On 29 March 2022, Federal Treasurer, Mr Josh Frydenberg, handed down the 2022/ 23 Federal Budget. Responding to the increased cost of living, the Budget provides several measures to support businesses and individuals by temporarily reducing fuel prices, tax relief for low-to-middle income earners, incentives, and superannuation changes.
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 overview is set out below.
Budget outcome and economic growth
The Budget shows that since the Mid-Year Economic and Fiscal Outlook (MYEFO), the estimated underlying cash balance has improved by $103.6 billion over the five years to 2025-26. According to the Budget Papers, the Underlying Cash Balance for 2021-22 (current year) is forecast at $79.8 billion and $78 billion in 2022-23. This MYEFO of $99.2 billion and $98.8 billion. The outlook for real GDP has strengthened, with growth forecast to be 4¼ per cent in 2021-22 and 3½ per cent in 2022-23, before moderating to 2½ per cent in 2023-24. MYEFO had forecast economic growth of 3¾ per cent in 2021-22, revised down from the 2021 Budget forecast of 4¼ per cent.
One-off cost of living tax offset
From 1 July this year, over 10 million low- and middle-income earners will receive a one-off $420 cost of living tax offset. Combined with the Low and Middle Income Tax Offset (LMITO), 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.
For eligible pensioners, welfare recipients, veterans, and eligible concession card holders the payment will be $250 and made in April 2022. This payment will help 6 million people, at a cost of $1.5 billion.
More than half of those who will benefit are pensioners. The Budget says this is on top of the higher income support payments from existing indexation arrangements. Income support payments increased by 2.1 per cent in March 2022, benefiting almost five million Australians. The Age Pension, Disability Support Pension, and Carer Payment rates increased by more than $20 a fortnight for singles and $30 a fortnight for couples.
Temporary fuel excise relief
The Budget announced the Government will reduce fuel excise by 50 per cent for six months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre.
“Fuel subject to a lower excise rate is expected to flow through to the majority of service stations and Australian consumers within a few weeks as stations replenish their stocks,” the Budget papers said.
Other key points from the Budget include:
- The unemployment rate is expected to continue to fall over the next few quarters.
- Treasurer Josh Frydenberg announced changes to the way business tax bills are calculated (the “uplift factor”), meaning regular business tax instalments would be calculated based on the previous year plus 2 per cent instead of the 10 per cent that would be added under current legislation.
- The Budget estimates that total tax collections in 2021-22 will be $512.5 billion, an increase of 8.2 per cent of its revised estimate of tax collections in 2021-22.
- The Government announced in the Budget it is supporting small businesses to digitalise their operations and upskill their employees by introducing a Technology Investment Boost and a Skills and Training Boost.
- The Budget announced a further $468.3 million to continue implementing the Government’s response to the Royal Commission into Aged Care Quality and Safety. This builds on the record $17.7 billion investment in aged care announced in the 2021-22 Budget.
- The Government announced an expansion of its apprenticeship and training schemes in the Budget.
- Ahead of the Budget, the Government announced an expansion of its Home Guarantee Scheme.
- Ahead of the Budget Treasurer Josh Frydenberg announced the Government will extend the 50 per cent reduction to minimum superannuation drawdown requirements for retirees into the next financial year.
- Ahead of the Budget the Treasurer and Prime Minister jointly announced a $17.9 billion investment in infrastructure across Australia.
This article contains information regarding taxation and legislative change, which is based on policy announcements that are yet to be passed as legislation and may be subject to future change. Any advice included in this article is general and has been prepared without taking into account your objectives, financial situation or needs. As such, you should consider its appropriateness having regard to these factors before acting on it. Any tax information refers to current laws, is not based on your unique circumstances and should not be relied on as tax advice. Before you make any decision about whether to acquire a certain financial product, you should obtain and read the relevant product disclosure statement.