As announced by Treasurer Jim Chalmers, the 2022/23 Federal Budget has been updated as of October 25, 2022. The National Tax and Accountants’ Association (NTAA) provided an excellent summary of those updates and we have highlighted some of the key points:

Clarification for unlegislated taxation and superannuation measures

It has been announced that legacy tax and super measures that were mentioned, but not previously legislated by the Government will not be proceeded. This includes:

The Government proclaimed that certain legacy tax and super measures announced, but not legislated prior by the Government will no longer proceed. This includes:

• The 2018/19 Budget
  • The annual audit requirement for certain self-manager superannuation funds (SMSFs) will change. Previously, the annual audit requirement for SMSFs with a history of compliance and good record-keeping changed to a three-yearly requirement.
  • Cash payments with a limit of $10,000 will be introduced to goods and services businesses. Initially, any payments made over this threshold were paid through an electronic payment system or via cheque.

Certain legacy tax and superannuation measures will be deferred to ensure policies are legislated ad implemented sufficiently. This includes:

• The 2019/20 Mid-Year Economic and Fiscal Outlook (MYEFO)
  • The introduction of a sharing economy reporting regime for transactions regarding the supply of ride sourcing and short-term accommodation will be deferred to July 1, 2023.
• The 2021/22 Federal Budget
  • The residency requirements for SMSFs will be relaxed as of July 1, 2022 through to the income year commencing either on or after the date of the Royal Assent of the enabling legislation.
  • This will be done by extending the ‘central control and management test’ safe harbour to five years and removing the ‘active member test’. This will enable SMSF members to make contributions to their superannuation fund, even when overseas temporarily.

Clarification that digital currencies are not taxed as foreign currency

A legislation will be introduced to further clarify that digital currencies such as Bitcoin, will continue to not be taxed as foreign currency. This includes the capital gains tax treatment where they are held as an investment. This measure will support the Government of El Salvador’s decision to adopt Bitcoin, which will be backdated to the year including July 1, 2021.

Any digital currencies issued under another authority or government official agency, will continue to be taxed as a foreign currency.

Superannuation – expanding the eligibility for downsizer contributions

The Government has reduced the downsizer contributions eligibility age from 60 to 55 years of age, which will be effective in the beginning of the first quarter after the Royal Assent of the enabling legislation.

This provides an opportunity for people to make a one-off post tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home. Either member of the couple can make contributions and it will not be included towards non-concessional contribution caps.

Non-tax measures will also be announced to reduce the financial burdens on pensioners considering downsizing their homes. This will increase the housing availability for younger growing families.  This includes:

• The assets test exemption will be extended for principal home sale proceeds to 24 months for income support recipients.
• The income test will change to apply only the lower deeming rate of 0.25% to principal home sale proceeds (calculated 24 hours after the principal home sale)

Fringe Benefits Tax (FBT) – Electric Cars

Battery, plug-in hybrid electric and/or hydrogen fuelled cars will be exempted from import tariffs and fringe benefits tax as of July 1, 2022. This only applies to those who have a retail price below the luxury car tax threshold for fuel-efficient car. The car mustn’t have been held or used prior to July 1, 2022.

Employers must ensure to include the exempt electric car fringe benefits within an employee’s reportable fringe benefits amount.

COVID-19 Business Grants made non-assessable non-exempt

As a result of COVID-19 payments made prior to June 30, 2022, they can be made non-assessable non-exempt (NANE) for income tax purposes and those who are eligible. This tax treatment is only available for businesses who experienced severe economic consequences during the pandemic.

The Government has designed COVID-19 grant programs for the following to be eligible to receive the NANE treatment. This means eligible businesses will be exempt from paying tax for the following grants:

• Victoria Business Costs Assistance Program Four – Construction
• Victoria Licensed Hospitality Venue Fund 2021 – July Extension
• Victoria Licensed Hospitality Venue Fund 2021 – Top Up Payments
• Victoria Business Costs Assistance Program (Round Two Top Up, Round Three, Round Four, Round Five)
• Victoria Impacted Public Events Support Program Round Two
• Victoria Live Performance Support Program (Presenters) Round Two
• Victoria Live Performance Support Program (Suppliers) Round Two
• Victoria Commercial Landlord Hardship Fund 3
• Australian Capital Territory HOMEFRONT 3
• Australian Capital Territory Small Business Hardship Scheme

Boosting Paid Parental Leave

As of 1 July 2023, the Government will introduce an improved Paid Parental Leave Scheme making it flexible for either parent to claim the payment. Both birth and/or non-birth parents are eligible to receive this payment if they meet the criteria.

Parents will also be able to claim this payment at the same time they take leave.

The scheme will be expanded from 1 July 2024, by an additional two weeks a year until it reaches 26 weeks from 1 July 2026.

The leave entitlement can be shared amongst both parents, with a section titled on a ’use it or lost it’ basis. This is to encourage both parents to use the scheme and share the caring responsibilities amongst one another equally.  Single parents can access the full 26 weeks.

Extending ATO Compliance Program

• Personal Income Taxation Compliance Program
  • From 1 July 2023, the Government will be extending its Personal Income Taxation Compliance Program for two years. By doing so, it will focus on delivering a more proactive, preventative, and corrective activities fundamental to areas of non-compliance.
• Shadow Economy Program
  • The ATO Shadow Economy Program will extended for a further three years, starting July 1, 2023. This will strengthen the ATO’s response to target shadow economy activity, continue to protect revenue for businesses following complying to the rules.
• Tax Avoidance Taskforce
  • The funding for the ATO Tax Avoidance Taskforce has been boosted by roughly $200 million per year for the past four years from 1 July 2022, whilst also extending this Taskforce for another year (1 July 2025). By doing so, the ATO will be supported to pursue new areas of priority for business tax risks, determining the focuses for multinational enterprises as well as large public and private businesses.

For information about these measures click here.