
  • LMITO is expected to cease on 30 June 2022
Taxable income 2022 LMITO Offset (current) 2022 LMITO Offset (proposed)
$37,000 or less $255 $675
From $37,001 to $48,000 $255 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,080 $675 plus 7.5 cents for every dollar above $37,000, up to a maximum of $1,081
From $48,001 to $90,000 $1,080 $1,500
From $90,001 to $126,000 $1,080 minus 3 cents for every dollar of the amount above $90,000 $1,500 minus 3 cents for every dollar of the amount above $90,001

Small business 120% tax deduction on eligible skills & training

Extra 20% deduction will be allowed on eligible staff training courses delivered by external Australia registered entities. The training must be provided to staff in Australia or online.

The extra 20% claim will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 until 30 June 2024.

The 2021-22 eligible expenditures’ extra 20% will be claimed in the tax return for the following income year (2022-23). 2023 & 2024 eligible expenditures’ 120% claim will be included in the income year in which the expenditure is incurred.

Small business 120% tax deduction on digital adoption

Extra 20% deduction will be allowed on eligible expense or capital purchase that support digital adoption such as portable payment devices, cyber security systems or cloud-based service subscriptions.

Note the total eligible expenditure (before extra 20% claim) is capped at $100k p.a.

The extra 20% claim will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 until 30 June 2023.

Both 2021-22 & 2022-23 income years eligible digital expenditures’ extra 20% will be claimed in the 2022-23 income year tax return.

Extended ‘patent box’ scheme

17% concessional rate applies to eligible corporate income associated with below new patents in the medical and biotechnology sectors:

  • agriculture
  • veterinary chemical products
  • technology with the potential to lower emissions

Employee share scheme (ESS) – unlisted companies

Under proposed amendments, ESS participants can invest up to $30K (currently $5K) per participant per year. This annual cap can be accrued for unexercised options for up to 5 years.

Participants can also invest any amount (no cap) if it would allow them to immediately benefit from a planned sale or listing (liquidity event).

PAYG instalment options

from 1 January 2024, companies will be allowed to choose to have their PAYG instalments calculated based on current financial performance as recorded in the business accounting software.

The GDP uplift factor will be reduced from 10% to 2% only for small businesses.

Superannuation

Minimum pension drawdown 50% discount extended

The temporary 50% reduction in minimum annual pension payment will be extended by a further year to the 2022-23 income year.

Super guarantee 10.5% from 1 July 2022

The Budget made no change to the legislated SG rate increase from 10% to 10.5% for the 2022-23 income year.

Other

Temporary fuel excise reduction

In response to the recent sharp rise in fuel prices, the fuel excise will be reduced by 50% (about 22 cents per litre reduction) for six months, starting from midnight on Budget night.

Cost of living once-off payment $250

The Government will make a $250 one-off cost of living payment in April 2022 to eligible pensioners, welfare recipients, veterans and concession cardholders.

 

Should you have any questions regarding the budget and how it may impact you or your business, please feel free to contact us.


Disclaimer:
Please note that this article is intended to be a general guide only, and should not be seen to constitute legal or tax advice. Where necessary, you should seek a second professional opinion for any legal or tax issues raised in your personal or business tax affairs.

 

Emma Zhao

Emma Zhao

Chartered Accountant | Registered Tax Agent | SMSF Speacialist™ emma@sencilloaccounts.com.au