The 2022-23 Federal Budget, delivered by Treasurer Josh Frydenberg last night, has focused on innovation, creating more jobs, stimulating the economy, and reacting to the rising cost of living.
The Government has announced some exciting measures such as additional deductions for small and medium businesses with annual turnover of less than $50m, great opportunities for agribusiness to invest in digital technologies and an extra tax cut for low and middle income workers.
As always, if you have any questions, please don’t hesitate to get in touch with us! Our friendly team are here and eager to help with all of your accounting needs!
ONE-OFF COST OF LIVING TAX OFFSET
- An extra $420 in tax relief for individuals earning up to $120,000
- Medicare levy low-income thresholds increase from 1 July 2021
- No change to individual income tax rates.
The Government will increase the low and middle income tax offset (LMITO) for the 2021-22 income year in a bid to combat the rising cost of living for low and middle income earners.
The proposed change will add another $420 to the current LMITO, resulting in the maximum offset increasing to $1,500 for an eligible single income household or $3,000 for an eligible dual income household (up from $1,080 and $2,160).
The proposed change will be paid from 1 July 2022 when Australians lodge their tax returns for the 2021-22 income year. Individuals with an income of up to $126,000 will benefit from the LMITO, with the full benefit of $1,500 available to those earning between $48,000 – $90,000 per annum. The LMITO then phases out as an individual’s income reaches $126,000.
All other features of the current LMITO remain unchanged (including that it will not apply to taxpayers with income of $126,000 or more). The one-off $420 cost of living tax offset will only apply to the 2021-22 income year as the Government did not announce an extension to the LMITO to 2022-23.
SMALL BUSINESS SUPPORT PACKAGE
Small businesses will receive a modest support package to assist with the following initiatives:
- $10.4m to support improving efficiency and reporting of the Payment Times Reporting
- $8.0m to enhance small business financial capability.
- $4.6m for free, accessible, and tailored mental health support to small business owners; and
- $2.1m for financial counselling to small business facing financial distress
These initiatives were previously foreshadowed on 13 January 2022 by the Acting Minister for Employment, Skills, Small and Family Business. They have now received the full backing of the Government in this year’s Budget.
The Government will supply over $25m to support small business initiatives over the next three years.
GREAT OPPORTUNITY FOR AGRIBUSINESS TO INVEST IN DIGITAL TECHNOLOGIES
The Budget provides an additional 20% tax deduction on eligible digital adoption spending from Budget date until 30 June 2023 for agribusinesses with turnover of less than $50 million.
This includes subscription costs for cloud-based farming software and bookkeeping programs such as Xero, QuickBooks and Figured.
Importantly, it also includes spending in relation to digital tracking for livestock. The measure is capped at total spend of up to $100,000, with all additional deductions able to be claimed in the 2022-23 financial year tax return.
To find out more about what the 2022-2023 Federal Budget means for you, contact MLP today!