Hard to recall a budget with no surprises and with just about everything leaked early or had already been announced. It was almost boring watching the speech last night even for us accountants!

Highlights from the budget courtesy of the Institute of Public Accountants:

A $4.2 billion surplus buffeted by stronger commodity prices, a strong jobs market, and strong immigration. While a surplus is welcomed, it is also short lived because Australia is predicted to return to the red over the forward estimates.

Inflation remains elevated at 6% for this year, it is expected to fall to 3.25% in 2023-24 and return to the RBA’s target band of 2-3% in 2024-25. The Government also believes that its cost-of living measures will take 0.75 of a percentage point off inflation in 2023-24.

Tax-related measures:

▪ Small businesses instant asset write-off threshold set at $20,000 per asset for 2023-24 for businesses with aggregated annual turnover of less than $10m.

▪ Small Business Energy Incentive – businesses with annual turnover of less than $50m will be able to claim an additional 20% deduction on spending that supports electrification and more efficient use of energy. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024.

▪ Small business lodgement penalty amnesty – will be provided for small businesses with aggregate turnover of less than $10m to encourage them to re-engage with the tax system. The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due between 1 December 2019 to 29 February 2022.

▪ FBT exempt rules for electric vehicles (EVs) – the eligibility of plug-in hybrid electric cars will sunset from 1 April 2025 from the FBT exemption for eligible electric cars; (that was short lived!).

▪ Personal tax rates unchanged for 2023-24; Stage 3 start from 2024-25 unchanged.

Superannuation

▪ Payday super – employers will be required to pay their employees’ super guarantee at the same time as their salary and wages from 1 July 2026.

▪ Pension drawdowns: no reduction in minimum – the Budget did not announce a further extension to 2023-24 of the temporary 50% reduction in the minimum annual payment amounts for superannuation pensions and annuities

▪ Non-arm’s length income (NALI) – the amount of non-arm’s length expenses (NALE) taxed at 45% as NALI will be limited to twice the level of a general expense from 1 July 2023 for SMSFs and small APRA funds. 

▪ Super account balances above $3m – the Budget confirmed the Government’s intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025.

Cost of living

$14.6 billion cost‑of‑living plan will provide help with power bills, bring down out‑of‑pocket health costs, support vulnerable Australians, create more affordable housing, and boost wages,” the Treasurer said.

The funds cover energy relief for households and small businesses, a boost to JobSeeker of $40 per fortnight as of 20 September, and an increase to the age cut-off for the Parenting Payment (Single) from eight to 14 from 20 September 2023.

Energy costs

Some 5.5 million Australian households and one million businesses are to receive financial support with their rising energy bills under a multi-billion-dollar package.

From July 2023, this plan will deliver up to $500 in electricity bill relief for eligible households and up to $650 for eligible small businesses.

Where to get the full Budget

As ever the details will emerge over coming weeks and for more information the 2023 Budget Papers are available from the following website: https://budget.gov.au/

How to beat the recession mindset:

You don’t know how good the good times are unless you have some tougher times with our Dr Steven Enticott & Mike Loder (Ticker News)

How to thrive past a recession: https://www.youtube.com/watch?v=-eoOAFnT7TU

How to be a sustainable business

It’s easier than you think with our Dr Steven Enticott & Mike Loder (Ticker News) To measure, reduce, offset and adopt a climate positive project: https://youtu.be/yL07CbAjC6M

Tax return deadlines

Yep, we are there now and it’s the last moment – so act now and if there are circumstances preventing you contact us today and we will add you to our extension list with the ATO!

