Budget: all the key points you need to know
A rundown of the main measures that will impact accountants and small business.
The Labor government’s first budget in almost a decade has revealed the tough reality of the rising cost of living along with stagnant wage growth.
Economic parameters
The Treasurer forecast an increase in gross domestic product of 3.25 per cent this current financial year, which will more than halve to 1.5 per cent in 2023-24.
The budget deficit for this financial year has been reduced from $78 billion down to $36.9 billion thanks to higher-than-expected commodity prices.
However, a deficit of 1.9 per cent of GDP by 2032-33 is forecast, up from the 0.7 per cent GDP expected earlier this year.
Partly responsible for the revisions are raised interest payments on debt, which will be $76 billion above forward estimates and $70 billion a year by 2032-33. Another factor is the additional cost of the NDIS, which amounts to $166 billion over the next four years and reaches $50 billion a year by 2025-26.
Dr Chalmers said that the budget was stuck with an inherited deficit and that in the short-term it would be limiting growth in spending particularly while inflation was high.
“This unwinds wasteful or unnecessary spending, redirects it towards higher-quality investments and priorities, and improves the integrity and fairness of our tax system,” he said.
Inflation is expected to peak at 7.75 per cent later this year, then average 3.5 per cent the following financial year before reducing to 2.5 per cent in 2024-25.
Funding for the ATO and ASIC
Both the ATO and ASIC received additional funding in the budget with $166.2 million to continue the rollout of the Modernising Business Registers Program and the operation and regulation of the director ID regime.
The budget also provided additional funding for the ATO’s Tax Avoidance Taskforce by around $200 million per year over four years to increase the focus on multinational enterprises and large public and private businesses.
The government said it estimated this investment would increase receipts by $2.8 billion and increase payments by $1.1 billion over the next four years.
Dr Chalmers said that this helped ensure the tax system was more sustainable “by making sure multinationals pay a fairer share of tax in Australia, by extending successful tax compliance programs, and by giving the ATO the resources they need to crack down on tax dodging.”
Cost of energy
The budget forecasts power prices to rise 56 per cent over the next two years while gas prices are expected to increase 44 per cent in the same period.
Labor’s pre-election promise of a reduction of $275 to power prices failed to be included with Dr Chalmers saying that relief now would add to inflation.
However, the government did establish a $20 billion fund for energy transmission of which $800 million would go to cutting taxes on electric cars, building an electric vehicle charging network and hydrogen refuelling stations on highways, along with solar battery storage for up to 100,000 homes.
Affordable housing
The government announced a national housing accord with states and territories to free up land to build 1 million homes over five years with the help of the $3.3 trillion superannuation industry.
An additional $350 million was announced to deliver 10,000 affordable homes over five years from 2024.
“This will be delivered through an ongoing funding stream to help cover the gap between market rents and subsidised rents - making more projects commercially viable,” said Dr Chalmers.
“State and territory governments will build on our commitment with up to 10,000 new homes as well.”
Young families
The budget provides $531.6 million over four years in extra funding to expand paid parental leave to 26 weeks by 2026, as well as delivering $4.7 billion over four years to provide cheaper childcare for 1.26 million families.
“For two-parent families, a portion of this leave will be reserved for each parent - to encourage families to share caring responsibilities,” said Dr Chalmers.
“This is about greater equality and greater security for Australian women - and more dads doing their bit.”
Dr Chalmers said that cheaper child care would increase the number of paid hours worked by women with young children by 1.4 million hours a week in the first year alone, the equivalent of 37,000 extra full-time workers.
Disaster relief
The government provisioned $3 billion as a response to the recent floods and declared it would fund Disaster Relief Australia to assist in deploying an additional 5,00 extra volunteers when future disasters struck.
The budget revealed $200 million a year in investment in disaster prevention and resilience through the Disaster Ready Fund.
Higher education
The budget makes a $1 billion investment in fee-free TAFE alongside the states and territories to provide 180,000 places, the government’s first step in its goal for almost half a million fee-free TAFE courses for Australians. An additional $50 million would also go to a TAFE technology fund to modernise the institutions as well.
A $485 million investment was also revealed to create 20,000 new university places over the next two years for students from disadvantaged backgrounds.
Josh Needs
25 October 2022
accountantsdaily.com.au
Hot Issues
- 2024 Year End Tax Planning Guide (Part 1)
- Medicare levy surcharge OR basic health insurance ?
- ATO warns of ‘serious penalties’ for unlawful tax scheme promoters
- ACCC scam report
- Employees taking more sick days - and it's getting worse
- Foreign residents selling property in Australia
- How much does negative gearing really cost – an overview and an opinion?
- The Shortest-reigning Monarchs in History
- FBT Reminder – Odometer Reading
- ATO’s debts on hold campaign prompts new IGTO guidance
- A comprehensive collection of small business benchmarks
- The 2025 Financial Year tax & super changes you need to know!
- Underperforming employees: When can you terminate?
- A comprehensive list of guides to industry specific tax deductions.
- ‘Renewed concerns’ about economy sees consumer sentiment dip: Westpac
- Oldest Buildings in the World.
- Small businesses may ‘collapse under strain of payday super’, IPA warns
- ATO’s hands tied with scrapping on-hold debts, expert says
- What Drives Your Business Growth and Profits?
- Australian Taxation Office (ATO) shifting to firmer debt collection activity
- Why employee v contractor comes down to fine print
- Sharing economy reporting regime for platform operators
- Countries producing the most solar power by gigawatt hours
- Illegal access nets $637 million
- Accessing superannuation benefits.
- Does your business have a company Power of Attorney?
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- GrantConnect
- 2 in 3 SMEs benefit from instant asset write-off, survey reveals
- Updated guidance on R&D claims
- Do you know how to recover debts?
- Vimeo test
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
October - December 2022 archive
- A 2022 Advent Calendar for our clients
- Difference Between Leasing vs Hire Purchase
- How Have Australians Reacted to Interest Rate Hikes?
- FBT – Christmas Parties and Taxi Fare/Rideshare
- Employee Christmas Parties and Gifts – Any FBT?
- Big-end-of-town tax: miners, banks pay up, but for one-third it’s zip
- Cash flow forecasting template
- Buyback law closes loophole ‘but franking credits here to stay’
- Budget October 2022-23-Comprehensive summary
- Federal budget 2022 -- Winners and Loser
- Federal Budget 2022/23 - Documents and Facts Sheets
- Budget: all the key points you need to know
- Sole traders cut back super, work longer hours
- Small business debt and tax gap at top of ATO hit list
- Christmas ‘crunch time for economy, inflation outlook’
- What business needs to know about the skills and technology boosts
- SMSF scam investigation sees call centre raided
- How to avoid personal liability when dealing with DPNs
- The Countries that Consume the Most Beer in the World
- ATO’s interest charges hit highest level in seven years
- Australian Taxation Office warns against asset wash sales
- Take action on valuations now to avoid delays, says ATO
- Australian Taxation Office-(ATO) reminder to small businesses this tax time
What our clients say about us