Here's what we know so far about the issues for accountants and advisers in the Federal Budget 2023-24:
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Support for single parents expanded
The age cut-off for the Parenting Payment (Single) will increase from 8 to 14.
From 20 September 2023, (subject to the passage of legislation), single parents will no longer have to transfer to JobSeeker when their youngest child turns eight. Instead, they will continue to receive the higher support, with a current base rate of $922.10 per fortnight (95% of the Age Pension), until their youngest child turns 14.
As a result, eligible single parents currently on JobSeeker will receive an increase to payments of $176.90 per fortnight.
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Electricity bill assistance for welfare recipients and small business
Social welfare recipients and small business will receive support for their electricity bills in Tuesday’s Budget. Treasurer Jim Chalmers has told the ABC, “More than 5.5 million households will get some assistance with their electricity bills, and around a million small businesses will be eligible as well.”
“People will be getting several hundred dollars if they're on pensions and payments, or a small business, but depending on where you live, depending on what the price pressures are, depending on how much the states and territories are prepared to kick in, because this is a co-investment with them.”
Any assistance will need to be negotiated with each State and Territory.
Natural gas to pay tax sooner
The Government will amend the Petroleum Resource Rent Tax (PRRT) to limit deductions and introduce a series of integrity measures for the offshore LNG industry. The Government has picked up 8 of 11 recommendations of the Treasury Gas Transfer Pricing (GTP) and 8 recommendations of the Callaghan Reviews. Consultation on the changes will occur later in 2023.
The effect is to bring forward PRRT revenue from LNG projects.
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Sovereign “Green Bonds” Program
The Government has announced the introduction of a Sovereign Green Bonds Program enabling investors to support public projects to drive Australia’s net zero transformation. The Australian Office of Financial Management will engage with the investment community on the Green Bonds Program, with the first issuance scheduled for mid‑2024.
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$4.3m to ASIC to pursue greenwashing
ASIC has bene allocated an additional $4.3m to pursue greenwashing. The funding for the 2023-24 financial year enables ASIC to increase surveillance of suspected greenwashing by listed companies, superannuation funds and investment managers. Announcing the funding, the Assistant Treasurer said, “sustainable business strategy must start in boardrooms and investment committees, not in marketing departments.
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Employee super payments move from quarterly to ‘payday’ from 1 July 2026
From 1 July 2026, employers will be required to pay employee superannuation at the same time that they pay their salary and wages.
The Government estimates that the move from quarterly to ‘payday’ superannuation will prevent liabilities building up and improve the financial position of workers on retirement.
The ATO will also receive additional resourcing to help it detect unpaid super payments earlier and the Government.
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$20k Small business energy incentive
The Government has committed to a Small Business Energy Incentive Scheme that offers a bonus tax deduction of up to $20,000.
The Small Business Energy Incentive encourages small and medium businesses with an aggregated turnover of less than $50 million to invest in spending that supports “electrification” and more efficient use of energy.
Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction of $20,000 per business. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024 to qualify for the bonus deduction.
Incentives to improve residential rental property supply
The Government has announced a series of measure to boost Australia’s rental stock:
- Increasing depreciation from 2.5% to 4% on new built-to-rent projects where construction commenced after 9 May 2023.
- Reducing the withholding tax rate from 30% to 15% for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties after 1 July 2024 (subject to further consultation on eligibility criteria).
- Affordable housing through the NHFIC - An additional $2bn has been allocated to the National Housing Finance and Investment Corporation (NHFIC), increasing the NHFIC’s cap from $5.5 billion to $7.5 billion from 1 July 2023 to support more social and affordable rental housing.
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Access to home guarantee scheme expanded to friends and siblings
From 1 July 2023, access to the Government’s Home Guarantee Scheme will be expanded to joint applications from “friends, siblings, and other family members” and to those who have not owned a home for at least 10 years.
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Scheme
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Current eligibility
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From 1 July 2023
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First Home Guarantee – guarantees part of a first home owner’s home loan enabling them to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance. Guarantee capped at 15% of the value of the property.
35,000 places are available to the scheme per year.
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- Applying as an individual or couple (married / de facto)
- First home buyers who have not previously owned, or had an interest in, a property in Australia.
- An Australian citizen(s) at the time they enter into the loan
- At least 18 years of age
- Earning up to $125,000 for individuals or $200,000 for couples, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
- Intending to be owner-occupiers of the purchased property
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- Friends, siblings, and other family members will be eligible for joint applications not just an individual or couple (married de facto)
- First home buyers and non‑first home buyers who haven’t owned a property in Australia in the last ten years
- Australian citizens and permanent residents at the time they enter the loan
- All other criteria remain the same
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| Regional First Home Buyer Guarantee - An extension of the First Home Guarantee applicable to regional areas only
10,000 places are available to the scheme each year to 30 June 2025.
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As above for the First Home Guarantee plus the borrower must have lived in the regional area (or adjacent) they are purchasing in for the preceding 12-month period to the date they execute the home loan agreement.
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As above for the First Home Guarantee plus the regional area eligibility requirement.
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Family Home Guarantee – guarantees the home loan of an eligible single parent with at least one dependent child enabling them to purchase a home with as little as 2% deposit without paying Lenders Mortgage Insurance. Guarantee capped at 15% of the value of the property.
5,000 places are available to the scheme each year to 30 June 2025.
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- Applying as an individual
- A single parent with at least one dependent child (natural or adopted)
- An Australian citizen at the time they enter into the loan
- At least 18 years of age
- Be earning no more than $125,000 per year
- Intending to be owner-occupier of the purchased property
- Not currently a property owner
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- A single parent with at least one dependent child including legal guardians of children such as aunts, uncles and grandparents
- Australian citizens and permanent residents at the time they enter into the loan
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Future earnings for super balances above $3m taxed at 30% from 2025-26
The Government has announced that:
- An additional 15% tax on earnings will be imposed on members with superannuation and pension balances above $3 million from 1 July 2025 (not indexed); and
- The additional 15% tax will apply to ‘unrealised gains’. This will mean that a tax liability will arise if the value of fund assets increases even if they are retained.
Currently, all fund income is taxed at either 15%, or 10% for capital assets that have been held by the fund for more than 12 months. Unrealised gains, that is gains that are made because of changes in value, are not currently taxed – tax only applies when the gain is realised on sale or disposal of the asset.
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$1,500 low and middle income tax offset ends
The Government has confirmed that they will not extend the $1,500 Low and Middle Income Tax Offset beyond 2021-22.
Originally announced in the 2022–23 Federal Budget, the LMITO was increased by $420 (a one-off $420 cost of living tax offset) for the 2021–22 income year. This increased the base amount to $675 and the full amount to $1,500.
Low income and renters electrification package
As part of the deal to enable the Government to cap gas prices, the Greens secured an electrification package in the upcoming Budget. The Government will examine support that could be provided to households to electrify their space heating, water heating, cooking and other appliances and equipment. The focus is on households that most need support, such as low-income households, renters, public and community housing residents and apartment dwellers, given the additional barriers they face (see also $20k Small business energy incentive).
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