Well if you did not know there was an election coming, you certainly do now after the budget.

The main changes that will affect individuals and businesses are set out below:

INDIVIDUALS

Low and Middle Income Tax Offset

The low and middle income tax offset will be increased by an amount of $420 for individuals with earnings up to $126,000 per annum, and payable in respect of the 2021-22 income year.  The Government has not announced an extension of the low and middle income offset beyond the 2021-22 income year.  The maximum offset payable to an individual is $1,500 where their earnings are between $48,001 and $90,000 which then phases out up to an amount of $126,000

  • The low-income tax offset remains unchanged and will continue to apply for the 2021-22 and 2022-23 income years. The maximum amount of the low-income tax offset is $700 on an income of $37,500.  The offset is phased out for individuals who earn greater than $66,667. 
  • Individuals offered an employee share scheme may invest up to $30,000 in unlisted companies per year (accruable for unexercised options for up to 5 years) plus 70% of dividends and cash bonuses. Participants will also be able to invest any amount if it would allow them to immediately take advantage of a planned sale or listing of the company. 
  • Costs incurred by individuals for undertaking Covid 19 tests to attend a place of work will be deductible from 1 July 2021.  As such, no fringe benefits tax should be incurred by employers for providing the benefit of the test to employees.
  • $250 cost of living payment – the Government will make a $250 one-off cost of living payment in April 2022 to eligible pensioners, welfare recipients, veterans and concession card holders.

BUSINESS

  • Small business 20% deduction boost: skills training and digital adoption – businesses with turnover less than $50m will receive a 20% uplift on deductions for eligible expenditure on external training courses and digital technology. The 20% boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption).
  • For small businesses (up to $50 million turnover), there is a proposed uplift of 20% on the expenditure incurred on external training courses. Further, the same uplift will be an allowable deduction for the cost incurred on business expenses and depreciating assets that support digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services.  The deduction is allowable for expenditure incurred from 7.30 29 March 2022 to 30 June 2023. An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. 
  • PAYG/GST Instalments.  The budget confirms that for small and medium business the GDP uplift factors will be limited to 2% in respect of instalments that relate to the 2022-23 income year. The measure applies to those businesses with up to $10 million annual aggregated turnover for GST instalments and $50 million annual aggregated turnover for PAYG instalments

SUPERANNUATION

  • The 50% reduction of the minimum superannuation pension drawdown requirements will be extended for the 2022-23 income year. Given the ongoing volatility in financial markets, this measure will allow retirees to avoid selling assets in order to satisfy the minimum drawdown requirements.
  • Super Guarantee rate will continue to rise to 10.5% for 2022-23. Note that the Budget did not contain any change to the legislated Super Guarantee rate rise from 10% to 10.5% for 2022-23.