By Chris Smith
Federal Budget – Key Takeaways
On 25 October the Federal Government released their first Budget.
The announcements impacting SME business owners are summarised below.
Summary of Key Announcements
Stage 3 Tax Cuts – Start Date Unchanged
As expected, the Government did not announce any changes to the Stage 3 tax cuts, as previously legislated.
The Stage 3 tax cuts will commence from 1 July 2023.
From this date onwards, the personal tax rates will be as follows:
The key difference being the 30% marginal tax rate for income between $45,000 – $200,000.
ATO Tax Compliance and Audit Activity:
The Budget has provided additional funding to the ATO to extend their compliance and audit activity in:
- Personal Tax Compliance
- Shadow Economy
- ATO Tax Avoidance Taskforce (expect increased audit activity for HNW groups)
- High Risk Tax Practitioners
We recommend reviewing whether ATO Audit Insurance is appropriate for your business.
FBT Exemption for Electric Cars:
Although previously announced, legislation will be introduced with effect from 1 July 2022, to exempt battery, hydrogen fuel cell and plug-in hybrid electric cars from fringe benefits tax and import tariffs if they have a first retail price below the luxury car tax threshold for fuel-efficient cars ($84,916 in 2022‑23).
The car must not have been held or used before 1 July 2022.
Employers will need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount.
Child Care Measures:
The Government will increase the maximum Child Care Subsidy (CCS) rate from 85% to 90% for families for the first child in care and increase the CCS rate for all families earning less than $530,000 in household income.
From July 2023, CCS rates will lift from 85 per cent to 90% for families earning less than $80,000. Subsidy rates will then taper down one percentage point for each additional $5,000 in income until it reaches 0% for families earning $530,000 (up from $356,756). Families will continue to receive existing higher subsidy rates for their second and subsequent children aged five and under in care, up to 95%.
For more information on these Budget announcements and potential planning opportunities, please do not hesitate to contact our office.
The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls WA before making any decision to discuss your particular requirements or circumstances.