2022-23 Budget: A wrap up of the proposed measures

The Labor Party won the majority of seats in the lower house at the May Federal election this year.

With this, the Albanese Government handed down an updated 2022-23 Federal Budget at 7:30pm (AEDT) on 25 October 2022.

In this latest Budget, the Government’s policy priorities—and the proposed measures to help achieve these priorities—centre on ‘building a better future’:

• Providing responsible cost-of-living relief that delivers an economic dividend
• Building a stronger, more resilient and more modern economy
• Beginning the hard task of budget repair to pay for what is important.

Other key areas of focus in terms of proposed measures include improving women’s economic equality, ending violence against women, and gender equality, health and wellbeing.

Below we recap on some of the key proposed measures that may be relevant to you. These measures, and the information relating to them, have been sourced from the 2022-23 Federal Budget papers. Please note: These measures are yet to be passed as legislation and may be subject to change.

Individual tax
Clarifying that digital currencies are not taxed as foreign 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 is aimed at reducing 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 1 July 2021. The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency. 

Company tax
Making COVID-19 business grants non-assessable non-exempt

In response to COVID-19, payments from certain state and territory business grants, made prior to 30 June 2022, can be made non-assessable, non-exempt (NANE) for income tax purposes, subject to eligibility. This tax treatment is only provided in exceptional circumstances, such as the severe economic consequences facing businesses during the COVID-19 pandemic.

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 LivePerformance 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.

Energy efficiency grants for small and medium sized enterprises 
The Government will provide $62.6 million over three years from 2022–23 to support small to medium enterprises to fund energy efficient equipment upgrades. The funding will support studies, planning, equipment and facility upgrade projects that will improve energy efficiency, reduce emissions or improve the management of power demand.

Housing
Safer and more affordable housing 
The Government will invest $10 billion in the newly created Housing Australia Future Fund, to generate returns to fund the delivery of 30,000 social and affordable homes over five years.

The Government will also provide $348.6 million over four years from 2022–23 for a number of further initiatives to deliver more social and affordable housing. Funding includes, for example:

• $324.6 million over four years from 2022–23 to establish the Help to Buy scheme to assist people on low to moderate incomes to purchase a new or existing home with an equity contribution from the Government.

The Government will also establish the Regional First Home Buyers Guarantee to support eligible citizens and permanent residents who have lived in a regional location for more than 12 months to purchase their first home in that location with a minimum 5 percent deposit. A total of 10,000 places will be available each year to 30 June 2026.

Community batteries for household solar
The Government will provide $224.3 million over four years from 2022–23 to deploy 400 community batteries across Australia to lower bills, cut emissions and reduce pressure on the electricity grid by allowing households to store and use excess power they produce.

Solar banks
The Government will provide $102.2 million over four years from 2022–23 to establish a Community Solar Banks program for the deployment of community-scale solar and clean energy technologies. Funding will improve access to clean energy technologies in regional communities, social housing, apartments, rental accommodation, and households that are traditionally unable to access rooftop solar.

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 after-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.

This measure aims to provide greater flexibility to contribute to super and encourage older Australians to downsize sooner to a home that better suits their needs, and in turn, increasing the availability of suitable housing for Australian families.

Social security
Incentivising pensioners to downsize 

The Government will provide $73.2 million over four years from 2022–23 (and $0.4 million per year after that), including:

• extending the assets test exemption for principal home sale proceeds from 12 months to 24 months for income support recipients
• changing the income test, to apply only the lower deeming rate (0.25 percent) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.

This measure will aim to reduce the financial impact on pensioners looking to downsize their homes in an effort to minimise the burden on older Australians and free up housing stock for younger families.

Lifting the income threshold for the Commonwealth Seniors Health Card
The Government will provide $69.6 million over four years from 2022–23 to increase the income threshold for the Commonwealth Seniors Health Card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

The Government will also freeze social security deeming rates at their current levels for a further two years until 30 June 2024, to support older Australians who rely on income from deemed financial investments, as well as the pension, to deal with the rising cost of living.

Jobs and Skills Summit – incentivise pensioners into the workforce (with temporary work bonus expansion)
The Government will provide $61.9 million over two years from 2022–23 to provide age and veteran pensioners a one-off credit of $4,000 to their Work Bonus income bank. The temporary income bank top up will increase the amount pensioners can earn in 2022–23 from $7,800 to $11,800, before their pension is reduced, supporting pensioners who want to work, or work more hours, without losing their pension.

Modernisation to reduce wait times to access support and services
The Government will provide $87.0 million over two years from 2022–23 to improve the administration of the claims processing system and improve veterans’ services. This measure is aimed at enhancing ICT systems, including MyService and myGov to better support veterans and their families. This measure also supports the development of business cases to replace and modernise at risk legacy ICT systems.

