12 Apr

NEWSLETTER – APRIL 2022

  1. Federal Budget Report 2022-23

The Treasurer delivered the Federal Budget on 29 March 2022. 

The following key tax and superannuation measures were announced at Budget night:

Announced MeasuresStart Date
 
Personal Tax & Transfer 
Increase in Medicare levy low income threshold1 July 2021
Cost of living tax offsetIncrease to LMITO for the 2021-22 income year. Paid from 1 July 2022
Cost of living paymentApril 2022
Affordable Housing and Home Ownership2022-23
  
Superannuation & Retirement 
Extension of temporary reduction in minimum drawdown ratesExtended to 30 June 2023
  
Tax issues for SME’s 
Small Business – Skills and Training Boost7.30 pm on 29 Mar 2022 (to 30 June 2024)
Small Business – Technology Investment Boost7.30 pm on 29 Mar 2022 (to 30 June 2023)
Varying GDP uplift factor for PAYG and GST instalments2022-23 income year
Primary Producers – increasing concessional tax treatment for carbon abatement and biodiversity stewardship income1 July 2022
  
Corporate Tax 
Patent Box – expanding tax concessional to agricultural sector innovationsIncome years starting on or after 1 Jul 2023
Patent Box – expanding tax concessional to low emissions technology innovationsIncome years starting on or after 1 Jul 2023
Patent Box – expanding tax concessional for Australian medical and biotechnology innovationsIncome years starting on or after 1 Jul 2022
  
Other Measures 
COVID 19 Response package  – tax deductibility of COVID-19 test expenses  1 July 2021

Increase of Medicare Levy low income threshold

The Medicare levy low income thresholds for singles, families, seniors and pensioners will increase from 1 July 2021.  The thresholds will be increased as such:

  • For singles – from $23,226 to $23,365
  • For families – From $39,167 to $39,402
  • For single seniors and pensioners – from $36,705 to $36,925
  • For family seniors and pensioners – from $51,094 to $51,401

For each dependant child/student, the family income thresholds increase by a further $3,619 (previously $3,597).

Increase in Low and Middle Income Tax Offset (LMITO)

The LMITO will increase by $420 in the 2021-22 year.  The LMITO is a non-refundable tax offset, which means that if a taxpayer does not have any tax liability, they will not be entitled to the LMITO.  If their tax liability is less than the LMITO, any excess of LMITO unused will not be refundable. 

The following table summaries LMITO rates for 2021-22:

Tax bracketLegislated rate for 21-22Proposed rate for 21-22
Nil to $37,000$255$675 (ie $255 + $420)
$37,001 – $48,000$255 plus 7.5% of income exceeding $37,000$675 plus 7.5% of income exceeding $37,000
$48,001 – $90,000$1,080$1,500
$90,001 – $126,000$1,080 less 3% of income exceeding $90,000$1,500 less 3% of income exceeding $90,000
$126,001 and overNilNil

Cost of Living payments

The Federal Government has proposed to provide a $250 support payment to eligible recipients to assist with the higher cost of living pressures.  The payment will be made in April 2022, to the following eligible recipients and concession card holders:

  • Age Pension
  • Disability Support Pension
  • Parenting Payment
  • Carer Payment
  • Carer Allowance (not in receipt of primary income support payment)
  • Jobseeker Payment
  • Youth Allowance
  • Austudy and Abstudy Living Allowance
  • Double Orphan Pension
  • Special Benefit
  • Farm Household Allowance
  • Pensioner Concession Card holders
  • Commonwealth Seniors Health Card holders
  • Eligible Veterans Affairs payment recipients and Veteran Gold card holders

Payments will be exempt from tax and won’t count as income support for purposes of any income support payment.

