The key focus of the budget is a five-point plan to ease the cost of living. This is in response to the uncertainty surrounding a potential global slowdown if the US goes into recession, a sharp drop in domestic consumption in response to high inflation and rising interest rates, and ongoing impacts of recent flooding and weather events.
For individuals, the budget promises cheaper childcare, paid parental leave, cheaper medicine, housing affordability and wage growth.
The budget also has earmarks significant infrastructure investment, including renewable energy initiatives and infrastructure to support regional areas and businesses.
There are some changes to Super and Tax, which we have included a snapshot of below.
As always, we will keep a close eye on financial markets and regulatory changes to stay ahead of changes that may affect you.
There are no significant changes to the personal income tax rates, thresholds, or notable changes to any current rebates or credits. However, the big news is the Labor government hasn’t amended the big changes coming to personal income tax from July 1 2024 when the 37% tax rate is set to be abolished. This means everyone earning between $45,000 and $200,000 will be on a 30% marginal tax rate.
Some of the budget considerations for tax include:
- Digital currencies not issued by or under the authority of sovereign governments will continue to be treated as a capital asset rather than as a foreign currency.
- The proposed extension of reportable transactions relating to the sharing economy was deferred by 12 months to 1 July 2023.
- This measure will apply from its announcement at 7:30pm on Budget night.
- Off-market share buybacks undertaken by listed public companies will be in alignment with on-market share buybacks.
- The ATO tax avoidance task force will receive additional funding and is being extended to 30 June 2026.
- Financial penalties for breaches of foreign investment compliance are set to double from 1 January 2023.
Superannuation & Retirement
There are no significant changes for super members, and some of the measures announced but not legislated by the previous government have been removed from this budget.
The proposed measures in this budget include:
- The proposed relaxation of residency requirements for SMSFs, which was to apply from 1 July 2022 has been deferred
- Eligibility to make a downsizer contribution to superannuation will be expanded by reducing the minimum age from 60 to 55 years.
- The downsizer contribution allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home.
- The Government has opted not to proceed with various legacy tax and superannuation measures that were announced but not legislated by the previous Government.
- The 2018–19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs) will not proceed.
- A requirement for retirement income product providers to report standardised metrics in product disclosure statements, initially announced in the 2018–19 Budget, will not proceed.
If you have questions about how the budget may affect you, your Super or your investment strategy, please book a time to chat with me.