Despite a backdrop of the ongoing Covid 19 pandemic, the war in Europe, and a looming Australian federal election, the 2022-23 Federal Budget held few big surprises. Most of the announcements related to tax relief and providing a post-pandemic economic recovery via stimulus payments.
It is important to remember that these are yet to be legislated, although we expect most of them to be accepted by the parliament. Please contact us if you have any questions or would like to know how any of these announcements may impact your personal situation.
The following provides a basic summary of some of the announcements made:
- Temporarily extending the minimum pension drawdown relief
Proposed effective date: 1 July 2022
The temporary reduction to the minimum income drawdown requirement for superannuation pensions will be further extended until 30 June 2023.
This will allow people to minimise the need to sell down assets given ongoing market volatility. It applies to account-based, transition to retirement, and term-allocated superannuation pensions.
- Temporarily cutting fuel excise
Proposed effective date: 30 March 2022
Fuel excise will temporarily be cut by half, or 22.1 cents per litre, to save families an estimated $30 a week.
- Increasing the Low and Middle-Income Tax Offset (LMITO)
Proposed effective date: 1 July 2021
The LMITO will be increased to up to $1,500 for the 2021-22 financial year. All eligible LMITO recipients will benefit from the full $420 increase, referred to as the Cost of Living Tax Offset. The benefit is based on your taxable income as follows:
- Below $37,000 will be $675 (currently $255).
- Between $37,000 and $48,000, the offset will increase at the rate of 7.5 cents per $1 above $37,000 to a maximum of $1,500 (currently $1,080).
- Between $48,000 and $90,000 are eligible for the maximum LMITO benefit of $1,500 (currently $1,080).
- Between $90,000 and $126,000 the offset phases out at a rate of 3 cents per $1.
- Above $126,000 it is not available
- Increasing the Medicare levy low-income thresholds
Proposed effective date: 1 July 2021
Low-income taxpayers will generally continue to be exempt from paying the Medicare levy. The threshold for:
- Singles will be increased to $23,365
- Families will be increased to $39,402
- Single seniors and pensioners will be increased to $36,925
- Families (seniors and pensioners) will be increased to $51,401.
Social security & Aged Care
- Introducing a one-off cost of living payment
Proposed effective date: 28 April 2022 onwards
A one-off tax-free payment of $250 to Australians who receive qualifying social security payments or hold eligible concession cards, including:
- Age Pension
- Disability Support Pension
- Carer Payment
- Carer Allowance Jobseeker Payment
- Pensioner Concession Cardholders
- Commonwealth Seniors Health Card holders.
- Enhancing the Paid Parental Leave scheme
Proposed effective date: 1 July 2023
The Government plans to create a single scheme of up to 20 weeks, fully flexible and shareable for working parents within two years of their child’s birth or adoption. Single parents will also benefit from the extended 20-week entitlement.
The income test will also be broadened. Parents who don’t meet the individual income threshold (currently $151,350) can still qualify for payment if they meet a family income threshold of $350,000 a year.
- Lowering the Pharmaceutical Benefits Scheme (PBS) threshold
Effective date: 1 July 2022
The Government will reduce the PBS safety net thresholds to support people who have a high demand for prescription medicines due to their health needs.
This means approximately 12 fewer scripts for concessional patients and 2 fewer scripts for general patients a year.
- Expanding the Home Guarantee Scheme
Proposed effective date: 1 July 2022 or 1 October 2022 depending on the specific scheme
The Home Guarantee Scheme allows first home buyers to build or purchase a newly built home with a low deposit, replacing the need for commercial lenders’ mortgage insurance.
The Government is expanding the scheme to make available:
- 35,000 guarantees each year (up from the current 10,000) from 1 July 2022 under the First Home Guarantee, to support eligible first home buyers to build or purchase a newly built home with a deposit as low as 5%.
- 10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee, to support eligible homebuyers (including non-first home buyers and permanent residents), to purchase or construct a new home in regional areas with a deposit as low as 5%.
- 5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee. This program enables eligible single parents with dependants to enter or re-enter the housing market with a deposit as little as 2%.