Federal Budget 2023

Talking Points A number of green initiatives in relation to fringe benefits tax relief on electric vehicles and government grants for energy efficient equipment upgrades. Amendments to the Paid Parental Leave Scheme and maximum Child Care Subsidy rates, to further benefit Australian families. A number of measures from previous budgets will not proceed. Government incentives program has been untouched

A relatively quiet night with the release of Budget 22-23. Inflationary pressures restrain the Treasurer as cost of living relief is prioritised in the face of a bleak outlook for wages growth and energy prices.

We narrow down the key highlights relevant to our clients across Businesses, Individuals and SMSFs.

For Businesses

1. From 1 July 2022, electric vehicles with a first retail sale value below the luxury car tax threshold (currently $84,916) will be exempt from fringe benefits tax. The government has defined electric vehicles to include the following:
   1. Battery electric vehicles;
   2. Hydrogen fuel cell electric vehicles; and
   3. Plug-in hybrid electric vehicles.
2. Grants will be provided this financial year to small and medium-sized businesses to fund energy efficient equipment upgrades, including feasibility and planning costs and subsequently the equipment and facility upgrades designed to lower emissions and boost efficiency.
3. A number of COVID-19 government grants (particularly Victorian and ACT state business grants) will be non-assessable non-exempt income for tax purposes.
4. The 2021–22 Budget measure to allow taxpayers to self-assess the effective life of intangible depreciating assets will not proceed.

For Individuals:

1. 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.
2. 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. Additionally, the current higher Child Care Subsidy (CCS) rates for families with multiple children aged 5 or under in child care will be maintained.
3. The government will legislate and clarify that cryptocurrencies will not be treated as foreign currency for income tax purposes. Cryptocurrencies will therefore continue to be subject to gains/losses on capital or revenue account, as appropriate.

For Self-Managed Superannuation Funds (SMSFs)

1. Eligibility to make a downsizer contribution of up to $300,000 to superannuation will be expanded by reducing the minimum age from 60 to 55 years.
2. The 2021–22 Budget measure that proposed relaxing residency requirements for SMSFs from 1 July 2022, has been deferred. The previously proposed measures were designed to allow SMSF management and control to be temporarily performed outside of Australia for up to five years and still satisfy the SMSF residency requirements.
3. The 2018–19 Budget measure that proposed the relaxing of the annual audit requirement for certain self-managed superannuation funds (SMSFs) will not proceed. The previously proposed measures would have permitted SMSFs to undergo a compliance audit once every three years.

ATO Compliance Programs

1. Continued funding for the ATO’s Tax Avoidance Taskforce – The ATO has been allocated a further $1.1bn of funding for its Tax Avoidance Taskforce over the next four years. This consists of an extra $200m above existing funding for the next three years, and the extension of the taskforce for an additional year (FY26, $500m spend). The funding will strengthen the ATO’s already significant taskforce resources
2. Extended ATO compliance programs – Existing ATO compliance programs are to be extended with additional funding. The ATO will have increased resourcing, including, improved data matching capability, which will see increased audit and review activity.
3. Personal Income Tax Compliance Program – This program is focused on individual non-compliance with an additional $80.3 million of funding to be provided for an additional two years from 2 July 2023. This is expected to increase tax revenue by $674.4 million between now and 2026. The ATO is likely to utilise this funding to improve existing compliance integrity products, as well as engage earlier with taxpayers and tax agents to target compliance activity.

At CharterNet, we will continue to keep you updated as things develop. Always feel free to get in touch if we can help clarify anything.

Please contact us if you have any questions regarding the Budget.