The Budget doesn’t hide that cost of living pressures will continue, and does provide some initiatives to help, but flags that inflation will peak at the end of the year and persist for longer than predicted. Wages are set to increase but will be undercut by cost of living.
It focuses on easing cost of living pressures on residents, cracking down on tax fraud and looking toward a renewable future.
INDIVIDUALS AND FAMILIES
Child Care Subsidy increase
Announcements from the first 2022-23 budget remain in place. Maximum Child Care Subsidy (CSS) rate will increase from 85% to 90% for families earning less than $80,000 then taper down gradually until it reaches zero for families earning $530,000 or more.
On top of this announcement, a base entitlement to 36 hours per fortnight of subsidised early childhood education and care will be implemented for families with First Nations children regardless of activity hours or income level.
This increase comes with a renewed focus on compliance, requiring large providers to report CSS related revenue and profits, as well as requiring electronic payment of fees to weed out fraudulent claims.
Paid Parental Leave reforms
As previously announced, from 1 July 2023 the Government will introduce reforms to make the Paid Parental Leave Scheme more flexible for families so either parent is able to claim the payment. They will also be able to claim weeks concurrently so parents can take leave at the same time.
The Government will expand eligibility by introducing a $350,000 family income test if families do not meet the individual income test.
From 1 July 2024, the scheme will gradually begin expanding from the current 18 weeks to a full 26 weeks at 1 July 2026. Parents can share this entitlement with a portion maintained on a “use it or lose it” basis, as to encourage both parents to access the scheme and share responsibilities. Sole parents will be able to access the full 26 weeks.
Aged care reform
$2.5bn will be provided over 4 years to improve the quality of care in aged care facilities. As previously announced, all facilities will be required to have a registered nurse onside 24 hours per day, 7 days per week from 1 July 2023. Care minutes will also increase to 215 minutes per resident per day from 1 October 2024.
Community batteries for household solar
From 2022-23, the Government will provide $224m over 4 years to install 400 community batteries across Australia.
They will also look to establish a Community Solar Banks program for the installation of community-scale solar and clean energy technologies. The additional $102m is aimed at regional communities, social housing, rental accommodation and more that are traditionally unable to access rooftop solar.
SUPERANNUATION AND INVESTORS
Downsizer eligibility reduced
The Government will reduce the age a person can make a ‘downsizer’ contribution to their super from 60 years to 55 years of age. Downsizer contributions of up to $300,000 per person can be made from the sale of a principal residence in Australia that you have owned for the past 10 years or more. These contributions are excluded from the age test, work test and total superannuation balance (but not from the transfer balance cap).
Legislation to expand the eligibility for downsizer contributions is currently before parliament, and if it passes, will become law from the first quarter after Royal Assent.
Three year Self-Managed Superannuation Funds audit requirement scrapped
The Government announced in the 2018-19 Budget that SMSF’s with a good history of record-keeping and compliance – three consecutive years of clear audit reports and returns submitted on time – would only be required to have their fund audited every three years. This measure will not be proceeding.
BUSINESS AND EMPLOYERS
Energy efficiency grants for SMEs
From 2022-23, the Government will provide $62m over 3 years to help small and medium businesses fund energy efficiency equipment upgrades.This will support studies, planning and equipment and facility upgrade projects. These projects need to improve energy efficiency, reduce emissions or improve power demand management.
Large jump in penalties for competition and consumer law breaches
From the 2022-23 year, the penalties for a company breaching competition and consumer laws will rise sharply from a maximum of $10m to a maximum of $50m per breach, and from 10% of annual turnover to 30% of turnover, whichever is greater, during the period the breach took place.
Self-assessment of intangible assets removed
A previous announcement, due to commence on 1 July 2023, the measure enabling taxpayers to self-assess the life of certain intangible assets, rather than following the effective life prescribed by statute, has been removed.
Personal income deductions and incorrect reporting
The ATO will receive an additional $80m to crackdown on non-compliance such as over claiming deductions and incorrect reporting of income. The ATO’s Shadow Economy Program will extend for a further 3 years from 1 July 2023 to scrutinise cash-in-hand payments, visa fraud, underpaid wages and more that stop the economy from collecting tax.
The Government has committed to cut what is spends on external labour, advertising, travel and legal expenses, expecting to save $3.6bn.
If you have any questions about what this budget means for you, get in touch with the Lead Advisory team on 5445 4200.