Record low unemployment and higher than expected resource prices has boosted taxation revenue for the government. This along with 85% of budget estimates turning out differently than expected has created and unlikely surplus for 2023-2024 financial years.
Great I hear you say! What's in it for me??
Individuals
The scheduled third installment of tax cuts, which is set to take effect next year, will proceed as planned. This stage-three tax cut involves eliminating the 37% tax bracket, reducing the 32.5% bracket to 30%, and raising the threshold for the highest tax bracket from $180,001 to $200,001.
Despite heavy lobbying to abandon or reduce the planned cuts, the federal government has maintained that it has no intention of doing so. The primary reason for the tax cut is to address “bracket creep,” which occurs when income tax is not adjusted for inflation and more workers fall into higher tax brackets over time as their incomes rise. The first two tranches of cuts targeted lower- and middle-income earners and were implemented under the previous government.
The rules for eligibility for the single parenting payment are undergoing a significant change, which is expected to predominantly benefit women.
This change involves expanding the eligibility criteria to include single parents with children up to the age of 14, which is a notable increase from the previous age limit of 8 years. It is worth noting that a staggering 91% of recipients of this payment are women. However, it is important to note that although eligibility is being expanded, the payment rate will remain unchanged.
Business
Small businesses with an annual turnover of less than $50 million will be offered a bonus tax discount to encourage electrification, aimed at promoting more efficient energy use.
This discount will allow them to claim 20% of their spending on electrified heating and cooling, installation of batteries and heat pumps, and the purchase of more efficient white goods and induction cooktops as tax deductions.
The maximum claimable amount through this 'Energy Incentive' will be $20,000, which means that up to $100,000 worth of spending will be eligible for this discount.
Asset write off - there is still time!
30 June 2023 brings an end to the temporary full expensing rules which allows a full deduction of eligible assets that are installed and ready for use.
From 1 July 2023 small businesses with an annual turnover under $10 million will be able to deduct the full cost of business upgrades and resources costing less than $20,000. This is possible as long as those purchases are installed and ready for use between July 1, 2023, and June 30, 2024.
Superannuation
Starting July 2026, employers will be required to pay super at payday instead of quarterly. This change is expected to ensure more people get paid the superannuation they are owed and boost retirement incomes for young workers by thousands of dollars. Workers will gain more money through compounding interest and it will be harder for businesses to dodge paying super.
From the 2025 financial year future earnings on super balances over $3 million will be taxed at a 30 per cent rate, which the government expects to affect about 80,000 people.
Please note that the information provided is general in nature and should not be considered as professional advice. You will need to contact Adrian and the team @ Clear Accounting Solutions for your personal situation to understand what changes mean for you.
Regards,
Adrian De Vito - CPA