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Federal Budget 2022: Short-term cost of living relief and small business incentives

On Tuesday 29 March 2022, Treasurer Josh Frydenberg delivered the 2022-23 Federal Budget. These include cost of living relief, small business incentives and streamlined administration.

Key announcements are for:

Low and middle-income earners

Taxpayers will receive A$420 through an increase to the lower and middle-income tax offset, which, depending on income levels, could mean a rebate of up to A$1500 when eligible taxpayers lodge their 2021-2022 tax return.

Pensioners, carers, veterans, job seekers, eligible self-funded retirees and concession card holders, an estimated six million Australians, will receive a A$250 cost of living Payment, to be delivered within six weeks.

Car owners and Transportation businesses

For the next six months, Australians will save 22 cents a litre every time they fill up their car after the halving in the fuel excise.

The treasurer claims that a family with two cars who fill up once a week could save about A$30 a week or roughly A$700 over the next six months

The cuts will cost the government A$5.6 billion.

Small business

The budget includes training incentives for small business, offering a A$120 tax deduction for every A$100 a small business spends on employee training.

There are also rebates for “small businesses that are embracing the digital revolution.”

Every A$100 small businesses spend on digital technologies like cloud computing, e-invoicing, cyber security and web design will also attract a A$120 tax deduction up until 30 June 2023.

This incentive is capped at expenditure up to A$100,000 per year for individual businesses.

Student and Working Holiday Maker (WHM) visa holders

The temporary changes include:

  • removing working-hour limits for Student visa holders across all sectors

  • increasing country caps for Work and Holiday visas by 30%, boosting overall places by around 11,000, and

  • relaxing the six-month work limitation for WHM visa holders.

Apprentices and trainees

The government has extended its support in boosting the apprenticeships scheme, providing A$5000 payments to new apprentices over two years and extending subsidies of up to A$15,000 for employers who take them on.

First and single parent home buyers

In an attempt to address housing affordability and promote the number of first home buyers, the budget doubles the number of available places in the Home Guarantee Scheme to 50,000 each year.

Over the past year, 160,000 people purchased their first homes through the scheme, which enables single parents to buy a home with a deposit as low as 2 per cent, with a 5 per cent deposit for first home buyers.

The budget also increases support for affordable housing by A$2 billion through the National Housing Finance and Investment Corporation.

Superannuation members (previously announced)

Superannuation guarantee increases

Currently, employers are required to pay 10% of your salary into super. This amount will increase to 10.5% on 1 July 2022. It’s then legislated to increase by 0.5% each year until it reaches 12% on 1 July 2025.

Minimum income threshold to be removed

From 1 July 2022, the Government will remove the $450 minimum monthly income threshold for the superannuation guarantee.

First home super saver (FHSS) scheme expanded

The maximum you can save under the FHSS scheme will increase from $30,000 to $50,000 for individuals from 1 July 2022.

This scheme currently allows people to make voluntary super contributions and then withdraw them, including earnings that relate to those contributions, when they’re ready to buy their home (subject to yearly limits and eligibility requirements). Eligible contributions made from 1 July 2017 can count towards the total amount released.

Work test to be abolished

From 1 July 2022, those approaching retirement will be able to make voluntary super contributions (salary sacrifice or after-tax contributions) without having to meet the work test.

Downsizer contributions open to over 60s

From 1 July 2022, people aged over 60 will be able to contribute up to $300,000 (or $600,000 for couples) from the sale of their home into their super. This downsizer contribution does not count towards the concessional and non-concessional contributions caps.

Source: CPA Australia

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