It is clear that the Government is tightening the purse strings and making a concerted effort to reduce debt and tackle inflation. Time will tell whether the responsible ‘adult, no-fun’ approach will achieve its intended outcome.
Here are the budget highlights:
CRACKING THE TAX WHIP
- Continued focus on eliminating the avoidance of tax by multi-national companies.
- $80.3 million to extend the Personal Income Taxation Compliance Program for 2 years from 1 July 2013. This will assist the ATO in providing preventative and corrective measures in areas of non-compliance such as incorrect reporting of income and overclaiming deductions. Those of you engaging in ‘creative accounting’ practices may wish to consider using your creative energies for other endeavours.
- The ATO Shadow Economy Program will be extended for a further 3 years to enable the ATO to target shadow economy (previously known as black economy) activity.
- $200m a year boosted funding for the ATO Compliance Programs – Tax Avoidance Taskforce to pursue business tax risks and complement the focus on multinational enterprises and large public and private business.
- Introduction of anti-avoidance tax mechanism for multinational companies to deny a tax deduction for payments relating to intangibles (such as IP, goodwill etc) held in low-or-no tax jurisdictions.
- Public companies (both listed and unlisted) will have to provide enhanced information to the ATO about the number of their subsidiaries and their country of tax domicile. This includes charities who are structured as companies limited by guarantee.
- Tenderers for Australian Government contracts worth more than $200,000 will have to disclose their country of tax domicile (by supplying their ultimate head entity’s country of tax residence).
- The Government intends to reverse the measure announced in the previous budget allowing taxpayers to self-assess the effective life of intangible depreciating assets.
- The instant asset write off has not been extended and will end on 30 June 2023.
- A number of other changes to tax legislation have been scrapped. Many of these changes tinkered around the edges with already complex tax regulation so we are hopeful that the decision to not proceed is making way for serious tax reform in the future.
- $15.1 million over 2 years to extend the Small Business Debt Helpline and the NewAccess for Small Business Owners programs which aim to support the financial and mental wellbeing of small business owners.
- $62.6 million over 3 years to support small to medium enterprises to fund energy efficient equipment upgrades through the Department of Climate Change, Energy, the Environment and Water.
- $7.9 million over 4 years for the Fair Work Commission to support the uptake of enterprise bargaining for small businesses, removing unnecessary complexity to ensure easier negotiations for small businesses and employees.
- Tax cuts on electric cars so that more Australians can afford them. From 1 July 2022, battery, hydrogen fuel cell and plug-in hybrid electric cars will be exempt from Fringe Benefits Tax and import tariffs if they have a first retail price below the luxury car tax threshold for fuel-efficient cars. This may increase salary sacrificing arrangements for hybrid cars.
- $141m will be invested to realign carbon capture technologies to prioritise technology development for hard-to-abate industrial sectors, accelerate carbon dioxide removal, and negative emissions.
- Establishment of a Department of Climate Change, Energy, the Environment and Water which will seek to support small to medium enterprises to fund energy efficient equipment upgrades. There is very little detail on what support of this nature will look like.
- $20b to establish the “Rewiring the Nation” program to expand and modernise Australia’s electricity grids at lowest cost and focus on new renewable and storage capacity. The aim of this program is to drive down electricity prices.
- $102m over 4 years from 1 July 2023 to establish a Community Solar Banks program for deployment of community-scale solar and clean energy technologies. The aim of this program is to improve access to clean energy in regional communities, social housing, apartments, and rentals that are traditionally unable to access rooftop solar.
- $15b over 7 years to establish the National Reconstruction Fund to support investment in resources, agriculture, forestry and fisheries sectors, transport, medical science, renewables and low emission technologies, defence capability and enabling capabilities. There is only brief detail around this proposal, and it appears to be a pooled funding resource for various projects that support investment in those key areas.
- $845m to support the aged care sector in managing COVID-19 including claims for additional costs due to outbreaks and in-reach testing arrangements.
- $808m to extend the National Partnership on COVID-19 response (which is responsible for 50% of the cost of state and territory COVID-19 responses including vaccination, testing and treatments) and to extend GP-led Respiratory Clinics.
- $162m to extend Medicare rebates for PCR testing for COVID-19, temporary Medicare item for telehealth consultations and Medicare support to manage COVID-19 positive patients in the community.
- $2.5b commitment to fixing the aged care crisis in improving quality of care, infrastructure, and services. There is very little detail on how this measure will be practically implemented.
- $200m over 6 years for the expansion of the Flinders Medical Centre and upgrades to the Repat Health Precinct.
- $787m over 4 years to decrease general patient co-payment for treatments on the PBS making general medical expenses lower for everyday Australians (from 1 July 2023).
- General Practice Grants Program including to Aboriginal Community Controlled Health Services and other GP-led practices to invest in training, equipment, and minor capital works.
CHILD CARE AND YOUNG PEOPLE
- $4.7b has been pledged to deliver cheaper childcare, ease the cost of living for families and reduce barries to greater workforce participation including by increasing the Child Care Subsidy from 85% to 90% for the first child and increasing the subsidy for all families earning less than $530K in household income. The devil will be in the detail here so we would need to see draft legislation before working out what that will mean for your family.
- An additional 20,000 Commonwealth supported placements in universities for 2023 and 2024 for under-represented students including First Nations peoples who are the first in their family to study at university, and students from rural and remote Australia.
- $310m over 9 years from 1 July 2023 to attract and retain high-quality teachers and improve student outcomes including bursaries (scholarship award) of $10,000 for 5,000 students with an ATAR of 80 or above who undertake a teaching degree, and a further $2,000 for students who complete their final year placement in a regional area.
- $95m over 9 years to support 10,000 people to complete a New Energy Apprenticeship (supporting the New Energy Skills Program which aims to transition to a clean energy economy).
- $531m over 4 years to support changes to the Paid Parental Leave Scheme including the ability for either parent to claim the parent and expansion of an additional 2 weeks per annum from 1 July 2024 until it reaches 26 weeks by 1 July 2026.
- $3.4m over 4 years to support the development and delivery of education, technical advice, and implementation of the commitment to legislate 10 days of paid family and domestic violence leave.
- $262m for the establishment of the long awaited National Anti-Corruption Commission. Again we will need to wait and see what powers the Commission will have but the intention is to have broad jurisdiction to investigage serious or systemic corrupt conduct across the Commonwealth public sector (including our pollies!).
- $75m over two years for the delivery of a referendum to enshrine a First Nations Voice to Parliament in the Constitution.
- Earlier access to the downsizer contribution in superannuation, now from the age of 55 years (down from 60 years of age). The downsizer contribution allows a one-off post tax contribution of up to $300,000 upon the sale of their family home.
- $10b in newly created Housing Australia Future Fund to fund 30,000 social and affordable housing projects over 5 years, including improvements of housing in remote Indigenous communities and cris and trasition housing options for women and chidlren fleeing domestic and family violence.
- Establishment of a Help-To-Buy Scheme to assist people on low to moderate income to purchase a new or exiting home with an equity contribution from the Government. We would need to see draft legislation before determining who is eligible for this assistance and what contribution the Government is going to make.
A sensible start to budget repair and a welcome commitment to the continuity of funding for the NDIS are positives from this budget. A difficult road lies ahead for the increasing cost of living crisis for all Australians and that will make for a very interesting May 2023 budget. Serious tax reform was missing from this budget, but time will tell how the economy shapes up.
For more information, please contact Lisa Christo on (08) 7111 2994.