Written by: Evan Lowenstein
On Tuesday, 29 March 2022, Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget, his 4th Budget and without doubt it showed all the hallmarks of an election budget.
This is clearly demonstrated by the Treasurer announcing a range of cost of living measures, including a one-off $420 cost of living tax offset for low and middle income earners, and a $250 payment for pensioners and welfare recipients. The fuel excise will also be reduced by 50% for 6 months, starting from midnight on Budget night.
For small businesses, a Skills and Training Boost will provide a new 20% bonus deduction for eligible external training courses for upskilling employees from Budget night. In addition, businesses will receive a similar 20% bonus deduction for expenditure on digital technologies (eg cloud computing, eInvoicing, cyber security and web design) for investments of up to $100,000 per year.
Treasurer Frydenberg said a strong economic recovery is well underway, notwithstanding the COVID-19 pandemic and the impact of the new shocks, such as the recent floods and the Russian invasion of Ukraine. He said economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending. The unemployment rate has also fallen to 4%, and is expected to reach 3.75% in the September 2022 quarter.
The main tax related measures are described here:
LMITO increased by $420 for 2021-22
– a one-off $420 cost of living tax offset for the 2021-22 income year will see the low and middle income tax offset (LMITO) increased up to a maximum of $1,500 for 2021-22 only (up from $1,080). Importantly, the Government did not announce an extension of the LMITO beyond 2021-22 when it is legislated to cease.
Personal tax rates
– no changes were made to the personal tax rates for 2022-23. The Stage 3 personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.
Small business 20% deduction boost
: skills training and digital adoption – businesses with turnover less than $50m will receive a 20% uplift on deductions for eligible expenditure on external training courses and digital technology. The 20% boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption)
PAYG instalments option
– from 1 January 2024, companies will be allowed to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software (with some tax adjustments).
$250 cost of living payment
– the Government will make a $250 one-off cost of living payment in April 2022 to eligible pensioners, welfare recipients, veterans and concession card holders.
Super pension drawdowns
– 50% reduction extended to 2022-23 – the temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to the 2022-23 income year.
Super Guarantee rate
– the Budget did not contain any change to the legislated Super Guarantee rate rise from 10% to 10.5% for 2022-23.
Budget and the Arts
The Budget once again disappointingly but not unexpectedly has decreased expenditure on the arts by around 13% over the next 4 years.
They say that this decrease has been caused by the end of the temporary funding offered to arts organisations due to the COVID-19 situation.
In the view of Treasury the decrease comes off this high base.
Amongst the winners are again large institutions – Screen Australia and National Museum of Australia.
But overall we have seen a decade of stagnation, efficiency dividends and cuts that have seen Australian government investment in arts and culture go backwards, and there is no indication that we will see a reversal of this in the near future.
(From NAVA see link to recent report on the situation of the visual arts in ABC article,”Vaccine plea from Australian artists, as research shows COVID-related income losses have left many below the poverty line’ https://www.abc.net.au/news/2021-10-15/artists-living-below-poverty-line-in-covid/100517636?utm_source=abc_news_web&utm_medium=content_shared&utm_campaign=abc_news_web