Major Tax Changes Seminar 28th March

Working from home? Trust Distributions? Superannuation? Major Tax Changes Seminar 28th March   Tuesday 6pm the 28th of March at Kingston Art Centre (opposite our CIA tax office) we’ll be hosting a seminar that is tax critical for nearly all of us. The tax world as we know it is rapidly changing and we feel it’s only the first shots across the bow in a new higher taxing environment (to manage deficits and to enact election promises). Bookings are essential – simply reply to this email your attendances.  If you can’t make our session, it will be recorded and we can provide you with a link the next day, again just reply to this email to be on this list.    Working from home The way you have been claiming home office (working from home expenses) has now significantly changed and we’ll be going through the new methods – for a sneak peek at the changes: https://www.ato.gov.au/Media-centre/Media-releases/ATO-announces-changes-to-working-from-home-deductions/   Superannuation changes Whilst it doesn’t effect many at the moment by not linking change to inflation it means over the years a whole lot more of middle Australia will be effected and making changes today become more critical. Clearly super is becoming more and more of a target – here’s a glimpse of the first nibble:  https://www.ifa.com.au/news/32466-government-confirms-super-balances-over-3m-to-be-taxed-at-30   Family Trust Distributions In short under the new rules you need to actually pay the distribution to the allocated beneficiary which can throw long standing traditional family arrangements into disarray https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/Section-100A-guidance-finalised/   CIA tax and Ticker Tv clips    Managing your tax liabilities successfully Dr Steven Enticott (CIA tax) & Mike Loder (Ticker News) Money Matters Ticker News – 7th March 2023: https://www.youtube.com/watch?v=tNaDeZ3wD8M   Rich, Middle Class & Poor Mindsets How to think rich Dr Steven Enticott (CIA tax) & Mike Loder (Ticker News) Money Matters Ticker News – 21 February 2023: https://www.youtube.com/watch?v=LrYbMwpQFyc               Labour Day Weekend CIA tax will be closed Monday the 13th- for the public holiday long weekend. Hope you too can get a mini break!

Well, 2022 has been a huge year (and for many a year that began at the end of the October 2021 Victorian lockdowns) without much of a pause so it will be great to have a proper Christmas break to refresh if you can!

CIA is closed from Thursday 1pm on the 22nd of December until 9am Wednesday the 11th of January (this email will be monitored for urgent matters in-between this period) we wish you all a wonderful and restful break.

Here’s some positive clips to help fire you into 2023…

2023 Wealth:

Name your goal, track your progress, beat it, invest it and if you need an accountability partner just shoot Dr Steve an email. 

Video: https://youtu.be/R40Uhc06qx0

Podcast: https://soundcloud.com/user-207440115/2023-wealth-name-it-track-it-smash-it

Profiting Through Recession:

Inflation will likely end in a recession and it’s what you do now that sets up the opportunities for when we do. 

Video: https://youtu.be/pwzjtGNaoXk

Podcast: https://soundcloud.com/user-207440115/3-steps-to-profiting-through-a-recession

Side Hustle Next Steps:

So, you have a successful side hustle – where to from here?

Video: https://youtu.be/jf5ZY4hPIg4

Podcast: https://soundcloud.com/user-207440115/successful-side-hustle-your-next-steps

What is Possible:

Let’s go easy on the word accountability and instead look to what is possible…

Video: https://youtu.be/pF1WbkPj-YM

Podcast: https://soundcloud.com/user-207440115/whats-possible

Safe Havens for Endangered Species

It’s been a wet year! 

CIA tax’s social enterprise: https://carbonlandscapes.com.au/

Contact us if you would like to get involved.

It’s a bit like 1996 on repeat with Howard and Costello’s first budget after replacing a long-standing government, just get into office first and don’t rock the boat significantly.

Two years later (1998) they went to the polls on tax structural reform (GST) and I expect Jim Chalmers is thinking the same way as clearly the unaddressed cost of living pressures and major deficits just won’t magically disappear… unless… like Howard/Costello we Aussies luck out with another sustained mining boom….

No doubt, more interesting years ahead.

The Budget

Well, it’s getting a bit ridiculous with 4 federal budgets in 2 years even us accountants are struggling to get budget night excited!

Here are some highlights:

Super downsizer contributions eligibility age reduction to 55 confirmed

The proposed reduction in the eligibility age will allow individuals aged 55 or over to make an additional non-concessional contribution of up to $300,000 from the proceeds of selling their main residence outside of the existing contribution caps. Either the individual or their spouse must have owned the home for 10 years.