Voluntary Income Management to replace the Cashless Debit Card
The Government will provide $217.7 million over four years from 2022–23 to abolish the Cashless Debit Card, and commence transition to voluntary income management. Participants will transition off the card from 6 March 2023, and will be able to progressively opt-in to income management and the BasicsCard on a voluntary basis. The Government will also extend and expand support services for participants transitioning off the Cashless Debit Card and individuals in current cashless welfare locations.

Child care
Plan for cheaper child care
The Government will provide $4.7 billion over four years from 2022–23 (and $1.7 billion per year after that) to deliver cheaper child care, easing the cost of living for families and reducing barriers to greater workforce participation. This includes $4.6 billion over four years from 2022–23 to:

• Increase the maximum Child Care Subsidy (CCS) rate from 85 percent to 90 percent for families for the first child in care and increase the CCS rate for all families earning less than $530,000 in household income
• Maintain current higher CCS rates for families with multiple children aged 5 or under in child care, with higher CCS rates to cease 26 weeks after the older child’s last session of care, or when the child turns six years old
• Task the Australian Competition and Consumer Commission to undertake a 12-month inquiry into the cost of child care and the Productivity Commission to conduct a comprehensive review of the child care sector
• Improve the transparency of the child care sector by requiring large providers to publicly report CCS-related revenue and profits.

Boosting parental leave to enhance economic security, support and flexibility for Australia’s families
The Government will enhance economic security, improve gender equality, and enhance and provide more flexibility for shared care arrangements at a cost to the budget of $531.6 million over four years from 2022–23 (and $619.3 million per year after that).

The Government will introduce reforms from 1 July 2023 to make the Paid Parental Leave Scheme flexible for families so that either parent is able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria. Parents will also be able to claim weeks of the payment concurrently so they can take leave at the same time.

From 1 July 2024, the Government will start expanding the scheme by two additional weeks a year until it reaches a full 26 weeks from 1 July 2026.

Both parents will be able to share the leave entitlement, with a proportion maintained on a “use it or lose it” basis, to encourage and facilitate both parents to access the scheme and to share the caring responsibilities more equally. Sole parents will be able to access the full 26 weeks.

In addition, eligibility will be expanded through the introduction of a $350,000 family income test, which families can be assessed under if they do not meet the individual income test.

Aged Care
Fixing the aged care crisis
The Government will provide $2.5 billion over four years from 2022–23 to reform the aged care system. Funding includes, for example:

• $2.5 billion over four years from 2022–23 to improve the quality of care in residential aged care facilities by requiring all facilities to have a registered nurse onsite 24 hours per day, 7 days a week from 1 July 2023 and increasing care minutes to 215 minutes per resident per day from 1 October 2024.

Implementing aged care reform
The Government will provide $540.3 million over four years from 2022–23 to improve the delivery of aged care services and respond to the Final Report of the Royal Commission into Aged Care Quality and Safety. Funding includes, for example: 

• $38.7 million over four years from 2022–23 to establish the Inspector-General of Aged Care and the Office of the Inspector-General of Aged Care as a Statutory Agency. 
• $23.1 million in 2022–23 to support the implementation of the Support at Home Program from July 2024 through the rollout of a large scale trial of an integrated assessment tool, the establishment of a Service List Advisory Body, commissioning the Independent Hospital and Aged Care Pricing Authority to undertake a pricing study, and to consult with the aged care sector.

The Government will also extend existing grant arrangements for the Commonwealth Home Support Programme for a further 12 months to 30 June 2024, to reflect the new start date of 1 July 2024 for the Support at Home Program.

Health care
Reduced Co-payment for treatments on the PBS
The Government will provide $787.1 million over four years from 2022–23 (and $233.4 million per year ongoing) to decrease the general patient co-payment for treatments on the Pharmaceutical Benefits Scheme (PBS) from $42.50 to $30.00 on 1 January 2023.

First Nations
Delivery of a First Nations Voice to Parliament referendum – preparatory work
The Government will provide $75.1 million over two years from 2022–23 to prepare for the delivery of a referendum to enshrine a First Nations Voice to Parliament in the Constitution. The Government will also provide $5.8 million to commence work on establishing an independent Makarrata Commission.

Cyber security
Fighting online scams
The Government will provide $12.6 million over four years from 2022–23 to combat scams and online fraud to protect Australians from financial harm. Funding includes:

• $9.9 million over four years from 2022–23 to the Australian Competition and Consumer Commission for initial work on the establishment of a National Anti-Scam Centre
• $2.0 million in 2022–23 to the Department of Home Affairs to expand its arrangement with IDCARE to provide specialist identity support services, including counselling and identity recovery services for victims of identity theft
• $0.7 million in 2022–23 to the Treasury to raise public awareness of the risk of scams.