Affordable Housing and Home Ownership

The Government has proposed to increase the number of guarantees under the Home Guarantee Scheme to 50,000 homes per year for the next 3 years from 2022-23 and then 35,000 homes a year ongoing, as a measure to support homebuyers to purchase a home with a lower deposit.  Under the Home Guarantee Scheme, the Government will make available the following:

  • From 1 Jul 2022 -> 35,000 guarantees per year ongoing for the First Home Guarantee Scheme (currently 10,000 per year), and will support eligible first homebuyers to purchase a new or existing home with a deposit as low as 5%
  • From 1 Jul 2022 to 30 Jun 2025 -> 5,000 places per year to 30 Jun 2025 to expand the Family Home Guarantee Scheme.  This scheme is targeted towards single parent family housing to support eligible single parents with children to buy their first home or to re-enter the housing market with a deposit of as little as 2%
  • Each year from 1 Oct 2022 to 30 June 2025 -> 10,000 places per year for a new Regional Home Guarantee that will support eligible citizens and permanent residents who have not owned a home for 5 years to purchase a new home in a regional location with a minimum of 5% deposit.

Superannuation & Retirement

The Government proposes to extend the temporary reduction in the minimum pension drawdown rate of 50% for account based pensions, for a further 12 months to 30 June 2023. The temporary reduction of minimum drawdown rates was scheduled to end on 30 June 2022.

The table below sets up minimum drawdown rates for superannuation income streams:

Age2008-09 to 2010-11 income years2011-12 to 2012-13 income years2013-15 to 2018-19 income years2019-20 to 2022-23 income years
Under 652.0%3.0%4%2.0%
65-742.5%3.75%5%2.5%
75-793%4.5%6%3%
80-843.5%5.25%7%3.5%
85-894.5%6.75%9%4.5%
90-945.5%8.25%11%5.5%
95 or more7%10.5%14%7%

New Skills and Training Boost

The New Skills and Training Boost is available to small businesses (SME) to support training and upskill of their employees.

Eligible SME’s will be able to claim an extra 20% (ie deduction of 120%) of expenses incurred on external training courses provided to their employees.  The training courses need to be provided to employees in Australia or online, and delivered by entities registered here in Australia.  Some training will be excluded, such as in house or on the job training and training courses provided to non-employees.

The temporary increased deduction (of 120%) will be available to SME’s with an aggregated turnover of less than $50m, for eligible expenditure incurred between 7.30pm (AEDT) on 29 March 2022 and 30 June 2023.

The increased deduction incurred by 30 June 2022 will be claimed in tax returns in the following income year (ie the 2023 tax return).  The extra deduction for eligible expenditure incurred in the 2022-23 year will be claimed in the 2022-23 income year.

New Technology Investment Boost

The New Technology Investment Boost is available to small businesses (SME) to support the adoption of digital technologies in their business.

Eligible SME’s will be able to claim an extra 20% (ie deduction of 120%)of the cost of the expenses incurred on business expenses and depreciating assets used to support digital adoption, such as portable payment devices, cyber security systems, cloud based services.

The temporary increased deduction (of 120%) will be available to SME’s with an aggregated turnover of less than $50m, for eligible expenditure incurred between 7.30pm (AEDT) on 29 March 2022 and 30 June 2023.

The increased deduction incurred by 30 June 2022 will be claimed in tax returns in the following income year (ie the 2023 tax return).  The extra deduction for eligible expenditure incurred in the 2022-23 year will be claimed in the 2022-23 income year.

There will be an annual cap of $100,000 each year.

Varying the GDP uplift factor for PAYG and GST instalments

The Government is proposing to set the GDP uplift factor for PAYG and GST instalments at 2% for 2022-23 income year.  This will apply to small and medium enterprises eligible to use the relevant instalment methods (which are up to $10m aggregated turnover for GST instalments and $50m annual aggregated turnover for PAYG instalments), for instalments relating to the 2022-23 income year and fall due after the legislation receives Royal Assent.

Primary Producers – increasing concessional tax treatment for carbon abatement and biodiversity stewardship income

The Government is proposing to allow the proceeds from sale of Australian Carbon Credit units (ACCC) and biodiversity certificates generated from on-farm activities to be treated as primary production income for the purposes of Farm Management Deposits (FMD) scheme and tax averaging from 1 July 2022.

