This week (29 March 2022), the Treasurer announced the Federal Budget 2022-23, which is the Governments economic plan for the next stage of Australia’s post pandemic recovery.

To help you understand how the Budget 2022-23 may affect you, we have uploaded Australia’s plan for a stronger future – overview to our downloads section of the website.

In terms of tax, the budget includes tax relief for working Australian’s and business tax relief to support investment and create jobs. Here is our summary:

One-off cost of living tax offset

From 1 July, over 10 million individuals will receive a one-off $420 cost of living tax offset.

This is combined with the low and middle-income tax offset (LMITO), so eligible low and middle-income earners will receive up to $1,500 for a single income household, or up to $3,000 for a dual income household.

The amount of tax relief you receive relates to your taxable income as it did in previous years. If you already receive the LMITO offset, this one- off tax offset adds to that.

  • If you earn up to 37,000 a year, your tax relief will now be $675
  • If you earn between $37,001 to $48,000, you’ll receive between $675 to $1500 relief
  • If you earn between $48,001 to $90,000 you will receive $1500 relief
  • If you earn $90,001 – $125,999 you will receive $420 – $1500 relief

The key word here is ‘relief’. This tax relief is part of your annual tax return, so if you are eligible you will receive it as a tax refund on assessment in the 22/23 financial year. It doesn’t just appear in your bank account!

If you earn over this amount, you are not eligible for the one-off living tax offset or LMITO.

Temporarily cutting fuel excise

From 30 March 2022, fuel excise will be cut by half from 44.2 cents per litre to 22.1 cents per litre until 28 September 2022. In his Federal Budget speech, Treasurer Josh Frydenberg said the measure will save hundreds for the average family – for example, a family with two cars who fill up once a week could save around $30 a week or around $700 over the next six months.

Cost of living one-off payment

A one-off ‘tax-exempt’ Cost of Living Payment of $250 will be provided to pensioners, carers, veterans, job seekers, eligible self‑funded retirees and concession card holders.

Budget 2022-23 Business summary

Two 21-22 budget incentives that continue into 22-23

  • Temporary full expensing

In the last Budget 21-22, the Government extended a temporary tax incentive for over 99 per cent of businesses, to support new investment and increase business cash flow from 30 June 2022 to 30 June 2023. Businesses with a turnover up to $5 billion are able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted. Assets must have been acquired from 7:30pm AEDT on 6 October 2020 and first used or installed for use by 30 June 2023 to be eligible.

  • Temporary loss carry-back

To help increase cashflow for business and for those that were profitable but are now suffering losses due to Covid-19, companies with a turnover up to $5 billion can offset losses against previous profits on which tax has been paid, to generate a cash refund. Losses incurred up to 2022‑23 can be carried back against profits made in or after 2018‑19 income year. If companies have not already elected to receive a tax refund from their 2020‑21 and 2021‑22 returns, they can do so on their 2022-23 tax returns.

Small business skills and training boost

Small businesses up to $50 million turnover will be able to deduct an additional 20 per cent of expenditure incurred on external training courses to up skill their employees. The Skills and Training Boost will apply to expenditure incurred from Budget night until 30 June 2024

Small business technology investment boost

Businesses with an annual turnover of up to $50 million will be able to deduct a bonus 20 per cent of expenditure incurred on business expenses and depreciating assets that support digital adoption such as subscriptions to cloud-based services, cyber security systems, portable payment devices. The boost will apply to eligible expenditure of up to $100,000 per year, incurred from Budget night until 30 June 2023

 

Further information can be found on the Budget.gov.au website.

As always, if you have any questions or concerns relating to your tax obligations, then please call us on 08 9240 7629 or email: admin@taxproaustralia.com.au

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