Once again there is relief for an economy still in recovery mode from a global pandemic with increased support for small businesses and tax reliefs for some. The cost of COVID-19 testing requirements will also be alleviated along with a few measures impacting superannuation, social security and retirement.
One-off cost of living tax offset
Available for low and middle-income tax offset (LMITO) recipients. One-off $420 offset will be paid from 1 July 2022 when individuals submit their tax return. The earning cap to be eligible is up to $126,000.
Cost of Living Payment
One-off $250 payment to eligible recipients for 28th April 2022 that will not be taxable or counted as income for social security purposes. It will be available to recipients of certain payments and concession card holders.
Temporary reduction in fuel price
Came into effect at 12:01am on 30 March 2022, and will remain in place until 11:59pm on 28 September 2022. Excise and excise-equivalent customs duty rate for petrol and diesel have been halved for 6 months.
Effective immediately, small businesses (with an annual turnover of less than $50m) can claim a deduction for 120% of the costs associated with
- External training courses delivered to employees in Australia or online by providers registered in Australia, for expenses incurred until 30 June 2024
- Digital adoption such as portable payment devices, cyber security systems or subscriptions to cloud-based services, up to $100,000 per year, for expenses incurred until 30 June 2022.
Tax Deductibility of COVID-19 test expenses
Expenses incurred on work related COVID-19 tests (PCR and RAT) will now be tax deductible to both employees attending work and those working from home. There will also be no FBT tax applicable to businesses providing work-related COVID-19 tests to employees.
Employee Share Schemes
To promote employee retention and encourage start-ups, the Government is planning on expanding access and reducing red tape. For employee share schemes in unlisted companies, participants can invest up to $30,000 per participant per year (an increase of $25,000 from the current limit) accruable for unexercised options for up to five years, plus 70% of dividends and cash bonuses.
Medicare levy low-income thresholds
The Government will increase the Medicare levy low-income thresholds for seniors, pensioners, families and singles from 1 July 2022
- 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 students, the family income threshold will be increased from $3,597 to $3,619
The Government has extended the 50 per cent reduction of the superannuation minimum drawdown requirements for account-based pensions, term allocated pensions (TPAs) and similar products for a further year to June 2023. This will give retirees more flexibility with their pension payments amid ongoing volatility in financial markets.
Note that the proposed measures are not yet law and could change through implementation. To see how this years’ budget can best work in your favour, contact one of our financial specialists today!