Hien Hoang: 0448 012 728 and Brian Spurrell: 0412 011 946

The 2022 budget contains some very scary forecasts including rising interest rates, rising inflation, rising energy costs, all of which are expected to have a significant impact on household spending and small business.

Fortunately the budget does not contain major tax and superannuation changes. The summary of changes discussed below is restricted to changes impacting on individuals and small businesses.

Tax Related Measures Announced.

  • There have been numerous State and Territory COVID-19 grants made to support small business that are treated as non-assessable, non-exempt (NANE) income. Details of such grants are available on the ATO website.
  • Resident income tax rates are unchanged for 2022-23.
  • The budget did not announce any changes to the stage 3 personal income tax rates promised by the coalition government that are set to commence from 1st July 2024. Whilst there are no guarantees the Albanese government will honour this status quo, set out below are the tax rates and income thresholds previously legislated by the Morrison government.

Tax rates and income thresholds – from 2024-25 onwards

taxable income

  • The budget did not however announce any extension of the low and middle income tax offset (LMITO). As a result, low-to-middle income earners may see their tax refunds from July 2023 reduced by between $675 and $1,500 for incomes up to $90,000 but phasing out up to $126,000, all other things being equal.
  • Off market share buyback rules have been changed taking effect from 25th October 2022. The change effectively aligns the buyback with on market buybacks by denying shareholders a fully franked dividend component in the purchase consideration. This measure is expected to deliver increased tax receipts of $550 million over a four year period from 2022-23.
    Increased funding of $80.3 million has been allocated to the ATO for compliance programs over two years from 1st July 2023. The ATO will focus on key areas of non-compliance which includes over claiming deductions and incorrect reporting of income.

Encouraging Pensioners into the Workforce
There is a Bill currently before parliament to provide a one-off increase in the work bonus of $4,000 for Age and Veteran pensioners. This temporary increase will enable pensioners to earn from $7,800 to $11,800 before their pension is reduced starting from 1st December 2022 and ending on 30 June 2023. It seems strange that this benefit is limited to such a small time frame.

Superannuation Related Measures Announced
The Government confirmed its election commitment to lower the minimum eligibility age for making superannuation downsizer contributions