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2022-23 Federal Budget Summary

Dear valued clients,

We are pleased to share a summary of announcements made in the 2022/23 Federal Budget, which have primarily focused on tackling rising cost of living.

The recent rising price of fuel, which is resulting in higher prices of everything from groceries to building supplies, is a hot topic across Australia. The latest Westpac Consumer Confidence Index highlights how damaging concerns about cost of living, potentially higher interest rates and the general prevalence of bad news in the world are for household confidence levels currently. The Index fell to 96.6 points in March from 100.8 in February – this is the lowest confidence reading since September 2020.

The Budget seeks to ease some of these concerns and boost consumer confidence with several temporary measures in the following areas:

Cost of living payments

  • An additional one-off payment of $420 for the 10 million taxpayers eligible for the Low and Middle-Income Tax Offset (LMITO). Taxpayers earning up to $126,000 were previously eligible for payments between $255 and $1,080 when they file their tax returns at the end of this financial year. Under the changes, they will now receive between $675 and $1,500.
  • A temporary reduction in fuel excise duty. The 22.1 cent/litre cut will provide some immediate relief and be in place for the next six months. In reality, the Government can’t sustainably address the underlying reasons why petrol prices have risen about 27 cents/litre1 since the start of March.
  • A one-off $250 payment to pensioners and welfare recipients to offset some of the rising cost of living pressures.

These three announcements alone will cost $8.6 billion in the next six months.

The economic forecast that will attract the most attention is the wages data, which is forecast to rise 3.25% in 2022/23 and 3.25% in 2023/24. This is a slightly faster forecast than the Reserve Bank of Australia, which is expecting wages growth to not reach 3.25% until mid-2024.

Cost of living rises

New tax incentives for small businesses

New policies that will directly benefit small businesses include:

  • New tax incentives to help small businesses, with a turnover of less than $50 million/year, adopt digital technology and train and upskill employees.
    • Until June 2024 for every $100 a small business invests in external training courses for their employees they will get a $120 tax deduction (Skills and Training Boost).
    • Until June 2023 for every $100 a small business spends on new digitalising their business (for items such as cloud accounting, online security and eInvoicing software) they will get a $120 tax deduction up to $100,000/year (Technology Investment Boost).
  • An extension of the current wage subsidy programs around apprenticeships, a new streamlined Australian Apprenticeships Incentive System and a new program to help lift youth employment (ReBoot).
  • Measures around the PAYG system are designed to improve short-term cash flow for small businesses and enhance the prefill of some income tax returns and activity statements.
  • Changes to procurement rules to make it easier for small businesses to win contracts and have government invoices paid more quickly.
  • Additional funding for the Fair Work Commission to establish a dedicated unit to support small businesses, including with unfair dismissal and general protections disputes.
  • An additional $480 million to improve wireless NBN access for households and businesses in regional and remote areas.

One long-standing policy that has been repeatedly extended is the instant asset depreciation program. This was not extended in the Budget and could end on 30 June 2023.

My Accounting Advantage - small business incentives

CPA Australia’s response to the Federal Budget

The 2022-23 Federal Budget has been delivered in one of the most uncertain and volatile environments in decades.

“A complex array of factors, including geopolitical tensions, the pandemic, rising inflation and low unemployment have left their mark on the budget,” said General Manager External Affairs, Dr Jane Rennie.

“All budgets are balancing acts. The main challenge for the government with this budget was maintaining sufficient flexibility to respond to once-in-a-lifetime economic crises while setting the nation on a path toward sustainable economic transformation.

“There are important announcements in the budget which will promote longer-term economic transformation. However, what’s missing are announcements to better support businesses to build their resilience to manage future uncertainty and shocks.”

Read CPA Australia’s verdict on Budget 2022-23.