October 2022 Budget Update

Believe it or not we normally have a mini budget in October every year, however it doesn't usually gain a whole lot of attention and largely passes by unnoticed. This year was different. It was the Labor Government’s first budget in 9 years and we were eagerly awaiting what if anything was going to be announced to assist in easing the ever increasing cost of living pressures.

Sadly there was only bad news in relation to cost of living pressure with inflation forecast to continue to rise to a peak of 7.75% by the end of 2022 and energy prices set to increase by 50% by 2023-24. The budget is reflective of the government’s hesitation in putting money back into the hands of taxpayers which would only further fuel inflation.

With that in mind the key takeaways from the budget are:

For individuals and families:

• The Low and Middle Income Tax Offset has not been continued and will not be extended to the 2022-23 financial year.

• Stage three tax cuts eliminating the 37% marginal tax rate and lowering the 32.5% marginal rate to 30% have been kept, however these aren’t set to come into effect until the 2024-25 financial year.

• Paid Parental Leave will be expanded to 26 weeks in 2026, up from 20 weeks.

• The childcare subsidy is increasing from July 2023 for families earning less than $530,000. Families with a combined income of less than $80,000 will have their subsidy increased from 85% to 90%, with the subsidy reducing by 1% for every additional $5,000 earned annually.

For businesses:

• $15.1 million is being spent for tailored business mental health and financial counselling.

• Measures to address the skills shortage, including:

  • Speeding up visa processing times

  • 480,000 fee-free TAFE and community-based vocational education places

  • 20,000 additional university places for more students from under-represented backgrounds

  • Increasing the amount that pensioners can earn by $3,000, before their pensions are reduced

For all taxpayers:

The ATO is receiving a boost to funding for compliance activities including activities to target the shadow economy, personal income and tax avoidance. A spend of $900 million is expected to raise more than $5.5 billion in extra tax.

In summary

There is a little bit for families and not much for business in this budget. Any measures providing relief are still some time away from being implemented, of course assuming that all measures will be passed by parliament and made law.

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Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.