Federal Budget Summary

Treasurer Josh Frydenberg delivered the 2022-23 Federal Budget last night, Tuesday 29 March 2022. 

In an economy emerging from the pandemic, the Treasurer handed down an election budget that announced a range of cost of living measures. 

The key measures include: 

• $420 tax offset for low and middle income earners for the 2022 Financial Year

• One off $250 cost of living payment to welfare recipients

• 50% reduction in fuel excise for 6 months

• 50% minimum super drawdown extended to 30 June 2023

• Increased deductions for external training expenditure for small businesses 

• Increased deductions for digital adoption for small businesses

• Access to employee share schemes expanded

• $2.8 billion of funding for apprenticeships

Read on for further details.

For Individuals

Tax Offset

From 1 July this year, over 10 million individuals will receive a one-off $420 cost of living tax offset. Combined with the low and middle income tax offset (LMITO), eligible low-and-middle-income earners will receive up to $1,500 for a single income household, or up to $3,000 for a dual income household. 

Cost of Living Payment

To help Australians meet cost of living pressures, the Government is providing a one-off, income tax-exempt payment of $250.

This payment will help 6 million people, at a cost of $1.5 billion. More than half of those who will benefit are pensioners.

It will be paid automatically to all eligible pensioners, welfare recipients, veterans and eligible concession card holders in April 2022. This is on top of the higher income support payments from existing indexation arrangements.

Halving the Fuel Excise

The Government will reduce fuel excise by 50 percent for 6 months. This will see excise on petrol and diesel cut from 44.2 cents per litre to 22.1 cents per litre.

Superannuation

Superannuation Pension Drawdowns

The temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to 30 June 2023.

The 50% reduction in the minimum pension drawdowns, which has applied for the 2020, 2021 and 2022 financial years, was due to end on 30 June 2022.

For Businesses

Increased Deduction for External Training Expenditure

Small businesses will have access to a bonus 20% deduction for the cost of external training courses delivered to their employees.

The external training course must be delivered by an Australian entity and provided to employees in Australia or online. In-house or on-the-job training and expenditure for persons other than employees will be excluded.

The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2024. Where eligible expenditure is incurred before 1 July 2022, the additional deduction will be claimed in the tax return for the following income year.

Increased Deduction for Digital Adoption

Small businesses will be able to deduct a bonus 20% of the cost of business expenses and depreciating assets that support digital uptake, up to $100,000 of expenditure per year.

The additional deduction will apply for businesses with aggregated turnover of less than $50 million.

Eligible expenditure will include the cost of depreciating assets and business expenses supporting digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services.

The measure will apply for eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023. Where eligible expenditure is incurred before 1 July 2022, the additional deduction will be claimed in the tax return for the following income year.

Employee Share Schemes

For employers that make larger offers in connection with employee share schemes in unlisted companies, participants can invest up to:

• $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus 70% of dividends and cash bonuses, or

• Any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.

Regulatory requirements for offers to independent contractors will be removed, where they do not have to pay for interests.

Apprenticeship Wage Subsidy Extended

The Boosting Apprenticeship Commencements wage subsidy will be extended to support businesses and Group Training Organisations that take on new apprentices and trainees. The subsidy will now be available to 30 June 2022.

This measure will provide for an additional 35,000 apprentices and trainees. Eligible businesses will be reimbursed up to 50% of an apprentice or trainee’s wages of up to $7,000 per quarter for 12 months.