On 25 October 2022, the new Labor Government handed down its October 2022/23 Federal Budget. It would be fair to say that this was not a typical Budget, both from a timing and content perspective.

With a backdrop of high inflation and geopolitical uncertainty around the World, this budget was billed as sensible and sustainable, without adding further pressure to inflation in this country.

As with all budgets, many of the announcements require legislation to be passed to achieve the stated outcomes, this currently needs the opposition to agree to the measures or for the Greens and Teals to agree.

There were many announcements in the budget relating to the environment, energy, and infrastructure.  Below are the items that are most relevant to individuals with a financial lens.

Taxation

  • There was no announcement of any changes to the personal income tax changes due to take effect from 1 July 2024.  Meaning that the 32% tax bracket will be reduced to 30%, the 42.5% tax bracket will be removed and the 45% tax bracket won’t commence until $200,000.  This measure is already legislated, but I would point out that there are 2 federal budgets to come before it commences.
  • There was no announcement of an additional extension of the low and middle income tax offset that ceased from 30 June 2022.
  • There was no extension of the previous cuts made to fuel excise tariffs that ceased to apply on 29 September 2022.
  • For those looking to salary package a motor vehicle as part of their employment, there will be exemptions from fringe benefits tax for certain electric vehicles packaged on or after 1 July 2022.  This legislation has already passed the lower house and currently sits in the Senate for deliberation.  It was also announced that import duties on certain electric vehicles will be removed, further brings the price of these vehicles down.

Superannuation

  • The ability to make a downsizer contribution to super of up to $300,000 per eligible person on the sale of a principal residence will become available to persons aged 55 and above (currently 60 and above). This will be effective 1 January 2023 at the earliest.  If this is you, it is an additional way in which you can add money to the tax-effective environment of superannuation.
  • No changes were announced to limit the amount that can be accumulated in super or transferred to retirement phase, providing some welcome stability to the system.

Social Security and Welfare

  • The level of income a person may earn and still be eligible for the Commonwealth Seniors Health Card will increase to $90,000 for a single person and $144,000 combined for a couple.
  • Other changes to benefit pensioners and income support recipients will be made, including extending the period that the proceeds from the sale of a home are exempt from the assets test by 12 months to a total of 2 years, freezing current deeming rates on financial assets and increasing the level of the Work Bonus.
  • The duration of the Government’s paid parental leave scheme will gradually extend to 26 weeks.
  • The level of child care subsidy paid by the Government will increase from 1 July 2023, reducing the out of pocket costs for many families.

Summary

The budget was slim on hand outs, and reducing cost of living pressures, however it was also light on spending that would increase inflation further.  If there are any items above, or elsewhere that you wish to know more information on, please don’t hesitate to contact out office.