Labour has passed down its budget with a focus on cost-of-living pressures, welfare recipients, age care reform and superannuation. In reality, much of what was announced had been previously discussed, such as the superannuation balance cap.

Although the budget itself had little focus on revenue measures going forward there was an acknowledgement that higher employment and commodities prices had created a $4.2bn surplus, the first surplus in 15 years.

Summary on key points:

  • Energy relief will provide savings of up to $500 for eligible households and $650 for eligible businesses.
  • Increased payments will be made to eligible income support recipients.
  • The instant asset write-off threshold for eligible small businesses will increase to $20,000 in 2023/24.
  • Employers will be required to make super contributions for their employees at the same time as they pay salary and wages.
  • The addition al 15% tax on calculated earnings for super balances exceeding $3m has been confirmed.
  • Stage 3 personal marginal income tax cuts will commence from July 2024 as previously legislated
  • Small business will be able to access to $20,000 instant asset write-off until 20th June 2024

Select detail:

Superannuation:

Effective date: 1 July 2026 Employers will be required to pay their employees’ super at the same time as salary and wages, via single touch payroll. This measure will make it easier for employees to monitor their employer’s payments. It’s also expected to reduce employer non-payments that result from superannuation liabilities building up over a quarter. The ATO estimates that $3.4 billion of workers’ super was unpaid in 2019/20. There will be an increase in funding to the ATO to assist with recovery unpaid entitlements.

The Government has retained its original position not to index the $3 million threshold and will continue to tax earnings based on the growth in total super balance (which includes unrealised capital gains). Although the Government is clear this only affects 0.5% of super members (around 80,000), it will draw a substantial amount of revenue in future years. For the two years of 2025/26 and 2026/27, extra revenue from this tax is expected to be $950 million, jumping up to $2.3 billion in 2027/28.

Defined benefit super clients should note that as part of this the Government will amend the way defined benefit contributions are valued. There are more details to come in this.

Tax:

There was no mention of changes to the Stage 3 personal marginal income tax cuts (for resident taxpayers), which have already been legislated to commence from 1 July 2024

Effective date: 1 July 2022 The Medicare levy low-income thresholds are as follows:

Family situation 2021/22 Proposed (2022/23)

Not senior or pensioner

Single $23,365 $24,276

Family* $39,402 $40,939

Senior or pensioner

Single $36,925 $38,365

Family* $51,401 $53,406

* Plus amount per dependant $3,619 $3,760

Welfare:

Effective date: 20 September 2023 Income support for working age and student payments will increase by $40 per fortnight. This increase will apply to:

  • JobSeeker Payment
  • Youth Allowance
  • Parenting Payment (Partnered)
  • Austudy
  • ABSTUDY
  • Disability Support Pension (Youth)
  • Special Benefit.

Efforts to make healthcare more affordable, effective date: 1 July 2023 Individuals will be allowed to buy twice as many common medicines for the price of one prescription under changes to the Pharmaceutical Benefits Scheme (PBS) from 1 July 2023. This would allow a patient access to 60 days’ worth of medicine for each prescription. The change could save general patients up to $180 a year per prescription. New medicines will also be included on the PBS list to make these more affordable and easier to access. GPs will be better incentivised to bulk bill consultations for children under 16, pensioners and other Commonwealth concession card holders.

More funding for Aged Care, effective date: 1 July 2023 The Government will provide additional funding to improve in-home aged care services. Among the measures it will fund is the release of 9,500 additional Home Care Packages in 2023/24. The additional Home Care Packages will reduce waiting times for clients, which are over 12 months for Level 3 and Level 4 packages. A new Age Care Act is due to commence from 1 July 2024

Small business

The instant asset write-off threshold increases to $20,000. Small businesses with aggregated annual turnover below $10 million can immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed between 1 July 2023 and 30 June 2024. The threshold applies on a per asset basis. Assets valued at $20,000 or more can continue to be placed into a depreciation pool and depreciated at 15% in the first year and 30% thereafter.

Businesses with an annual turnover of less than $50 million will get an additional 20% tax deduction on spending that supports electrification and more efficient use of energy. Up to $100,000 of this expenditure will be eligible for the additional 20% tax deduction, providing a benefit up to $20,000. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

If you have any questions about how the budget may impact your strategy directly or that is not mentioned here, please contact me.

Gareth Daniels

Gareth has worked in financial services for more than 15 years both in the UK and Australia. He knows that maximising the opportunity to generate income whilst creating genuine wealth is a challenge for most people. With this in mind, Gareth takes a common sense, strategic approach to providing solutions. These are designed to give clients the tools, knowledge and ongoing support they need to ensure that they can create the lifestyle that they want to live. Gareth, his wife and their two young children live on the coast in Victoria and enjoy spending time at the beach, and camping whenever possible.