The tax changes that were - and weren't - in the Budget
This was a Budget for repairing the public finances, helping with the cost of living and building long-term productivity, not tax changes.
There were significant investments in affordable housing, cheaper child care, cheaper medicines, amongst others - but they were dwarfed by the government's decision to "bank" the Budget savings arising from higher commodities prices, rather than spending them.
There were no significant tax announcements. What this means is that the hard decisions have been deferred, not avoided.
What will happen to the stage three tax cuts that are scheduled to start from July 1, 2024 and provide substantial tax breaks, largely to the wealthiest? What will happen to the temporary full expensing measures that provide nearly all businesses with the opportunity to invest in capital assets and get an immediate tax deduction for doing so?
This measure comes to an end on June 30, 2023 - and there was nothing said about this tonight. This might simply be a case of pain deferred for the Treasurer.
Individuals
Personal tax rates
The Government did not announce any personal tax rates changes in the Budget.
Further tax cuts are due to be implemented from July 1, 2024, when the 32.5% marginal tax rate will be cut to 30% for one big tax bracket between $45,000 and $200,000. The 37% tax bracket will be entirely abolished at this time.
Therefore, from July 1, 2024, there are scheduled to be only be three personal income tax rates - 19%, 30% and 45%.
Digital currency
The Government will introduce legislation to clarify that digital currencies (such as Bitcoin) continue to be excluded from the Australian income tax treatment of foreign currency.
This maintains the current tax treatment of digital currencies, including the capital gains tax treatment where they are held as an investment.
This measure removes uncertainty following the decision of the Government of El Salvador to adopt Bitcoin as legal tender and will be backdated to income years that include July 1, 2021.
ATO compliance programs
The Government will provide $80.3 million to the ATO to extend the Personal Income Taxation Compliance Program for two years from July 1, 2023.
This extension will enable the ATO to continue tackle non-compliance, including over-claiming of deductions and incorrect reporting of income.
Small business
FBT exemption for electric vehicles
The Government will cut taxes on electric cars.
From July 1, 2022, the measure will exempt battery, hydrogen fuel cell and plug-in hybrid electric cars from fringe benefits tax and import tariffs if they have a first retail price below the luxury car tax threshold for fuel-efficient cars. The car must not have been held or used before July 1, 2022. Employers will need to include exempt electric car fringe benefits in an employee's reportable fringe benefits amount.
Depreciation
The Government will not proceed with the measure to allow taxpayers to self-assess the effective life of intangible depreciating assets, announced in the 2021-22 Budget.
Reversing this decision will maintain the status quo - effective lives of intangible depreciating assets will continue to be set by statute.
COVID-19 business grants
In response to COVID-19, payments from certain state and territory business grants, made prior to June 30, 2022, can be made non-assessable, non-exempt (NANE) for income tax purposes, subject to eligibility.
The Government has made the following state and territory COVID-19 grant programs eligible for NANE treatment, which will exempt eligible businesses from paying tax on these grants:
- Victoria Business Costs Assistance Program Four - Construction
- Victoria Licenced Hospitality Venue Fund 2021 - July Extension
- Victoria License, Hospitality Venue Fund 2021 - Top Up Payments
- Victoria Business Costs Assistance Program Round Two - Top Up
- Victoria Business Costs Assistance Program Round Three
- Victoria Business Costs Assistance Program Round Four
- Victoria Business Costs Assistance Program Round Five
- Victoria Impacted Public Events Support Program Round Two
- Victoria Live Performance Support Program (Presenters) Round Two
- Victoria Live Performance Support Program (Suppliers) Round Two
- Victoria Commercial Landlord Hardship Fund 3
- Australian Capital Territory HOMEFRONT 3
- Australian Capital Territory Small Business Hardship Scheme.
Unlegislated tax measures announced by the previous Government
The Government will not proceed with the following legacy tax measures that were announced but not legislated by the previous Government:
- The 2013-14 MYEFO measure that proposed to amend the debt/equity tax rules.
- The 2016-17 Budget measure that proposed changes to the taxation of financial arrangements (TOFA) rules (a delayed start date was announced in 2018-19 Budget).
- The 2016-17 Budget measure that proposed changes to the taxation of asset-backed financing arrangements
- The 2016-17 Budget measure that proposed introducing a new tax and regulatory framework for limited partnership collective investment vehicles.
- The 2018-19 Budget measure that proposed introducing a limit of $10,000 for cash payments made to businesses for goods and services (a delayed start date was announced in 2018-19 MYEFO).
- The 2018-19 Budget measure that proposed introducing a requirement for retirement income product providers to report standardised metrics in product disclosure statements.
- The 2021-22 MYEFO measure that proposed establishing a deductible gift recipient category for providers of pastoral care and analogous well-being services in schools.
Further, the Government will defer the start dates of the following legacy tax measures to allow sufficient time for policies to be legislated and implemented:
- The 2019-20 MYEFO measure that proposed introducing a sharing economy reporting regime, from:
- July 1, 2022, to July 1, 2023 for transactions relating to the supply of ride sourcing and short-term accommodation, and
- July 1, 2023, to July 1, 2024 for all other reportable transactions (including but not limited to asset sharing, food delivery and tasking-based services).
- The 2021-22 Budget measure that proposed making technical amendments to the TOFA rules, from July 1, 2022, to the income year commencing on or after the date of Royal Assent of the enabling legislation.
Superannuation
Superannuation - expanding eligibility for downsizer contributions
The Government will allow more people to make downsizer contributions to their superannuation, by reducing the minimum eligibility age from 60 to 55 years of age.
The measure will have effect from the start of the first quarter after Royal Assent of the enabling legislation.
The downsizer contribution allows people to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. Both members of a couple can contribute and contributions do not count towards non-concessional contribution caps.
Unlegislated superannuation measures announced by the previous Government
The Government will not proceed with the following legacy superannuation measures that were announced but not legislated by the previous Government:
- The 2018-19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs).
Further, the Government will defer the start dates of the following superannuation measures to allow sufficient time for policies to be legislated and implemented:
- The 2021-22 Budget measure that proposed relaxing residency requirements for SMSFs, from July 1, 2022, to the income year commencing on or after the date of Royal Assent of the enabling legislation.
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