Our Comments After the Recent 2022 Federal Budget

April 1, 2022

The team at Visia Financial Services are here to provide you with insights and clarity. Please, enjoy the read.

The government is offering sweeteners to encourage small business

It’s no secret that a Federal Election is coming up in May 2022. In the lead up to that, and after the recent Federal Budget, there have been a few incentives on offer for those in small business. Below, we have outlined the announcements that were made.

#1 Tax deductions and incentives

Did you know?

Small businesses can claim a 120% tax deduction on external training for staff incurred this year in 2022 and claimed in 2023 and 2024 tax year? You can also claim up to 120% of the cost of technologies such as cloud storage subscriptions, payments systems and cyber security for expenditure incurred by 30 June 2022 and claimed in the 2023 tax year.

Low and Middle Income Tax Offset (incomes of less than $126,000) will increase to assist with the cost of living pressures to $1,500 for individuals and $3,000 for couples from 1 July 2022. Check with our office or your accountant for more tax details.

The cost of fuel will come down temporarily by 22.1 cents per litre (government excise fuel tax) from 30 March 2022 for 6 months so look for opportunities for fill up the tank and store some fuel. We don’t know how long fuel supplies will be compromised by Russia’s attacks on Ukraine.

Finally, the workforce participation incentive for seniors has been extended for another 2 years.

#2 Superannuation

Furthermore, those with a low income threshold are eligible for government co-contributions of $500, if your income is less than $42,016. You can receive partial contributions up to $57,016.
Also, the minimum super pension drawdowns have been halved again for the next year.

#3 Families

There are also benefits for families. The Paid Parental Scheme will change to include dad and partner pay, and parental leave pay, to provide eligible families access to up to 20 weeks leave based on family income of less than $350,000. If you are an eligible single parent, you may be entitled to a further 2 weeks leave.

#4 Women in leadership and board roles

A further investment to improve leadership outcomes for women is planned, with an additional $18.2 million for the Women’s Leadership and Development program.

This includes $9 million from 2023-24 to 2025-26 to expand the successful Future Female Entrepreneurs program.

Funding will continue the successful academy for Enterprising Girls (10-18 year olds) and the Accelerator for Enterprising Women, expanding it to include all women aged 18+, as well as adding a new Senior Enterprising Women program.

To support women facing unique barriers to leadership and employment, the government is also investing $9.4 million to expand the Future Women’s Jobs Academy, and to support gender balanced boards.

#5 Work test

A major change effective 1st July is the ability to make non-concessional contributions from the age of 67-74, without meeting the ‘work test’. This is very significant as it will allow many people to use a withdrawal and recontribution strategy. They can withdraw a lump sum from their super, if they have a high ‘taxable component’, and recontribute these funds as non-concessional contributions, which will be ‘tax-free components.

The benefits from this include (as outlined by the ATO):

  • For every $100,000 that is switched from taxable to tax-free, beneficiaries may save up to $17,000 in tax on their death.
  • It may also provide some with the ability to recontribute the funds to their spouse’s account rather than their own to even up balances and use both members’ transfer balance caps.
  • It may also provide some protection against future government legislation taxing pensions, as they may be more likely to tax the “taxable component” as that is the super guarantee component and salary sacrifice where the member has received concessional treatment of their contributions.
  • This could save $136,000 in death benefits tax to their adult beneficiaries on their death.

Downsizer contributions

Also noted by the ATO, another measure promoted in the fiscal 2022 budget, which recently became law, is a reduction in the eligibility age for “downsizer” contributions from 65 years old to 60 years old, effective 1st July.

For superannuation members nearing retirement, eligible individuals aged 60 years or older can choose to make a downsizer contribution into their superannuation of up to $300,000 per person from the proceeds of selling their home, without impacting contribution caps.

For contributions made prior to 1st July, eligible individuals must still be aged 65 years or older at the time of making their contribution.

Downsizer contributions still count towards the transfer balance cap, which is applied when moving super savings into retirement phase and helps determine eligibility for the age pension.

​If you would like to know more, please contact us.

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