Oz's big takeaways
Cost of living
There was a clear focus to ease the cost of living for Australian which has skyrocketed in the wake of the pandemic and the war in Ukraine. Tuesday’s budget focused on two key areas to help address this issue.
The first is the record fuel prices that have made travel enormously expensive for most Australians. The government announced they will be cutting the fuel excise in half for the next six months, which they believe will save motorists 22c a litre on petrol. For many of our clients who drive to work each day, this reduction in fuel prices is estimated to save you upwards of $10 every time you go to fill up.
The other was to increase the tax offset that low and middle income earners will get back at tax time this year. An extra $420 has been added, meaning that taxpayers earning less than $126,000 can now receive a max offset of $1500 in their tax returns.
Training and technology
There are clear incentives in this budget to encourage small and medium businesses to invest in skills and new technology. This is part of an effort to boost Australia's tech capabilities and grow the future of our digital economy.
One of these incentives is a temporary tax break for small businesses who spend money on either new technology or training for new and existing employees. This applies to small businesses who spend on training courses delivered by external providers and new technology such as cyber security, cloud based computing services and web design. For every $1 invested in these areas, businesses (with an annual turnover less than $50 million) will be rewarded with a $1.20 tax reduction. Technology investments up to $100,000 over the upcoming financial year will be supported under this measure.
Apprenticeships
Whilst the current Boosting Apprenticeship Commencement scheme is due end on June 30, the Australian Apprenticeships Incentive Scheme will replace it.
For business owners, this means that there will be less wage subsidies for new apprentices than under the current scheme. After July 1, the government has pledged to subsidise 10 per cent of wages for first and second year apprentices, and 5 per cent for third years. Employers will be able to seek up to $15,000 in wage subsidies.
However for apprentices employed in “priority” industries, they will be eligible to receive up to $5,000 in direct cash payments over their first two years. Apprentices in “non-priority” industries will only be eligible for a one-off $3,500 payment. The government has not yet outlined which industries will be deemed “priority”, but the list will be updated annually based on national demand.
Sam's big takeaways
Paid Parental Leave
There has been a few changes to the current Paid Parental Leave (PPL) scheme which could have a big impact on young dads and single parents in the workforce.
Currently, new mothers can access the government-paid parental leave for 18 weeks, in addition to their work entitlements. This is alongside the “Dad and Partner Pay” scheme which covers the other parent or primary caregiver for the first two weeks.
These two schemes have now been combined into one, meaning parents can now split the 20 weeks of PPL however they like. The PPL threshold has also been lifted to a combined household income of $350,000 per year.
As part of the new changes, single parents can now access the additional two weeks of PPL as well.
Income support for pensioners, welfare recipients
The government also announced a one-off payment targeted at easing cost of living pressures for some of the more financially vulnerable Australians.
This is in the form of an income-tax exempt sum of $250 which is to be paid to eligible pensioners, welfare recipients, veterans and concession card holders. Although this is unlikely to affect many of our clients, it is expected to impact around six million Australians. Recipients will receive the payment in April of this year.
First home buyers
The first home buyer loan deposit scheme is set to be expanded further in an attempt to help more young Australians break into the property market.
The scheme allows eligible first home buyers to purchase a property with a deposit as low as 5 per cent, without needing to take out a Lenders Mortgage Insurance policy. The scheme now has 35,000 spots available each year, up from the 10,000 spots available previously.
This is good news for any of our clients looking to buy their first home, potentially saving them the cost of LMI or the years of saving required to build up a 20% deposit.
ATO Funding
Working as accountants, we hear a lot of small business owners voice their frustrations that much larger business entities are often able to avoid facing the same level of scrutiny when it comes to paying tax.
In this budget, the government announced they will be funding an additional $600 million to a taskforce in the ATO that targets tax avoidance by multinational corporations, large public and private groups, trusts and wealthy individuals. It is forecast that this crackdown on big business will generate $2.1 billion worth of revenue for the ATO over the next four years.
