This budget claims it is “easing the cost-of-living and investing in small businesses”

It is correctly described as a short term, election budget.

It does not appear to provide any initiatives to improve the future direction of the country or address the major issues we face.

  • It’s hard to fathom we are not incentivising renewables and alternative fuels or electric vehicles.
  • The widening wealth imbalance will create future problems.

Regardless here is a budget summary in the various categories:

Tax changes

There will be a one-off tax offset of $420 for low and middle-income earners (LMITO) to help ease the cost of living.

  • Clients with taxable income between $25,436 and $126,000 will receive the full $420 increase.

This will be combined with the current LMITO offset for the 2021-22 financial year so that LMITO receive a tax offset of up to $1,500 for the 2021-22 income year.

This is a non-refundable tax offset, the amount you actually get depends on your taxable income, it does not reduce the Medicare levy.

It will increase the effective tax free threshold for tax planning purposes for 2021-22 from the current $23,226 to $25,436.

The maximum amount is paid to those between $48K -$90K.

Effective 1 July 2021: The government will increase the Medicare Levy low-income thresholds for singles, families, and seniors and pensioners from the 2021-2022 income year

Expected to be 1 July 2021: Coronavirus tests (including PCR and Rapid Antigen Tests) are tax deductible when purchased for work-related purposes, this ensures that businesses will not be subject to fringe benefits tax (FBT) on tests that are provided to employees for this purpose.

Certain state and territory Coronavirus business support programs to be made non-assessable non-exempt (NANE) for income tax purposes from 30 June 2021 until 30 June 2022


Business Initiatives

Modernisation of PAYG instalment systems Proposed to commence 1 January 2024 Companies will be able to choose to have their Pay As You Go (PAYG) instalments calculated based on current financial performance, extracted from business accounting software, with some tax adjustments. The aim is to support business cash flow by ensuring instalments reflect current performance.

Small business skills and training boost Effective 29 March 2022 (Budget night)

  • A skills and training boost incentive to support small businesses to train and upskill their employees.
  • Applies to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2024.
  • Applies to small businesses (with aggregated annual turnover of less than $50 million).
  • They will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees in Australia or online, and delivered by entities registered in Australia.
  • Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees.
  • The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year.
  • The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2024 will be included in the income year in which the expenditure is incurred.

Small business technology investment boost From 7:30pm on 29 March 2022 until 30 June 2023

  • A technology investment boost to support digital adoption by small businesses.
  • Applies to eligible expenditure incurred from 7:30pm (AEDT) on 29 March 2022 (Budget night) until 30 June 2023.
  • Applies to small businesses (with aggregated annual turnover of less than $50 million).
  • They will be able to deduct an additional 20% of eligible expenditure 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.
  • An annual cap will apply with expenditure up to $100,000 eligible for the boost.

Expanding access and further reducing red tape for employee share schemes Effective date not announced


The 50% reduction to the minimum drawdown rate for pension accounts has been extended another 12 months to 30 June 2023.

This will give retirees more flexibility with their pension payments amid ongoing volatility in financial markets.

From 1 July 2022 the following are now law:

  • Removal of work tests for personal and voluntary employer contributions for members aged 67-75
  • Requirement for members aged 67-75 to satisfy a work test (or work test exemption) to claim a deduction for a personal contribution
  • Reducing the eligibility age for downsizer contributions from 65 to 60
  • Removing the $450 per month superannuation guarantee eligibility threshold
  • Maximum amount of voluntary contributions that can be released under the First Home Super Saver Scheme increased from $30,000 to $50,000

Social security

A one-off Cost-of-Living Payment of $250 in April 2022

$250 to eligible recipients of income support payments and eligible concession card holders.

The payments are exempt from taxation and won’t 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 two or more of the categories.

The payment will only be available to Australian residents

Self-funded retirees who hold a Commonwealth Seniors Health Card (CSHC) will be eligible to receive the Cost-of Living Payment.

The annual income limit for the Commonwealth Seniors Health Card is currently $92,416 combined for a couple and $57,761 for singles.

Enhanced Paid Parental Leave Effective no later than 1 March 2023

The Paid Parental Leave (PPL) scheme is to be enhanced by integrating Parental Leave Pay and Dad and Partner Pay into a single scheme of up to 20 weeks leave, which can be shared between eligible parents.

Provides more flexibility for families to decide how to best manage work and care.

Can be taken any time within two years of the birth or adoption of their child.

The income test will also be broadened to include a household income eligibility test to include a household income threshold of $350,000 a year.

The existing PPL scheme comprised two payments:

  1. Parental Leave Pay – paid up to 18 weeks at a rate based on the national minimum wage. This payment is currently available to the primary carer who is either the natural mother, the initial primary carer of an adopted child, or another carer under exceptional circumstances.
  2. Dad and Partner Pay – paid up to two weeks at a rate based on the national minimum wage to fathers and partners.

Currently, mothers who have adjusted taxable income up to $151,350 can access PPL even if their partner earns a high income. However, a mother who earns more than $151,350 has no entitlement to PPL even if their partner has no or low income.

Extension of suspension period for partner employment income – pensions and Pensioner Concession Card Effective 1 July 2021

20 free Rapid Antigen Tests (RATs) for concession card holders Effective until 31 July 2022

Aged care 2 initiatives also provided

Safety net threshold lowered for the Pharmaceutical Benefits Scheme Effective 1 July 2022

The Pharmaceutical Benefits Scheme (PBS) safety net threshold will be lowered, which will allow patients to reach the safety net sooner.

Concessional patients will require approximately 12 fewer scripts and general patients will require approximately two fewer scripts.

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.


Expansion of Home Guarantee Scheme Effective 1 July 2022

The Home Guarantee Scheme is being expanded to help more first home buyers purchase their first home.

Under the schemes, the government guarantees part of a home loan. This allows the purchase of a home with a smaller deposit without needing to pay Lender’s Mortgage Insurance.

Under the expanded Home Guarantee Scheme, the government will make available:

  • 35,000 guarantees each year (up from the current 10,000) from 1 July 2022 under the First Home Guarantee. This supports eligible first homebuyers to purchase a new or existing home with a deposit as low as 5%.
  • 10,000 guarantees each year from 1 October 2022 to 30 June 2025 under a new Regional Home Guarantee. This supports eligible homebuyers, including non-first home buyers and permanent residents, to purchase or construct a new home in regional areas.
  • 5,000 guarantees each year from 1 July 2022 to 30 June 2025 to expand the Family Home Guarantee announced in last year’s Budget. This scheme assists eligible single parents with children to either buy their first home or re-enter the housing market with a deposit as little as 2%.

Temporary reduction in fuel excise From 12.01am on 30 March to 11.59pm on 28 September 2022

Reduction in the fuel excise (and excise-equivalent customs duty rate) that applies to petrol and diesel by 50% for six months.

Includes fuel and petroleum-based products (including LPG and Biodiesel).

Estimated total savings (including GST savings) per tank of fuel of:

  • $9.72 for a small hatchback with a 40 litre petrol tank
  • $14.59 for a mid-sized SUV with a 60 litre petrol tank
  • $19.25 for a large 4WD with an 80 litre petrol tank.

It will take several weeks for the full reduction to flow through as it applies to new stock.

Adrian and the VJC team


General Advice warning: the information in this article is general in nature, it is not advice specific to your needs. If you want to act upon the information in this article, then you should seek advice from a qualified professional. VJC accepts no liability to any party for acting from this information unless they have sought advice in a formal engagement with VJC for this purpose.