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The budget has just been released and here are the key announcements that will impact most taxpayers.

1. Personal 

1.1 There has been no change to the personal tax rates as previously legislated.

1.2 Removal of the  low and middle income tax offset (‘LMITO’) with only the Low offset remaining.

The Government has announced that the temporary LMIT has now ceased and been replaced by the low-income tax offset as below.

                                        2023 LITO       
$0 – $37,000                              $700                                                
$37,001 – $45,000                    $700 -(TI – $37 000x 5%)                                   
$45,001 – $66 667                    $325 -(TI – $45 000x 1.5%)                                             
$66 668+                                          Nil                                              

1.3 Increasing the Medicare levy low-income thresholds

The Government will increase as they do every year, the Medicare levy low-income thresholds for seniors and pensioners, families and singles from 1 July 2022 as follows:
• The threshold for singles will be increased from $23,365 to $24,276.
• The family threshold will be increased from $39,402 to $40 939.
• For single seniors and pensioners, the threshold will be increased from $36,925 to $38 365.

 

2. Business

The only announcement that would be of interest to most businesses, will be the depreciation write off below. The other announcements apply to very large businesses and you can read about these in other news releases.

2.1 Instant Asset  Write-Off Threshold increased to $20 000

From 1 July 2023 until 30 June 2024, the Government will temporarily increase the instant asset write-off threshold from $1,000 to $20,000.
Small businesses with an aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per-asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.
The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2024

3. Superannuation

3.1 Employer to pay superannuation the same day as salaries are paid

From 1 July 2026, employers will be required to pay their employees’ superannuation guarantee entitlements on the same day that they pay salary and wages.
Currently, employers are only required to pay their employees’ superannuation guarantee on a quarterly basis. By increasing the payment frequency of superannuation to align with the payment of salary and wages, this measure aims to ensure employees have greater visibility over whether their entitlements have been paid and better enable the ATO to recover unpaid superannuation.

3.2  Earnings for superannuation balances above $3 million taxed at 30%

From 1 July 2025, the Government will reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million.
Individuals with a total superannuation balance of less than $3 million will not be affected.
This reform is intended to ensure superannuation concessions are better targeted and sustainable.
It will bring the headline tax rate to 30%, up from 15%, for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million. This rate remains lower than the top marginal tax rate of 45%.
Earnings relating to assets below the $3 million threshold will continue to be taxed at 15%, or 0% if held in a retirement pension account.
Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests. This will ensure commensurate treatment.
The measure will not place a limit on the amount of money an individual can hold in
superannuation. The current contributions rules will continue to apply.

 

If you have any specific questions relating to your particular situation, please contact us at questions@accoladeaccounting.com.au or phone us (08) 6263 4466 or (03) 9524 3145