On 25 October 2022, Treasurer Jim Chalmers handed down his first Budget. While there have been four Budgets in the past 2 years, with the most recent one handed down by the previous government in March 2022, this Budget updates economic forecasts and outlines the new Labor Government’s priorities following their election win.
Against a sobering backdrop of economic data, including estimates of an underlying cash deficit of $36.9bn for 2022-23 increasing to $44bn in 2023-24, the Treasurer has sought to exercise what he has termed “fiscal restraint” to lower the pressure on prices. The economy is expected to grow by 3.25% for the 2022-23 financial year. However, it will slow to 1.5% for the 2023-24 financial year, which is lower than the March 2022 forecast.
Learn about Jim Chalmers’ budget in greater detail with this article from Alexander Bright – experienced business accountants in Melbourne.
In total, eight measures announced by the previous government will be abandoned, while the start date of 3 further measures will be deferred. While some of the abandoned measures relate to more complex areas such as TOFA and debt/equity rules that concern multinationals, other measures will affect the areas of superannuation, personal taxation and SMEs.
Measures relating to super that are no longer proceeding include the proposal to change the annual audit requirements for certain SMSFs. The original proposal would have changed the annual audit requirement for SMSFs with a history of good record-keeping and compliance to allow a 3-year cycle. This means the SMSFs will have to continue to meet annual audit requirements.
The government has also announced the delay of the start date of the residency requirement for certain SMSFs. The proposal to relax the SMSF residency rules by extending the central management and control test safe harbour from 2 to 5 years and removing the active member test for both SMSFs and small APRA funds was originally slated to start from 1 July 2022 but will now commence on or after the date of assent of the enabling legislation, which has yet to be introduced.
Measures relating to businesses and personal tax that have been abandoned include the cash payments proposal. The previous government had proposed a limit of $10,000 for cash payments made to businesses for goods and services ostensibly to reduce the effects of the black economy. The proposal was not well received and will now no longer proceed. The Treasurer also announced the deferral of the following tax compliance proposals previously announced:
In addition, the proposal to allow business taxpayers to self-assess the effective life of intangible depreciating assets for assets acquired from 1 July 2023 will also no longer proceed. This means that the effective lives of intangible depreciating assets will continue to be set by statute.
Lastly, the previously announced measure to stop the payment of the pension supplement after 6 weeks of temporary absence overseas and immediately for permanent departures will no longer be proceeding. This means that instead of stopping altogether, pensioners who travel more than 6 weeks or permanently depart the country will receive the basic amount of the pension supplement.
In addition to the headline measures of childcare and paid parental leave, there were many other measures announced in the Budget that may affect you, your business or your retirement. Contact our accountants and bookkeepers in Melbourne to learn more and find out how we can help you with our bookkeeping services.
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