The Federal Treasurer, Dr Jim Chalmers, handed down the Labor government’s first Federal Budget on 22 October 2022. Here are the highlights of the tax and accounting measures announced.

Businesses

• Electric vehicles under the luxury car tax threshold will be exempt from fringe benefits tax and import tariffs.
• A number of Victorian and ACT based business grants relating to the COVID-19 pandemic will be non-assessable non-exempt income for tax purposes.
• Grants will be provided to small and medium-sized businesses to fund energy efficient equipment upgrades.
• The tax treatment for off-market share buy-backs undertaken by listed public companies will be aligned with the treatment of on-market share buy-backs.
• The 2021-22 Budget measure to allow taxpayers to self-assess the effective life of intangible depreciating assets will not proceed.
• Heavy Vehicle Road User Charge rate increased from 26.4 to 27.2 cents per litre of diesel fuel, effective from 29 September 2022.
• Australia has signed a new tax treaty with Iceland.
• Additional tariffs on goods imported from Russia and Belarus have been extended by a further 12 months, to 24 October 2023.
• Ukraine goods are exempted from import duties for a period of 12 months from 4 July 2022.
• Technical amendments to the taxation of financial arrangements (TOFA) rules proposed in the 2021-22 Budget will be deferred.
• Amendments to simplify the taxation of financial arrangements (TOFA) rules proposed in the 2016-17 Budget will not proceed.
• The proposed measure from the 2018-19 Budget to impose a limit of $10,000 for cash payments will not proceed.
• Proposed changes in the 2016-17 Budget to amend the taxation of asset-backed financing arrangements will not proceed.
• The new tax and regulatory regime for limited partnership collective investment vehicles proposed in the 2016-17 Budget will not proceed.
• The Pacific Australia Labour Mobility (PALM) scheme will be expanded and enhanced.

Individuals

• The amount pensioners can earn in 2022-23 will increase by $4,000 before their pension is reduced, supporting pensioners who want to work or work more hours to do so without losing their pension.
• To incentivise pensioners to downsize their homes, the assets test exemption for principal home sale proceeds will be extended and the income test changed.
• The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
• The Paid Parental Leave Scheme will be amended so that either parent is able to claim the payment from 1 July 2023. The scheme will also be expanded by 2 additional weeks a year from 1 July 2024 until it reaches 26 weeks from 1 July 2026.
• The maximum Child Care Subsidy (CCS) rate and the CCS rate for all families earning less than $530,000 in household income will be increased.
• The current higher Child Care Subsidy (CCS) rates for families with multiple children aged 5 or under in child care will be maintained.
• Legislation will be introduced to clarify that digital currency (or crypto currencies) will not be treated as foreign currency for income tax purposes.

Superannuation

• Eligibility to make a downsizer contribution to superannuation will be expanded by reducing the minimum age from 60 to 55 years.
• The 2021-22 Budget measure that proposed relaxing residency requirements for SMSFs and small APRA-regulated funds (SAFs) from 1 July 2022, has been deferred.
• The 2018-19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs) will not proceed.
• A requirement for retirement income product providers to report standardised metrics in product disclosure statements, originally announced in the 2018-19 Budget, will not proceed.

Multinationals

• Thin capitalisation rules for non-ADIs will be amended from 1 July 2023, with tests relating to ratios replaced by earnings-based tests.
• Significant global entities will be denied a tax deduction for payments to related parties in relation to intangibles held in low- or no-tax jurisdictions.
• Significant global entities and public companies will have additional reporting requirements for income years commencing from 1 July 2023.
• Proposed amendments to the debt/equity tax rules mentioned in the 2013-14 MYEFO will not proceed.

Tax administration

• Penalty unit increase to $275 from 1 January 2023.
• Personal Income Taxation Compliance Program extended a further 2 years to 30 June 2025.
• Shadow economy compliance program extended to 30 June 2026.
• The ATO tax avoidance taskforce will receive additional funding and is being extended to 30 June 2026.
• Financial penalties for breaches of foreign investment compliance to double from 1 January 2023.
• Access to refunds of indirect tax, including GST, fuel and alcohol taxes, under the Indirect Tax Concession Scheme has been expanded to the diplomatic and consular representations of Bhutan.
• The proposed extension of reportable transactions relating to the sharing economy deferred by 12 months to 1 July 2024.

Tax agents

• Funding to be given to the Tax Practitioners Board to increase compliance investigations.
• Additional funding will be provided to support the delivery of government priorities in the Treasury portfolio.

Not-for-profit

• Deductible gift recipients list to be updated.
• The 2021-22 MYEFO measure to establish a deductible gift recipient category for providers of pastoral care will not proceed.

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