Federal Budget 2022

We have prepared a summary of the key measures for Individuals, Superannuation, Social Security and for Companies below:

• There were no changes to Marginal Tax Rates as The Government previously brought forward ‘stage 2’ of its already planned and legislated tax cuts which were due to commence from 2022.  From 1 July 2020 the tax rates of 32.5% will apply to incomes up to $120,000 (previously $90,000 threshold);

 

• Proposed changes from 2024 will remain with marginal tax rates to reduce the 32.5 percent tax rate down to 30 percent and removal of the 37 percent tax rate so all income earners under $200,000 would pay no more than 30 cents in the dollar;

 

• Changes to the Low Income Tax Offset (LITO) and Low and Middle Income Tax Offset (LMITO) The low and middle income tax offset (LMITO) will be increased for the 2021-22 income year to assist with cost of living pressures.The LMITO for the 2021-22 income year will be paid from 1 July 2022 when Australians submit their tax returns for the 2021-22 income year. This proposal will increase the LMITO by $420 for the 2021-22 income year. This increases the maximum LMITO benefit in 2021-22 to $1,500 for individuals and $3,000 for couples.  Other than those that do not require the full offset to reduce their tax liability to zero, all LMITO recipients will benefit from the full $420 increase. All other features of the current LMITO remain unchanged. Consistent with the current LMITO, taxpayers with incomes of $126,000 or more will not receive the additional $420.

 

• Changes to the Medicare Levy
  
  • The threshold for singles has increased from $23,226 to $23,365.
  • The family threshold has increased from $39,167 to $39,402.
  • For single seniors and pensioners, the threshold has increased from $36,705 to $36,925.
  • The family threshold for seniors and pensioners has increased from $51,094 to $51,401.
  • For each dependent child or student, the family income thresholds increase by a further
    $3,619, instead of the previous amount of $3,597.

 

• Temporary Fuel Excise Reduction The excise and excise-equivalent customs duty rate that applies to petrol and diesel will be halved for 6 months to reduce the burden of higher fuel prices. The excise and excise-equivalent customs duty rates for all other fuel and petroleum-based products, except aviation fuels, will also be reduced by 50 per cent for 6 months. The Australian Competition and Consumer Commission (ACCC) will monitor the price behaviour of retailers to ensure that the lower excise rate is fully passed on to Australians.
  The measure will commence from 12.01am on 30 March 2022 and will remain in place for 6 months, ending at 11.59pm on 28 September 2022.

 

• Home Guarantee Scheme has been increased – The number of guarantees under the Home Guarantee Scheme will increase to 50,000 per year for 3 years from 2022-23 and then 35,000 a year ongoing to support homebuyers to purchase a home with a lower
  deposit. The guarantees will be allocated to provide:
  • 35,000 guarantees per year ongoing for the First Home Guarantee (formerly the First Home Loan Deposit Scheme)
  • 5,000 places per year to 30 June 2025 for the Family Home Guarantee
  • 10,000 places per year to 30 June 2025 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 5 per cent deposit.
• This will come at a cost of $8.6 million over 4 years from 2022-23 and $138.7 million over 7 years from 2026-27, with $20.5 million per year ongoing from 2033-34. The Government guaranteed liability cap of the National Housing and Finance Investment Corporation
  (NHFIC) will be increased by $2.0 billion to $5.5 billion to enable NHFIC to support increased loans through the Affordable Housing Aggregator, which increases support for affordable housing.

 

• First Home Deposit Scheme (via Superannuation contributions) – From last budget The Government has increased the maximum amount of voluntary concessional and non-concessional contributions releasable from FHSSS accounts from $30,000 to $50,000 from 1 July 2022.  This means all voluntary contributions made from 1 July 2017 up to the existing limit of $15,000 per year will count towards the total amount able to be released.  The Government has also announced some minor amendments to the administration of the FHSSS to  provide additional flexibility to the recipient and the ATO to make amendments to their application and withdrawal amount allowing an increase or decrease of the applied amount prior to a payment being made with no penalty to the recipient.;

• The Government has extended the 50 per cent reduction of the superannuation minimum drawdown requirement for a further 12 month period.

	Standard Rate	Reduced Rate
Under 65	4%	2%
65 – 74	5%	3%
75 – 79	6%	3%
80 – 84	7%	4%
85 – 89	9%	5%
90 – 94	11%	6%
over 95	14%	7%

 

• $250 economic support payments will be made to help eligible recipients with higher cost of living pressures. The payment will be made in April 2022 to eligible recipients of the following payments and to concession card holders:
  • Age Pension
  • Disability Support Pension
  • Parenting Payment
  • Carer Payment
  • Carer Allowance (if not in receipt of a primary income support payment)
  • Jobseeker Payment
  • Youth Allowance
  • Austudy and Abstudy Living Allowance
  • Double Orphan Pension
  • Special Benefit
  • Farm Household Allowance
  • Pensioner Concession Card (PCC) holders
  • Commonwealth Seniors Health Card holders
  • Eligible Veterans’ Affairs payment recipients and Veteran Gold card holders

The payments are exempt from taxation and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment, even if they are eligible under 2 or more of the categories outlined above. The payment will only be available to Australian residents.

• Pharmaceutical Benefits Scheme – lowering the Safety Net threshold.  In additional support to ease the cost of living pressures, from 1 July 2022, the PBS Safety Net thresholds will be reduced from $1,542.10 to $1,457.10 for general patients and from $326.40 to $244.80 for concessional patients.
  As a result of these changes, concessional patients will reach the PBS Safety Net with approximately 12 fewer scripts per year, and two fewer scripts for general patients in a calendar year. On reaching the PBS Safety Net, concessional patients receive their PBS medicines at no cost for the rest of the calendar year and general patients receive their PBS medicines at the concessional co-payment rate which is currently $6.80 per prescription. The change to the Safety Net thresholds will take effect from 1 July 2022.