As we expected, this Budget doesn’t deliver any major structural reforms. It mainly includes key spending measures in infrastructure, manufacturing and defence aimed at driving Australia’s economic recovery in a post-pandemic, natural disaster and conflicted international environment.
There are also several quick wins aimed at addressing the increasing cost-of-living challenges currently facing many Australians.
Key Take Outs
- Those earning under $126,000 – Will benefit from a $420 Tax Offset in their next tax return. When combined with an extension of the low and middle-income tax offset this can mean up to $1500 back for single-income households or $3000 for dual-income households.
- Pensioners and welfare recipients – Are due to receive a one-off $250 Cost of Living Payment in April 2022. It’s not clear how yet.
- Retired Super Account Holders – Can continue to draw a reduced amount from their superannuation until 30 June 2023. The minimum drawdown requirements determine the minimum amount that a retiree must draw each year to qualify for tax concessions. The 50 per cent reduction will reduce the need to sell assets in order to satisfy the minimum drawdown requirements.
- Motorists – Will benefit from a 22.1 cents a litre cut on fuel excise. Filling a 40-litre tank will save petrol buyers $10 per tank on average for the next six months. No incentives for electric vehicle owners.
- First Homebuyers – Could get their keys sooner with the number of places in The Home Guarantee Scheme doubling to 50,000. Under the scheme, eligible buyers can have part of their loan guaranteed, allowing them to enter the market with just a five per cent deposit or two per cent for single parents. From 1 July 22, the maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme will be increased from $30,000 to $50,000. The scheme allows would-be buyers to build a deposit inside their super, providing a tax cut to help boost their savings.
- New Parents – Will have greater flexibility. In addition to any employer-funded leave, two-parent households will now have access to 20 weeks of paid parental leave which can be split between them at their discretion during the two years following the birth or adoption of their child. Single parents can also access the full 20 weeks. Childcare subsidies are also increasing.
- Apprentices – Employed in “priority industries”, will be eligible for up to $5,000 over two years from 1 July 22. Their employers can also seek up to $15,000.
- Small businesses – Will receive further tax breaks for continuing to train their teams as well as additional tax deductions on business expenses that support the adoption of digital processes such as cyber security systems, cloud subscriptions and portable payment solutions.
If you have any questions or would like to discuss how best to utilise your potential cash flow savings, please contact us.