On Tuesday 25 October, the new Labour 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.
Taxation
Budget repair measures
From various dates
The Government announced a number of measures aimed at increasing tax receipts to help repair the Budget:
- Extending three existing ATO compliance programs:
- Tax Avoidance Taskforce
- Shadow Economy Program
- Personal Income Taxation Compliance
- Ensuring multinational pay their fair share of tax, including:
- Limiting the amount of debt-related deductions multinationals can claim under the thin capitalisation regime
- Requiring relevant companies to enhance the tax information they disclose to the public from 1 July 2023
- Closing loopholes on payments from 1 July 2023 to related parties for intangibles held in low tax jurisdictions
These measures are estimated to increase tax receipts by $4.7 billion of the next four years.
Stage 3 tax cuts to proceed
From 1 July 2024
Despite the ongoing debate about deferring or cancelling the stage 3 tax cuts, the measure will go ahead in accordance with the legislated timetable from 1 July 2024. The stage 3 tax cuts were introduced as part of the previous Government’s personal income tax reform, will remove the 37% income band and increase the higher threshold in the 45% income band from $180,000 to $200,000. The applicable rate on the 32.5% income band will also reduce to 30%.
| Current | From 1 July 2024 | ||
| Taxable Income | Tax Payable | Taxable Income | Tax Payable |
| $0 – $18,200 | Nil | $0 – $18,200 | Nil |
| $18,201 – $45,000 | 19% | $18,201 – $45,000 | 19% |
| $45,001 – $120,000 | $5,092 + 32.5% | $45,001 – $200,000 | $5,092 + 30% |
| $120,000 – $180,000 | $29,467 + 37% | Income band removed | |
| $180,000+ | $51,667 + 45% | $200,000+ | $51,592 + 45% |
Superannuation
Expanding eligibility age for downsizer contributions to 55 and over
Downsizer contributions provide an opportunity for eligible individuals to contribute up to $300,000 to superannuation upon the sale of an eligible main residence. From 1 July 2018 until 30 June 2022, the minimum qualifying age to be eligible to make a downsizer contribution was age 65. From 1 July 2022, the minimum qualifying age was reduced to age 60.
On 3 August 2022, the Government introduced Treasury Laws Amendment (2022 Measures No. 2) Bill 2022 into Parliament, which if legislated, will ensure that the minimum qualifying age for downsizer contributions will be reduced to age 55. The Government reaffirmed its commitment to this proposal in the Federal Budget.
It is expected that if legislated, this measure will be effective from 1 January, 1 April, 1 July or 1 October following the day enabling legislation receives Royal Assent.
No extension to the halving of minimum annual pension payments from Account Based Pensions beyond the 2022-23 financial year
There was no announcement in relation to extending the halving of the minimum annual pension payments beyond the 2022-23 financial year in relation to eligible income streams such as account-based pensions and market linked pensions.
| Current | From 1 July 2023 | ||
| Age | Min Pension* | Age | Min Pension* |
| Under 65 | 2% | Under 65 | 4% |
| 65 – 74 | 2.5% | 65 – 74 | 5% |
| 75 – 79 | 3% | 75 – 79 | 6% |
| 80 – 84 | 3.5% | 80 – 84 | 7% |
| 85 – 89 | 4.5% | 85 – 89 | 9% |
| 90 – 94 | 5.5% | 90 – 94 | 11% |
| 95+ | 7% | 95+ | 14% |
* Minimum annual payment for full financial year = account balance at each 1 July x minimum percentage
Social Security
Lifting the income threshold for the Commonwealth Seniors Health Care Card
Effective 7 days after Royal Assent
As previously announced, the Government has proposed increasing the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
Legislation implementing this measure is currently before Parliament. It was initially proposed to commence 20 September 2022. However, due to delays in passing the legislation, the commencement date is now proposed to be 7 days after the legislation receives Royal Assent.
Temporary increase to Work Bonus
From 2022-23
As previously announced, the Government will provide a once-off increase to the Work Bonus income bank of $4,000 for Age and Veteran Pensioners.
The temporary increase to the income bank will increase the amount pensioners can earn in 2022-23 from $7,800 to $11,800, before their pension is reduced.
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.