Currently, these sales are treated as non-primary production income and are ineligible for concessional tax treatment under the FMD scheme or tax averaging.  ACCU holders are also currently taxed based on changes in the values of their ACCU’s each year, which can result in tax liabilities prior to sale.

Tax deductions for work related COVID-19 tests

Taxpayers who incur relevant COVID-19 testing expenses in gaining or producing assessable income will be able to claim an income tax deduction for that expense.  The deduction applies retrospectively to relevant expenses incurred by the taxpayer on or after 1 July 2021.

2. Protect your business from the cost of email scams

Email scams are a leading cause of financial loss for businesses in Australia. Scammers change banking details so that future invoices are paid to them.  It’s important to check account details and know who you’re paying.  It’s important for your business to have strict protocols when dealing with requests to update client information and change any payment instructions. 

3. NSW Property transfers

Revenue NSW has confirmed that duty will not be payable under the following restructures, if the documents prepared to give effect to the restructure meet certain guidelines. 

The following transactions do not give rise to a liability to duty (if executed before 12 May):

  1. To move a property from an individual to a unit trust
  2. To move a property from a discretionary trust to a unit trust
  3. To move property from a company to a trust, enabling access to the 50% CGT discount
  4. To clone a trust, with CGT, stamp duty and land tax savings
  5. To gain multiple land tax thresholds
  6. To otherwise separate assets from asset protection purposes
  7. To move property in an SMSF from a company or a trust
  8. To move property for estate planning purposes. 

Revenue NSW has issued a ruling confirming the circumstances when duty would not be payable. 

From 12 May 2022

However, from 12 May 2022 onwards, the transactions above to change of beneficial ownership as well as a whole series of anti-avoidance provisions will give rise to a liability to duty, following the State Revenue and Fines Legislation Amendment (Miscellaneous) Bill 2022 receiving assent on or around 12 May 2022.

4. Superannuation Guarantee obligations

A reminder that the superannuation guarantee rate is going to increase from 10% to 10.5% from 1 July 2022 to 30 June 2023.

5. Taxable Payments Annual Report (TPAR)

TPAR reports must be lodged by 28 August each year. Taxpayers that operate in certain industries that make payments to contractors may need to report these payments in a TPAR.  Some of the industries that may be affected include cleaning services, building and construction services, info tech services, courier services.

From 23 March 2022, the Tax Office will be apply failure to lodge penalties for taxpayers who:

  • Did not lodge their TPAR for the 2021 year or the prior year
  • Taxpayers who have already been sent 3 non-lodgement reminders regarding their overdue TPAR reports, or
  • Taxpayers who did not respond to the ATO follow up phone calls about their overdue TPAR reports

Please refer the ATO’s website regarding information on who needs to lodge a TPAR report, and how to do so.

6. Important lodgement due dates

28 April 2022Superannuation Guarantee payment for the quarter ending 31 March 2022
29 April 2022Quarterly reports for listed entities for the quarter ending 31 March 2022
30 April 2022Deadline to lodge R&D activities for the year ended 30 June 2021.
15 May 2022Tax returns for the year ended 30 June 2021 for all remaining individuals and trusts not required earlier and not eligible for the 5 June concession (including new registrations).
21 May 2022FBT returns for year ended 31 March 2022 due for lodgement and payment.

7.Upcoming dividends

CompanyDate$% Franked
Nine Entertainment Co. Holdings21-Apr-220.07100%
Woolworths Group13-Apr-220.39100%
QBE12-Apr-220.1910%
Rio Tinto21-Apr-226.6284100%
TPG Telecom13-Apr-220.085100%
Myer Holdings12-May-220.015100%
Harvey Norman2-May-220.2100%
Seven Group6-May-220.23100%

If you wish to discuss any of the above matters, please contact our office.