On 25 October 2022, Treasurer Jim Chalmers handed down an updated 2022/2023 Federal Budget.
The key points to be aware of are the following:
- The stage 3 individual tax cuts remain unchanged.
- The low and medium income tax offset will not be extended into the 2023 tax year.
- The 2018/2019 Federal Budget proposal for SMSF’s to be audited every three years will not proceed (so it remains a yearly obligation).
- The 2018/2019 Federal budget proposal to limit cash payments to businesses to $10,000 will not proceed.
- The 2019/2020 Mid-Year Economic Fiscal Outlook proposal to introduce a share economy reporting regime for transactions relating to ride sourcing and share accommodation will be deferred to 1 July 2023.
- The 2019/2020 Mid-Year Economic Fiscal Outlook proposal to introduce a share economy reporting regime for transactions relating to all other share economy areas (asset sharing, food delivery and task based sharing) will be deferred to 1 July 2024.
- The 2021/2022 Federal Budget proposal to relax the residency requirements for SMSFs to allow members to contribute while overseas will start upon Royal Ascent (instead of 1 July 2022).
- The government will legislate that digital currencies are not foreign currencies even where a country nominates a digital currency (as Ecuador did with Bitcoin) as legal tender unless the government issues that digital currency.
- The 2021/22 Federal Budget proposal to allow the self-assessing of effective lives of intangible assets (patents, trademarks, copyrights, in-house software) will not proceed.
- The government will legislate to increase the Commonwealth penalty unit to $275.
- The government will legislate to reduce the superannuation downsizer contribution (a once off $300,000 post tax contribution to super) to people 55 years of age (down from 60).
- The government will seek to legislate extending the pension asset test exemption from the principal home sale proceeds to 24 months (up from 12 months) and apply the lower deeming rate in the pension income test to principal home sales proceeds.
- The government will seek to legislate to make electric cars (including hydrogen and plug in hybrid) cars exempt from FBT and import tariffs if they are below the luxury car tax for fuel efficient cars. The cars must be first held after 1 July 2022. Unfortunately, the electric car fringe benefit exemption will be a reportable fringe benefit.
- The government will seek to legislate to make most state government COVID 19 related business grants non-assessable and non-exempt.
- The government will seek to legislate funding to support small and medium sized enterprises to fund energy efficient upgrades.
- The government will seek to legislate to make the Paid Parental Scheme more flexible from 1 July 2023 to allow either parent, non-birth parents and concurrent claims to be made. Further from 1 July 2024 the scheme will increase by two weeks until 1 July 2026 allowing a 26 weeks claim.
- The government will increase funding to the ATO to address personal income tax compliance, the shadow economy and tax avoidance (including multinationals, large public and private businesses).
- The government will increase funding to the Tax Practitioners Board to target high risk tax agents and unregistered preparers.
- The government will increase funding to the Small Business Debt Helpline and the NewAcess for Small Business Owners programs.
- The government will seek to legislate to align off market share buy backs for listed companies with on market share buy-backs for listed companies.
- The government will seek to legislate to increase fees and penalties under its Foreign Investment Framework (relates to residential land purchases for foreigners).
- The government will seek to legislate a Multinational Tax Integrity Package altering the thin capitalisation rules, deductions for intangibles in low/no tax countries and requiring increased transparency on overseas tax information
As with all budgets bear in mind budget proposals are merely that and may be legislated differently and sometimes not at all. If you have any questions regarding how any of the above items may impact you or your business please contact one of our accountants at the Victoria Point.