On Tuesday 29 March, Treasurer Josh Frydenberg handed down the 2022 Federal Budget, which was eagerly awaited given the impact it could have on the forthcoming election outcome.
The Treasurer detailed the current state of the economy, a plan to help Australia move past a difficult two-year period following the COVID-19 pandemic and a number or measures to improve cost of living pressures.
Some of the key numbers announced include:
A deficit of $79.8 billion for 2021/22.
Net debt of $631.5 billion for 2021/22, which is expected to peak at $864.7 billion in 2025/26.
Wages growth of 2.75% for 2021/22, expected to reach 3.5% in 2024/25.
Inflation of 4.25% for 2021/22, expected to fall to 2.75% in 2023/24.
The unemployment rate is expected to fall to 3.75% in 2022/23.
Easing cost of living pressures
From 1 July this year, over 10 million individuals will receive a one-off $420 cost of living tax offset. When combined with the low and middle income tax offset (LMITO), eligible low and middle-income earners will receive up to $1,500 for a single income household, or up to $3,000 for a dual income household. LMITO will however end in the 2022 financial year. The LMITO was a one-off tax offset worth up to $1,080 available to those earning from $48,000 to $126,000 a year.
To help some Australians meet cost of living pressures, the government is providing a one‑off, income tax-exempt payment of $250.This payment will help 6 million people, more than half of which are pensioners, at a cost of $1.5 billion.
Temporary fuel excise relief
With recent fuel prices rising to record levels, adding to cost of living pressures faced by families and the cost of doing business for small businesses, the fuel excise is being cut by 50% for the next six months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre with an average price reduction of around $15 per tank expected to flow through to the majority of service stations and Australian consumers within a few weeks.
The Government has extended the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023.
The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their superannuation in order to qualify for tax concessions. Given ongoing volatility, this change will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.
$2.8 billion has been committed to increase take up of apprentices, with up to $15,000 wage subsidies for employers who take on a new apprentice. $3.7 billion is being invested on skills reform to support an additional 800,000 trade places.
Technology Investment Boost
The Government is providing $1.0 billion for a new Technology Investment Boost to encourage small businesses to go digital. Small businesses with annual turnover less than $50 million will be able to deduct a bonus 20 per cent of the cost of expenses and depreciating assets that support digital uptake. This includes portable payment devices, cyber security systems or subscriptions to cloud-based services. The boost will apply to eligible expenditure of up to $100,000 per year, incurred from Budget night until 30 June 2023.
Skills and Training Boost
Small businesses with annual turnover of less than $50 million will have access to a new bonus 20% deduction for the cost of external training courses delivered to their employees by providers registered in Australia. The boost will apply to eligible expenditure incurred from Budget night until 30 June 2024, such as a cyber security course delivered by a registered training provider. This initiative will provide $550 million in tax relief for small businesses.
Building on the $18.3 billion committed in 2021/22, the government is continuing to implement aged care reforms and additional services in response to the Royal Commission into Aged Care Quality and Safety. A further $468.3 million is being invested in support for the aged care sector and the 1.3 million senior Australians using these services.
Affordable home ownership
The government will increase the number of guarantees under the Home Guarantee Scheme to 50,000 per year for three years from 2022-23 and then 35,000 a year ongoing to support homebuyers to purchase a home with a lower deposit.
Major infrastructure projects
The government is providing a further $7.4 billion for new and expanded dam projects intended to increase water security, build drought resilience for the future and promote regional economic development.
This includes $6.6 billion for water infrastructure in Queensland to facilitate the development of a new food bowl in Australia’s north and unlock new agricultural export opportunities.
If you want to explore these announcements further, please reach out to us to discuss your specific circumstances at [email protected] or 1300 360 186.
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