In addition, the Government will also provide $5.5 million over two years from 2022–23 for the Office of the Australian Information Commissioner to investigate and respond to the Optus data breach.

Employment
Secure Australian jobs

The Government will:

• Automatically sunset agreement-related instruments made prior to the commencement of the Fair Work Act 2009 and during the ‘bridging period’ (1 July to 31 December 2009), commonly referred to as ‘zombie agreements’, to ensure employees can access entitlements available under modern awards.
• Remove unnecessary complexity and make the Better off Overall Test simple, flexible and fair by streamlining the enterprise agreement approval process and consideration by the Fair Work Commission of whether an employee is better off under the proposed award.
• Increase the capacity of the Fair Work Commission to proactively help workers and businesses reach agreements by reducing the level of disputation required in order to access arbitration.

Other policy measures that may be of interest:

The Government will:

• Cut taxes on electric cars so that more Australians can afford them. 
  • From 1 July 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 1 July 2022.

    Employers will need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount. This measure is estimated to decrease receipts by $410.0 million and decrease payments by $65.0 million over the four years from 2022–23. The measure will be reviewed after three years.

  • In addition to above, the Government will provide $39.8 million over five years from 2022–23 to establish a National Electric Vehicle Charging Network to deliver 117 fast charging stations on highways across Australia, in partnership with the NRMA.
• Provide $12.0 million over four years from 2022–23 to community legal centres in New South Wales and Queensland to help fire and flood affected individuals to access timely legal assistance.
• Provide $80.3 million to the ATO to extend the Personal Income Taxation Compliance Program for two years from 1 July 2023. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming of deductions and incorrect reporting of income. The funding will enable the ATO to modernise its guidance products, engage earlier with taxpayers and tax agents and target its compliance activity.
• Extend the existing ATO Shadow Economy Program for a further three years from 1 July 2023. The extension of the Shadow Economy Program will enable the ATO to continue a strong and co-ordinated response to target shadow economy activity, protect revenue and level the playing field for those businesses that are following the rules.
• Improve the integrity of the tax system by aligning the tax treatment of off-market share buy-backs undertaken by listed public companies with the treatment of on-market share buy-backs. This measure will apply from announcement on Budget night (7:30pm AEDT, 25 October 2022).
• Increase penalties for breaches of competition and consumer law to deter conduct that stifles competition and increases costs to consumers. Maximum penalties for corporations will increase from $10 million to $50 million per breach, and from 10 percent of annual turnover to 30 percent of turnover (whichever is greater) during the period the breach took place.
• Establish a new unit within the Attorney-General’s Department to scope options to establish an Anti-Slavery Commissioner to work with business, civil society and state and territory governments to support compliance with Australia’s Modern Slavery Act 2018 and address modern slavery in supply chains.
• Provide $3.4 million over four years from 2022–23 to support the development and delivery of education, technical advice and support services targeting the needs of small business employers to support the implementation of the Government’s election commitment to legislate 10 days of paid family and domestic violence leave.

Changes to measures announced in the March 2022 Budget

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. This will help to avoid the potential integrity concerns with the previously announced measure and contribute to budget repair.

The Government has reviewed and decided to not proceed with several legacy tax and superannuation measures that were announced (but not legislated) by the previous Government. Including, but not limited to: 

• The 2016–17 MYEFO measure titled: Pension Supplement – changes to the payment of the Pension Supplement for permanent departures overseas and temporary absences
• The 2018–19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs)
• 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 Government has also decided to defer the start dates of several legacy tax and superannuation measures to allow sufficient time for policies to be legislated and implemented. Including, but not limited to: 

• The 2019–20 MYEFO measure that proposed introducing a sharing economy reporting regime, from: 
  • 1 July 2022 to 1 July 2023 for transactions relating to the supply of ride sourcing and short-term accommodation, and 
  • 1 July 2023 to 1 July 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 relaxing residency requirements for SMSFs, from 1 July 2022 to the income year commencing on or after the date of Royal Assent of the enabling legislation. 

Further information about the October 2022 Federal Budget

To read more about this latest Budget, you can watch the following:

ABC News’ Sarah Ferguson interview with Treasurer Jim Chalmers
ABC News segment on Labor’s 2022 Federal Budget

The information contained above is factual in nature, does not take into account your personal circumstances, and should not be relied upon to make any decisions. If you have any questions or concerns about these proposed policy measures (including the information above) and how they may affect you, do not hesitate to get in touch.