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2022 Federal Budget update


The Australian Government has recently passed down their budget for 2022/23, which can often raise questions. In an effort to “cut through the noise”, we’ve distilled the announcements most likely to make an impact. With an election looming, it is important to know that many of the announcements must first pass-through Parliament before becoming law. Temporary fuel excise relief – proposed effective date: 30 March 2022 The Government will reduce fuel excise by 50 per cent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre. Fuel subject to this lower excise rate is expected to flow through to the majority of service stations and Australian consumers within a few weeks as stations replenish their stocks. One-off cost of living payment – proposed effective date: 28 April 2022 To help Australians meet cost of living pressures, the Government is providing a one-off, tax-exempt payment of $250. It will be paid automatically to all eligible pensioners, welfare recipients, veterans and eligible concession card holders – including Commonwealth Seniors Health Card (CSHC) holders – in April 2022. Extending the minimum pension drawdown relief - proposed effective date: 1 July 2022 The temporary reduction to the minimum income drawdown requirement for superannuation pensions will be further extended until 30 June 2023. This will allow people to minimise the need to sell down assets given ongoing market volatility. It applies to account-based, transition to retirement and term allocated superannuation pensions. Personal Income Tax - proposed effective date: 1 July 2021 The Low and Middle Income Tax Offset (LMITO) will be increased up to $1,500 for the 2021/22 financial year. All eligible LMITO recipients will benefit from the full $420 increase, referred to as the Cost-of-Living Tax Offset. The benefit for those earning up to $37,000 will be $675 (currently $255). For those earning between $37,000 and $48,000, the offset will increase at the rate of 7.5 cents per $1 above $37,000 to a maximum of $1,500 (currently $1,080). Those earning between $48,000 and $90,000 are eligible for the maximum LMITO benefit of $1,500 (currently $1,080). For income above $90,000, the offset phases out at a rate of 3 cents per $1 and is not available when taxable income exceeds $126,000. The LMITO is due to end on 30 June 2022 and has not been extended.

Housing Affordability - proposed effective date: 1 July 2022 or 1 October 2022 depending on the specific scheme

The Home Guarantee Scheme allows first home buyers to build or purchase a newly built home with a low deposit, replacing the need for commercial lenders’ mortgage insurance.

The Government is expanding the scheme to make available:


35,000 guarantees each year (up from the current 10,000) from 1 July 2022 under the First Home Guarantee, to support eligible first homebuyers to build or purchase a newly built home with a deposit as low as 5%.


10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee, to support eligible homebuyers (including non-first home buyers and permanent residents), to purchase or construct a new home in regional areas with a deposit as low as 5%.


5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee. This program enables eligible single parents with dependants to enter or re-enter the housing market with a deposit as little as 2%.


Eligible first home buyers may also be able to take advantage of the First Home Super Saver Scheme which allows them to use the concessionally taxed super system to save their first home deposit. Other federal and state grants and stamp duty concessions may also be available.


Small business – technology investment boost

The Government is introducing a technology investment boost to support digital adoption by small businesses. The boost will apply to eligible expenditure incurred from 7:30 PM (AEDT) on 29 March 2022 until 30 June 2023.


Small businesses – with aggregated annual turnover of less than $50 million – will be able to deduct an additional 20 per cent of the cost incurred on business expenses and depreciating assets that support their digital adoption – such as portable payment devices, cyber security systems or subscriptions to cloud-based services.


An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible to boost.


The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred.


Synergy Private Wealth


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