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The Federal Budget Tax Impact 2022

Written by Gabrielle Bow . April 01, 2022
5 min read

In light of the upcoming Federal Election, the Morrison Government handed down the 2022-23 Budget. This year the Budget was quite uneventful, however below is a list of the key points impacting regular taxpayers and businesses.

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One-off Cost of Living Tax Offset

The Low and Middle Income Tax Offset (LMITO) will have an additional one-off $420 increase in the 2021-22 income year, meaning eligible taxpayers will receive a tax reduction of up to $1,500 when they lodge their 2022 Tax Return.

No changes to the Personal Tax Rates for 2022-23

The personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.

One-off $250 Cost of Living Payment

The Government will make a one-off $250 cost of living payment in April 2022 to eligible pensioners, welfare recipients, veterans and eligible concession card holders.

Fuel Excise – Household Impact

From 12.01am on 30 March 2022, the excise rates for petrol, diesel and all other fuel and petroleum-based products, have been halved for 6 months. For petrol and diesel, the rates are reduced from 44.2 cents to 22.1 cents per litre.

Lowering the fuel excise is expected to flow through to most service stations across Australia within a couple of weeks. The ACCC will monitor this to ensure the cost-savings is passed down to consumers.

This should have a positive impact on Australian households, where the Government estimates a saving of $300 for households with at least one vehicle over the 6-month period.

Fuel Excise – Business Impact

While businesses will also enjoy the benefit of the fuel savings, any business registered for Fuel Tax Credits will need to keep in mind the rate at which the credits are calculated will halve as well, as the Fuel Tax Credit rate is a direct reflection on the Fuel Excise rate.

Minimum Super Pension Requirements Halved

Due to ongoing economic volatility, the Government announced the minimum drawdown on superannuation pensions to be halved for another Financial Year until 30 June 2023. This allows retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.

No change to legislated Super Guarantee rate rise

The Budget did not announce any changes to the timing of the next superannuation guarantee (SG) rate increase. Therefore, the SG rate is still legislated to increase from 10% to 10.5% from 1 July 2022.

Small Business Digitalisation

The Technology Investment Boost will allow small businesses (annual turnover of less than $50 million) to deduct a bonus 20% of the cost of expenses that support digital uptake (e.g. portable payment devices, cyber security systems or subscriptions to cloud-based services). Therefore, for every $1 spent on these costs, the business will receive a $1.20 deduction in return. An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. This measure will be available for spending from 29 March 2022 to 30 June 2023.

Small Business Training Bonus

Similar to the digital spending measure, small businesses with an annual turnover less than $50 million can claim a bonus 20% deduction for the cost of external training courses delivered to their employers by registered providers. This measure will be available for spending from 29 March 2022 to 30 June 2024.

Apprenticeship Rebates

Up to $15,000 in wage subsidies continue to be made available to businesses who employee apprentices.

So there you have it! Not the most exciting Budget to ever be released, but certainly some small wins for the regular taxpayer.

Please feel free to talk with our team at BLG Business Advisers for more information and advice to help you out.

We wish you and your business every success!

*This information is relevant at the time of publishing and is subject to change*
Written by Gabrielle Bow . April 01, 2022
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