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2022/23 Federal Budget & What It Means For You!

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This week, the Australian Government have released the 2022/23 Federal Budget.

Today, we would like to break it down for you so you can get a better understanding of what it means for you & your business.

Increase to low and middle income tax offset (LMITO)

Announced is a once-off $420 cost of living tax offset. This is on top of the existing tax offset for the 2022 Financial Year. Below is a table which shows what offset you will receive in your 2022 income tax return based on your level of income;

2022 LMITO

If your income exceeds $126,000+ you are not eligible for a tax offset.

An increase to the Medicare Levy low-income thresholds 

Seniors, pensioners, singles and families will find an increase in the Medicare Levy low-income thresholds. See below:

  • The threshold for singles will be increased from $23,226 to $23,365.
  • The family threshold will be increased from $39,167 to $39,402.
  • For single seniors and pensioners, the threshold will be increased from $36,705 to $36,925.
  • The family threshold for seniors and pensioners will be increased from $51,094 to $51,401.

For each dependent child or student, the family income thresholds will increase by a further $3,619 instead of the previous amount of $3,597.

COVID-19 test expenses to be tax deductible

From 1 July 2021, the Government have ensured that the costs of taking a COVID-19 test to attend a place of work are
tax deductible for individuals.

The Government will also ensure FBT (Fringe Benefits Tax) will not be incurred by businesses where an employer has provided employees with COVID-19 tests.

Skills and Training boost for Businesses 

The Government have announced a new skills and training boost for small and medium sized businesses to train and up-skill their employees. The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 until 30 June 2024.

There will be some exclusions such as in-house or on-the-job training and expenditure on external training courses for persons other than employees.

For expenditure incurred by 30 June 2022, the boost will be claimed in the income tax returns for the following income year. For expenditure incurred between 1 July 2022 to 30 June 2024, the boost will be claimed in the income year in which the expenditure is incurred.

Technology Investment boost for Businesses 

Small and medium sized businesses will be able to deduct an additional 20% of expenditure on business expenses and depreciating assets that support their digital adoptions. This includes:

  • Cyber security systems
  • Portable payment devices
  • Subscriptions to cloud-based services

This only applies to businesses with aggregated annual turnover of less than $50 million and an annual cap of $100,000 will be eligible for the boost.

For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year in which the expenditure is incurred.

PAYG instalment System for Businesses 

Companies will now have the option to have their PAYG instalments  calculated based on current financial performance. This information will be extracted from business accounting software.

The aim is to support business cash flow by insuring instalments reflect current performance.

This option is subject to software providers capacity to deliver this service. The aim is to have this system in place by 31 December 2023 ready to commence 1 January 2024.

To read more about the 2022-23 Federal Budget, click here & you will be re-directed to budget.gov.au

If you have any questions in regards to the above information, please give us a call on (03) 9762 7344.

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