On 9th May 2023, the Labor Party Treasurer Jim Chalmers presented his second budget.
The Federal Budget for 2023-24 included a variety of measures concerning taxes and superannuation. The primary emphasis was on providing assistance to small businesses, promoting investments in housing and environmentally friendly structures, modifications to the Petroleum Resource Rent Tax, and additional attention given to large multinational corporations.
TAXATION HIGHLIGHTS
Below is a summary of the key tax items from the budget.
The Temporary Full Expensing and Loss Carry Back measures will conclude on 30 June 2023, these temporary measures have not been extended.
Small businesses will experience a temporary one-year rise in the instant asset write-off threshold, to $20,000 for eligible assets.
Small and medium businesses will be eligible for an additional 20 percent bonus tax deduction when their expenditures support "electrification" and promote more efficient energy usage under the Small Business Energy Incentive.
A reduction in withholding rates will apply to funding payments from qualifying build-to-rent projects, and eligible build-to-rent properties will experience an increase in capital works depreciation rates from 2.5% to 4%.
The Low Middle Income Tax Offset (LMITO), which provided a tax offset ranging from $675 to $1,500 in the 2021-22 income year, will no longer be available.
However, the Low Income Tax Offset (LITO) will remain available during the 2022-23 financial year, granting a tax offset of up to $700 for individuals earning less than $66,667.
There have been no planned changes to the stage three tax cuts which were introduced by the previous Government and are expected to take effect from 1 July 2024.
The Medicare levy low-income thresholds for various categories including singles, families, seniors, and pensioners will witness an increase in the 2022-23 income tax year. The revised thresholds are as follows:
For individuals, the threshold will be $24,276 (previously $23,365).
For families, the threshold will be $40,939 (previously $39,402). Additionally, each dependent child or student will have an increased threshold of $3,760 (previously $3,619).
Single seniors and pensioners will have a threshold of $38,365 (previously $36,925).
The family threshold for seniors and pensioners will be $53,406 (previously $51,401), with an additional $3,760 for each dependent child or student (previously $3,619).
Starting from 1 July 2025, the preferential tax rate for future earnings on superannuation balances exceeding $3 million will be raised to 30%, which is still lower than the highest tax rate of 45%.
The minimum superannuation guarantee (SG) rate will be increased from 10.5% to 11% as of 1 July 2023. Furthermore, the government has announced that starting from 1 July 2026, employers will be obligated to pay their employees' SG entitlements concurrently with their salary and wages.
The implementation of the Global Anti-Base Erosion (GloBE) rules will take effect from 1 January 2024. These rules are designed to ensure that large multinational enterprises pay a minimum amount of tax in the jurisdiction where they operate.
As of 1 July 2023, deductions for LNG projects will be limited to 90% of their income in a given year. This establishes a minimum net level of PRRT (Petroleum Resource Rent Tax) at 2.8% of assessable receipts after allowing for an income tax deduction for the PRRT paid. However, this provision only applies seven years after a project's initial production.
A change in the fuel tax credits calculations by an increase in the Heavy Vehicle Road User Charge rate from 27.2 cents per litre of diesel to 32.4 cents per litre. This will be implemented progressively starting from 1 July 2024 with 32.4 cents per litre expected to apply by 2026.
If you would like any further information or would like to discuss how the newly introduced budget measures may be relevant to you, please feel free to get in touch with us.