As under the current rules, the maximum downsizer contribution is $300,000 per contributor (i.e. $600,000 for a couple), although the entire contribution must come from the capital proceeds of the sale price. A downsizer contribution must also be made within 90 days after the home changes ownership (generally the date of settlement).

Paid parental leave and childcare

The government is investing over $530 million over 4 years from 2022–23 to expand Australia’s paid parental leave scheme to 26 weeks by 2026. This will happen under a staggered plan which will see the addition of two extra weeks to the program every year starting in July 2024.

The six months paid parental leave is also set to become more flexible, meaning parents will be able to share it more equitably between each other.

Tax

As expected, Labour has not made any changes to the stage three 2024 tax cuts in this budget (Yet!)

Instead, as promised, it has cracked down harder on tax abuse by multinationals and the rich as it looks to raise over $4 billion in extra revenue. 

Where to get the full Budget

The 2022-23 October Budget Papers are available from the following website: https://budget.gov.au/

How to beat current economic conditions

You don’t know how good the good times are unless you have some tougher times (Inflation / Interest rate rises) with our Dr Steven Enticott & Mike Loder (Ticker News)

The three B’s of Buffer, Budget & Build: https://www.youtube.com/watch?v=uNCjvzSeWZ0

How to be a sustainable business

It’s easier than you think with our Dr Steven Enticott & Mike Loder (Ticker News) To measure, reduce, offset and adopt a climate positive project: https://youtu.be/yL07CbAjC6M

For any clients who are affected by the VIC floods.

https://business.vic.gov.au/grants-and-programs/small-business-immediate-flood-relief-program

To be eligible for a grant, businesses must:

• be located within a local government area deemed eligible for assistance under the Disaster Recovery Funding Arrangement
• hold an active Australian business number (ABN) and have held that ABN on and from 14 October 2022
• be registered for Goods and Services Tax (GST) on and from 14 October 2022
• have incurred significant direct damage from flooding to the place of business, business assets, stock or equipment.

List of eligible LGAs:

https://business.vic.gov.au/grants-and-programs/small-business-immediate-flood-relief-program/eligible-lgas

(There are quite a few here, not just the obvious ones like Shepparton etc)

FBT tax free electric cars

The Government has announced a proposal to:

• remove fringe benefits tax (FBT) on eligible electric cars from 1 July 2022, and
• include the value of these exempt car fringe benefits in the calculation of an employee’s reportable fringe benefits amount.

This measure is not yet law. If enacted, this will apply from the FBT year beginning 1 April 2022.The Government intends to review this exemption after 3 years, to consider electric car take-up.

ttps://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6876

20% training tax deduction boost

Subject to law, small businesses with an aggregated annual turnover of less than $50 million will be able to deduct an additional 20% of expenditure incurred on eligible training courses provided to employees.

Small Business Technology Investment Boost

Subject to law, small businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20 per cent of the cost incurred on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud based services.

Businesses may continue to deduct expenditure that is ineligible for the bonus deduction under the existing tax law. We will provide further details on eligible expenses once the law has passed.

https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Small-Business-Technology-Investment-Boost-and-Small-Business-Skills-and-Training-Boost/#:~:text=business’s%20balancing%20date.-,Small%20Business%20Skills%20and%20Training%20Boost,training%20courses%20provided%20to%20employees.

Director ID cut off dates

With the 30 November 2022 deadline approaching, SMSFs and other company directors are being reminded to obtain their director identification number by this date. Also includes those directors who on or before 31 October 2021 but have since resigned.

The director ID laws that were passed back in June 2022 require all directors of companies in Australia to obtain an ID number including SMSF members who are directors of a corporate trustee also include those who were a company director on or before 31 October 2021, but have since resigned.

Tax return deadline

For those who did not use a tax agent last year and those who did but were significantly late in doing so the tax return deadline is effectively this Friday as the office is closed for the 4-day cup weekend.

If this is you, contact us today and we will add you to our extension list with the ATO!

Cup Weekend CIA tax (as is our tradition) will be closed for the 4 day cup weekend and re-open Wednesday 2^nd of November after the tax frenzy (from July onwards!) our brains really need a mini-break