Mon-Fri 9 AM - 5 PM

Client portal
Federal Budget, Finance Updates, PAC Financial

Federal Budget Briefing 9th May 2023

On Tuesday 9th May, Labor handed down its second Budget for 2023-24. The announcements were concentrated around providing support to ease the cost of living.
Below are some of the key announcements from the Budget and how these might apply to you if they become law.

Disclaimer: These are currently announcements only; the successful implementation of the measures will require successful negotiation through the Senate where the Government does not hold a majority. The final version of these measures may differ from the current announcements.

Cost of living measures

Relief on power bills
Holders of Pensioner Concession Cards, Commonwealth Seniors Health Card holders and recipients of Family Tax Benefit payments will be eligible to receive a temporary rebate of their energy bill from 1 July 2023 of up to $500 to assist in easing the cost of living.

Super changes

 Pay day super
From 1 July 2026, employers will be required to pay super at the same time they pay salary and wages. Many employers have already adopted this approach even though currently, super is only required to be paid quarterly.
Additional funding will also be provided to the ATO in 2023-24 to improve its ability to identify and act on any cases of Super Guarantee underpayment by employers.

Minimum pension payments set to revert
The minimum amount that was required to be paid to a member from their pension was halved in 2019-20. This was legislated to revert to the full amount from 1 July 2023. There was no announcement of an extension to the reduced minimum in the Budget so the amount is likely to revert to 100 per cent of the standard minimum from 1 July 2023 unless an extension is announced. This means the payments you receive from your pension may need to increase from 1 July this year.

Increase to Transfer Balance Cap
In February 2023, it was announced the Transfer Balance Cap would increase by $200,000 to $1.9 million on 1 July this year due to indexation. This is the amount you can transfer from super to start a tax-free super pension, such as an account-based pension. Although there has been some speculation as to whether this would remain at its current level, the fact that it wasn’t announced in the Budget suggests it will increase as expected.

$3 million super cap
As recently proposed, the government reinforced its plan to increase the tax on earnings on super balances over $3 million by 15%.
This will only affect a small proportion of the population who hold larger balances in super, and the tax would only be payable on earnings over this threshold. The additional 15% will apply regardless of whether they are in the accumulation phase of super, or if they have retired and have commenced a super pension.

Personal taxation

 ‘Stage 3’ tax cuts
There were no new announcements regarding stage 3 tax cuts which remain legislated to take effect 1 July 2024.

As a reminder, the stage 3 tax cuts will change the income tax rates and thresholds (for resident taxpayers) as follows:

 

Current (2022–23) year                                                From (2024–25) year
Taxable income Marginal tax rate Taxable income Marginal tax rate
$18,200 to $45,000 19% $18,200 to $45,000 19%
$45,001 to $120,000 32.5%  

$45,001 to $200,000

 

30%

$120,001 to $180,000 37%
$180,001 and over 45% $200,001 and over 45%

 

Age Care

 Improving Aged Care Support, home care, and funding model
The Government will introduce a new hoteling supplement of $10.80 per resident per day by separating out the existing hoteling component of the Australian National Aged Care Classification (AN-ACC) price (the $10 Basic Daily Fee Supplement) starting 1 July 2023.
The Government will also adjust the care minute allocations within the AN-ACC funding model from 1 October 2023 to better align care minutes with resident needs.

The Government will provide:

  • $487.0 million over 4 years from 2023–24 (and $133.6 million ongoing) to extend, and make ongoing, the Disability Support for Older Australians Program.
  • $41.3 million over 4 years from 2023–24 (including $11.9 million in capital funding from 2022–23) to build a new place assignment system, allowing older Australians to select their residential aged care provider.
  • additional funding to improve the in-home aged care system, including $166.8 million in 2023–24 to release an additional 9,500 Home Care Packages.

Other changes

  • From 1st July 2023, an increase in Medicare Levy exemption threshold for low-income earners.
  • For those looking to salary package a motor vehicle as part of their employment, in the October 2022 Federal Budget it was announced that there would be an exemption from fringe benefits tax for certain electric vehicles packaged on or after 1 July 2022. The Government has decided that this exemption will only be available for such vehicles that are packaged before 1 April 2025.
  • From 1 July 2023 until 30 June 2024, eligible small businesses with aggregated turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000.
  • Small and medium businesses will be incentivised to save on energy bills through the electrification of assets and improvement to energy efficiency. Business with aggregated annual turnover of less than $50 million, will be able to deduct an additional 20% of the cost of eligible depreciating assets that support electrification and more efficient use of energy.
  • Amnesty on penalties for late tax lodgements for small businesses for overdue returns including income tax and business activity statement from 1 December 2019 and 28 February 2022.
  • Increase for working age and student payment rates (Such as Jobseeker, youth allowance, Austudy) by $40 fortnight on top of the usual indexation of benefit in September 2023.
  • Increase of Rent Assistance payment by 15% from September 2023.
  • Single parents in receipt of a parenting payment may now be eligible to receive this payment up until their youngest child turns 14. Currently the payment ceases when that child turns 8.

Information in this email is provided by PAC Financial ABN 28 608 364 183, AFSL 534310. It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. Financial Services Guide (FSG) available online for information about our services. This information is based on current requirements and laws as at the date of publication. Published as of 10th May 2023.

Client Portal

1300 590 790