Comments on the 2022-23 Federal Budget Report
The first Albanese and Chalmers budget has been handed down last night, labelled as ‘Building a Better Future’. It’s designed to achieve a stronger more resilient and modern economy and includes various cost of living relief measures predominantly around childcare and paid parental leave.
Some of the relevant announcements include:
- Reintroduction of proposed changes to Corps Act to allow documents to be electronically signed, executed and sent.
- FBT exemption for certain electric vehicles purchased from 1 July 2022.
- Funding for small business assistance to educate and support:
- Paid family & domestic violence leave.
- Mental health and wellbeing programs.
- Stage 3 tax cuts remain on track to commence 1 July 2024 as legislated by the previous government.
- Good news for pensioners with proposed changes that include a once off credit of $4,000 to their work income bank and an increase to the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for single and $98,054 to $144,000 combined for couples.
- An increase in paid parental leave from 24 to 26 weeks.
With surging inflation and such a significant budget deficit to deal with the new government have a lot of work to do to achieve these economic changes.
This budget starts to address some of the issues but I would predict the next Federal Budget in May 2023 may include more significant tax changes to help alleviate the problems similar to those they proposed in the 2019 election. Only time will tell.
This was a quiet budget in regards to superannuation, with only some minor new announcements and amendments to prior budgets made.
The dropping of the downsizer age to 55, should also allow more Australians to contribute further monies into their super funds.
A previously announced measure around a 3 year audit cycles of SMSFs has been dropped and so they will continue with their annual audit requirements.
Announcements made in relation to the Commonwealth Seniors Health Care card, should mean more self-funded retirees can access or retain the card.
The Government will probably look to tinker with Super to assist in repairing the budget deficit. This has commenced with the announcement of amendments to the tax treatment of off-market buy-backs, removing the ability to obtain a refund of excess franking credits on the dividend portion paid to shareholders from these schemes.
Director & SMSF Specialist Adviser
DFK Benjamin King Money
The most significant benefits available to business in the Federal Budget relate to the support for the previously announced skills and technology boosts and certainly the proposed FBT exemption for electric vehicles.
For the first time since FBT was introduced in 1986 a business can provide their employees with a fully FBT exempt electric vehicle. To qualify for the FBT exemption, it needs to be under the electric vehicle luxury car tax threshold of $84,916 and must not have been held or used prior to 1 July 2022.
This will result in significant tax savings for both employer and employees.
DFK Benjamin King Money
The budget delivered last night highlights the cost of living will start to ease in the new year. It is attempting to restrain government spending to curb inflation but at the same time supporting employees through increases in the paid parental scheme, cheaper child care and free TAFE.
There was little in the way of taxation and superannuation announcements although in good news for individual tax payers the stage three tax cuts that will abolish the 37% tax bracket and reduce the 32.5% bracket to 30% remains untouched in both form and timing. Another tax highlight are the FBT concessions for electric vehicles announced.
Paul Turnbull & Mary Ellicott
Senior Manager & Manager
DFK Benjamin King Money
There was little change in the budget for Investors and Superannuation. The main concern was the forward economic forecasts of economic growth (GDP) for FY 2023/24 to be 1.5% (nominal GDP is forecast to be -1.0%).
The budget confirmed some (already well received) changes in Superannuation and Retirement Incomes that have already been presented to Parliament:
- Increase in the thresholds for Commonwealth Seniors’ Health Card (CSHC) – up to $144,000 for couples and $90,000 for singles;
- Sale proceeds of your family home if they will be used to buy a new home being excluded for the Age Pension Assets Test has been extended to 24 months;
- Downsizer Contributions to Super eligibility lowered to age 55;
- Formalising a once off $4,000 credit to the Work Bonus income bank of participating recipients. This temporary income bank top-up will increase the amount pensioners can earn in 2022–23 from $7,800 to $11,800, before their pension is reduced. This will assist pensioners who want to work, or work more hours, to do so to a greater extent before their benefits are impacted.
Perhaps the biggest change for the future of Superannuation came with the National Housing Accord and the ambitious target to build one million new homes by 2029. Affordable housing is a very respectable federal budget aim. This social good is very difficult to achieve against the many competing interests between of 3 layers of government, developers, property owners, renters and infrastructure providers.
The national Housing Accord in the Federal Budget brings in another competing interest; Superannuation Investors. Over the years I’ve had many discussions about Superannuation funds coming to the table to assist in social good investing. Whilst it sounds great on the surface, the idea tries to meld two competing interests – properties being built and rented out at the lowest cost possible and Superannuation Investors trying to maximise their return.
Past guises of using public money alongside private investors (including Super Funds) to generate more affordable housing, such as the National Rental Affordability Scheme (NRAS) failed to deliver on in the face of these competing aims. With NRAS it was the property developers that won out. Low income renters achieved a short term gain, however the Investors, including Super Funds, lost out via poor investment returns in loss making properties (despite generous government tax incentives). We will watch how the newly announced National Housing Accord may (hopefully) benefit Superannuation Investors in the future (and more importantly, build more affordable housing).
Benjamin King Money Wealth