On 25 October 2022, Treasurer Jim Chalmers presented the 2022-23 Federal Budget. While the Federal Budget is usually in May each year, during the election the then Opposition indicated it would undertake an interim Budget to enable effective implementation of its policies.
This update has been provided by Superannuation Compliance Services
The Budget focused on cost of living. Measures included:
- Childcare assistance – child care subsidy rates will increase to up to 90% for the first child and increase the rates eligible families earning under $530,000. This measure will commence 1 July 2023.
- Paid parental leave (PPL) will be extended to 26 weeks, but will not include superannuation. The inclusion of superannuation in PPL is a regular Budget wish list item for gender equity groups.
Superannuation was not a focus for significant change in this Budget. Measures that will affect superannuation were limited.
Downsizer contributions are intended to encourage older Australians to sell the larger houses they may be occupying by providing an additional superannuation contribution option.
Eligibility for the downsizer contribution will be extended to 55-59 years old. This measure is already in progress, with legislation in Parliament and Regulations already made.
This is in tandem with more favourable treatment for pensioners with the Government extending the exemption of home sale proceeds from pension asset testing from 12 months to 24 months. This will give pensioners potentially more time to purchase, build or renovate a new home before their pension is affected.
There will also be changes to the income test, to apply only the lower deeming rate (0.25 per cent) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.
The Government will also establish a Housing Australia Future Fund to build more social and affordable housing. The expectation is that this will include superannuation and institutional investors. The Government will invest $350 million over 5 years in the measure to encourage institutional investment in an area not traditionally popular in Australia with these investors.
The Budget included an item on providing certainty on legislated tax and superannuation measures announced by the previous Government. The majority of these measures are not relevant to superannuation but there a few that are.
Over the years there were a number of Budget and Mid-Year Economic Fiscal Outlook (MYEFO) measures announced but not fully implemented. A number of these will not be proceeding:
- A 2013-14 MYEFO measure to amend the debt/equity tax rules.
- The 2016–17 Budget measure that proposed changes to the taxation of financial arrangements (TOFA) rules (a delayed start date was announced in 2018–19 Budget).
- The 2016–17 Budget measure that proposed changes to the taxation of asset-backed financing arrangements.
- The 2016–17 Budget measure that proposed introducing a new tax and regulatory framework for limited partnership collective investment vehicles.
- The 2018–19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs).
- The 2018–19 Budget measure that proposed introducing a limit of $10,000 for cash payments made to businesses for goods and services (a delayed start date was announced in 2018–19 MYEFO).
- The 2018–19 Budget measure that proposed introducing a requirement for retirement income product providers to report standardised metrics in product disclosure statements.
- The 2021–22 MYEFO measure that proposed establishing a deductible gift recipient category for providers of pastoral care and analogous well-being services in schools.
Other measures will be legislated but will have delayed start dates from their initial timeframe:
Tax Practitioners Board – compliance program for tax system integrity
The Tax Practitioners Board (TPB) will receive additional funding over the 4 years from 1 July 2023 to undertake and increase compliance investigations into high-risk tax practitioners and unregistered preparers. This will include utilisation of new risk engines to identify those who are engaging in poor and unlawful tax advice, which is intended to improve tax compliance and raise industry standards.
Encouraging pensioners back into the workforce
Funding of $61.9 million over two years will be used to provide age and veteran pensioners with a credit in their Work Bonus income bank. This one-off credit of $4,000 will enable them to earn more in 2022-23 before the pension is reduced. This will address the twin issues of lack of workers and increasing cost of living.
Income threshold for the Commonwealth Seniors Health Card
The income threshold for the Commonwealth Seniors Health Card will increase from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples. This is a significant increase.
Social security deeming rates will be frozen at the current level for a further 2 years until 30 June 2024.
As in previous years, a specific Women’s Budget Statement has been prepared. It outlines the impacts and measures considered to be of special interest to women.
Areas of focus include advancing gender equality, achieving economic equality for women, ending violence against women and children and gender equality, health and wellbeing.
While several of the measures are valuable, it should be noted that issues such as paid parental leave and childcare are not solely women’s issues.
As part of the discussion on the gender gap in superannuation balance, the Government has committed to including a right to superannuation in the National Employment Standards. This will give workers the power to pursue their unpaid super as a workplace entitlement.