1.1. Increase to low and middle income tax offset (“LMITO”):
The low and middle income tax offset (LMITO) currently provides a reduction in tax of up to $1,080 for individuals with a taxable income of up to $126,000.
The tax offset is triggered when a taxpayer lodges their 2021-22 tax return.
For the 2021-22, the LMITO will be increased by $420 which means that the proposed new rates for individuals are as follow, as follows:
1.2 Increasing the Medicare Levy low-income thresholds:
The Government will increase the Medicare levy low-income thresholds for seniors and pensioners, families and singles from 1 July 2021 as follows:
For each dependent child or student, the family income thresholds will increase by a further $3,619 instead of the previous
amount of $3,597.
1.3. $250 Cost of living expenses:
A one-off $250 “cost of living payment” will be provided to eligible recipients. The payment will be made in April 2022 to eligible recipients.
2.1. Temporary fuel excise reduction:
To ease the pressure felt by drivers at petrol bowsers, the Government will reduce the fuel excise by half – or 22.1 cents per litre for 6 months.
2.2. Instant asset write-off:
Maintained until 30 June 2023.
2.3. Technology Investment boost:
The Government intends to provide a 120% tax deduction for expenditure incurred by small businesses 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.
The technology boost will be available to small business with an aggregated annual turnover of less than $50 million.
An annual expenditure cap of $100,000 will apply to the boost.
2.4. Modernising the PAYG instalment system:
Normally GST and PAYG instalment amounts are adjusted using a GDP adjustment or uplift. For the 2022-23 income year, the Government is setting this uplift factor at 2% instead of the 10% that would have applied.
The 2% uplift rate will apply to small to medium enterprises eligible to use the relevant instalment methods for instalments for the 2022-23 income year and are due after the amending legislation comes into effect:
2.5. Small business productivity and security:
To boost investment in skills and new technology the Government has announced:
3.1. Extending the reduction in minimum drawdowns:
The Government will extend the 50% reduction of superannuation minimum drawdown requirements for account-based pensions (“ABPs”) and similar
products for a further year to 30 June 2023 (ie for the 2023 income year).
Based on this change, the (effective) reduced minimum percentage factors for ABPs (including TRISs), which are used to calculate the minimum annual pension amount under Schedule 7 to the SIS Regulations, are set out in the following table for the 2023 income year.
Note that, for ABPs and TRISs that commence or cease part-way through the 2023 income year, a pro-rated minimum pension payment applies (unless the pension commenced on or after 1 June 2023, in which case, no minimum pension payment is required).
Important: This is not advice. Clients should not act solely on the basis of the material contained in this Newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. The Newsletter is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.
If you would like to discuss any points raised in the above Newsletter or other elements relating to the 2022-2023 Federal Budget not mentioned, please feel free to contact your Accountant at PinnacleHPC Pty Ltd.
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