Federal Budget 2022 – What you need to know

On Tuesday 29 March, the government handed down its Budget for 2022–23.

Here are some of the key Budget announcements that may affect you.

Note that each of these proposals will only become law if it is passed by Parliament.


Increase to the low & middle income tax offset for the 2021-22 income year

Effective for 2021-22 income year only

The Low and Middle Income Tax Offset (LMITO) will be increased by a one-off non-refundable $420 ‘cost of living offset’ for the 2021/22 financial year. The 2021/22 financial year will be the last year that the LMITO will be available.

Combined with this one-off tax offset the maximum LMITO will increase to $1,500 per individual or $3,000 for couples combined.

What this could mean for you

It is important to note that the LMITO is a non-refundable tax offset. This means the amount of these tax offsets can only reduce an individual’s tax liability to $0. An individual who is eligible for LMITO is not required to complete a section in their tax return. The ATO will work out the LMITO once the tax return is lodged.

For more information about the proposed changes to tax thresholds and offsets, speak to your accountant.

Temporary reduction in fuel excise

Effective from 12.01am on 30 March to 11.59pm on 28 September 2022

Excise and excise equivalent customs duty rate that applies to petrol and diesel will be temporarily reduced by half. Excise taxes for other fuel and petroleum-based products, other than aviation fuel, will also be reduced by half.

This measure aims to help individuals, families and businesses with cost-of-living pressures resulting from the increases in fuel costs which flow through to higher transportation costs including the cost of goods and services.

What this could mean for you

While the reduction in fuel excise applies from 12.01 on 30 March 2022, it will take several weeks for the full reduction to flow though because the excise will have already been charged on existing fuel stocks.


Extension of temporary reduction in superannuation minimum drawdown rates

From 1 July 2022

The Government has a 12-month extension of the temporary 50% reduction in superannuation minimum drawdown rates for account-based pension and similar products to cover the 2022/23 income year. This will apply to:

  • Account-based pension and annuities
  • Transition-to-retirement pensions
  • Term allocated pensions and annuities (also know as market-linked income streams).


What this could mean for you

Extending the temporary reduction will allow you to keep more funds within your pension if you do not require the money to support your everyday cost of living.

Social Security

$250 Cost of Living Payment

Effective April 2022

The government will provide a once-off Cost-of-Living Payment of $250 in April 2022 to eligible recipients of the following payments and to concession card holders:

  • Age Pension
  • Disability Support Pension
  • Parenting Payment
  • Carer Payment
  • Carer Allowance (if not in receipt of a primary income support payment)
  • Jobseeker Payment
  • Youth Allowance
  • Austudy and Abstudy Living Allowance
  • Double Orphan Pension
  • Special Benefit
  • Farm Household Allowance
  • Pensioner Concession Card (PCC) holders
  • Commonwealth Seniors Health Care Card holders
  • Eligible Veterans’ Affairs payment recipients and Veteran Gold card holders


The payments are exempt from taxation and won’t count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under two or more of the categories outlined above. The payment will only be made to Australian residents.

Supporting you through the changes

Depending on your circumstances, the Budget proposals could have an impact on your financial situation and your financial plans for the future.

If you have any concerns, or would like to discuss your financial strategy, please don’t hesitate to get in touch with us on                     (08) 8312 0000 to arrange an appointment.