In his second budget since winning power in May last year, Treasurer Jim Chalmers boasted the first budget surplus in 15 years as strong jobs growth and high mining revenue swelled its coffers. The Treasurer announced a package of cost-of-living measures, including up to $3 bn in energy bill relief (expected to reduce power bills by up to $500 for 5 million households) and $1.3bn for home energy upgrades.
After several interest rate rises and calls to use fiscal policy to help fight inflation, Chalmers said the budget aimed to “strike a considered, methodical balance … between spending restraint to keep the pressure off inflation, while doing what we can to help people struggling to make ends meet”.
Broadly, the Budget included measures that:
•Provide cost-of-living relief that is responsible and affordable and prioritises those most in need.
•Deliver historic investments in Medicare and the care economy – making it easier and cheaper for Australians to see their doctor.
•Broaden opportunity by breaking down the barriers of disadvantage and exclusion.
•Lay the foundations for growth by embracing clean energy, and investing in value-adding industries, people, skills, technology and small business.
•And strengthen the Budget – with a surplus forecast for this year, with less debt and smaller deficits compared with recent budgets.
It is important to note the Budget announcements are still only proposed at this stage and to be legislated. Changes can also be made prior to these proposals becoming law.
Superannuation
Employers to pay super on payday
From 1 July 2026, employers are required to make super guarantee payments on the same day they pay employees. Referred to as ‘payday’ super, this measure aims to make it easier for businesses to manage their payrolls and reduce their accounting liabilities.
As part of this measure, the Government is also improving data matching capabilities to identify and act on cases of SG underpayment by employers.
This measure benefits lower paid, casual and insecure workers who are more likely to miss out when super is paid less frequently.
Reduced super concessions on total super balances over $3m
From 1 July 2025, any portion of a person’s total super balance over $3m will have earnings taxed at 30 per cent. Total super balances under $3m continue to receive 15 per cent earnings tax. Holdings in retirement phase continue to receive nil tax.
Interests in defined benefit schemes will also have an appropriate value and have earnings taxed under this measure to ensure these products are treated similarly.
Tax
Increasing the Medicare Levy low-income threshold
The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners from 1 July 2022. The increase in thresholds means more low income individuals can be exempt from paying the Medicare Levy.
Medicare levy exemption for lump sum payments in arrears from 1 July 2024
The Government will exempt eligible lump sum payments in arrears from the Medicare levy from 1 July 2024. The measure seeks to ensure low-income taxpayers do not pay higher amounts of the result of receiving an eligible lump sum payment, e.g. as compensation for underpaid wages.
Small Business Support – $20,000 instant asset write-off
From 1 July 2023 until 30 June 2024, the Government will improve cash flow and reduce compliance costs for small businesses by temporarily increasing the instant asset write-off threshold to $20,000.
The instant asset write-off rules allow for the immediate deduction for the cost of a depreciating asset for small business entities. However, those rules were effectively replaced by temporary full expensing in relation to depreciating assets first held and used or installed ready for use for taxable purposes, between the 2020 Budget time and 30 June 2023. Without this proposal, the instant asset threshold goes back to $1,000.
Under this proposal, small businesses, with aggregated annual turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first year and 30% each income year thereafter.
The provision that prevents small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will continue to be suspended until 30 June 2024.
Energy bill relief
The Government is partnering with state and territory governments to deliver up to $3 billion of electricity bill relief for eligible households. From July 2023, this plan will deliver up to $500 in electricity bill relief for eligible households, and up to $650 for eligible small businesses.
Eligible householder include:
•Pensioners,
•Commonwealth Seniors Health Card holders,
•Family Tax Benefit A and B recipients and
•Small business customers of electricity retailers.
