2022 Federal Budget: What it means for Individuals

Cost of living featured in the 2022 Federal Budget – with tax breaks, petrol and superannuation key themes.

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Unsurprisingly this year’s Budget includes a number of sweeteners to assist with the rising cost of living.

Contrary to reports that it would not be continued, the Low and Middle Income Tax Offset will be extended for another year. The low and middle income tax offset allows those earning up to $126,000 to receive up to $1080 after they’ve submitted their tax returns. In addition to this, there will be a further payment of $420 for the current year, taking the payment up to $1500 for those eligible. Those earning more than $126,000 will receive neither payment, while those with tax payable of less than $1500 will receive a lower amount.

If you’re eligible, payments for the 2021-22 income year will be paid from 1 July 2022 when you submit your tax returns for the current financial year.

In addition, a widely flagged one-off, income tax-exempt payment of $250 will be paid automatically to all eligible pensioners, welfare recipients, veterans and eligible concession card holders in April 2022.

Also widely flagged is a reduction in fuel excise by 50 per cent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre. The measure will commence from 12.01am on 30 March 2022 and will remain in place for 6 months, ending at 11.59pm on 28 September 2022, and should reduce the cost of filling up a standard tank by about $11. This measure will cost the Budget several billion dollars.

The Home Guarantee Scheme will be extended for those eligible, to 50,000 places for 3 years from next financial year, and 35,000 a year ongoing. These will include 35,000 guarantees per year for the First Home Guarantee, which was formerly known as the First Home Loan Deposit Scheme, 5,000 places for the Family Home Guarantee, and 10,000 places per year to 30 June 2025 for a new Regional Home Guarantee, that will allow those who have not owned a home for 5 years to purchase a new home in a regional location with a minimum 5 per cent deposit.

For those receiving a superannuation income stream, the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products has been extended for a further year to 30 June 2023.

The Paid Parental Leave scheme will be amended by rolling Dad and Partner Pay into Parental Leave Pay to create a single scheme of up to 20 weeks, fully flexible and shareable for eligible working parents as they see fit. The Paid Parental Leave can be taken any time within 2 years of the birth or adoption of a child. The income test will also be broadened to have an additional household income eligibility test. These changes will not result in any existing eligible claimants being worse off.

There are also some very attractive measures for small business, including a skills and training boost to support small businesses to train and upskill their employees. The boost will apply to eligible expenditure incurred from Budget night until 30 June 2024. Small businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20 per cent of expenditure incurred on external training courses provided to their employees, meaning a total deduction of 120% on the expenditure. The external training courses will need to be provided to employees in Australia or online, and delivered by entities registered in Australia.

Small businesses (with aggregated annual turnover of less than $50 million) will also be able to deduct an additional 20 per cent of the cost incurred on business expenses and depreciating assets that support digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services. An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost.

 

Important information and disclaimer
Sources: Budget Measures Budget Paper No. 2 2022–23
This material has been prepared by nabtrade, the information, trading and settlement service provided by WealthHub Securities Limited and based on https://budget.gov.au/2022-23/content/bp2/download/bp2_2022-23.pdf, 29 March 2022. No warranty is made as to its accuracy, reliability or completeness. This website contains general advice only, and has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on the information on this website, you should seek professional advice including independent taxation advice and consider whether it is appropriate for you in light of your objectives, financial situation and needs. WealthHub Securities Limited ABN 83089718 249 AFSL No. 230704 is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL  230686 (NAB). WealthHub’s obligations do not represent deposits or other liabilities of NAB. NAB does not guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.