ATO March 2024 Updates: Secure Access & Tax Tips

ATO March 2024 Updates: Secure Access & Tax Tips

Explore the ATO's Q1 2024 updates on secure online access and tax tips for maximising deductions and enhancing cybersecurity.

New controls for ATO Online

Following the use of stolen personal data to access ATO Online accounts, the federal government has tightened the access rules to online tax accounts as part of an increased focus on the vulnerability of small and medium businesses to cyber incidents.

ATO interest non-deductible

From 1 July 2025, taxpayers will no longer be able to claim tax deductions for ATO interest charges.i

Although not yet law, the government made the announcement in its 2023-24 Mid-Year Economic and Fiscal Outlook.

Since deductions for general interest charges (GIC) and shortfall interest charges (SIC) will not be permitted after July 2025, any GIC or SIC later remitted by the ATO need not be included in assessable income.

New fraud controls

Tighter controls for taxpayers’ ATO online accounts will make it more difficult for criminals to commit identity fraud using stolen personal information such as bank and ATO statements and tax file numbers.

The changes mean taxpayers who use their myGovID to log into the ATO will need to use myGovID for all future logins, leaving criminals unable to access the account without it.

The government is urging Australians to upgrade to myGovID when interacting with government agencies online and has released its new Cyber Security Strategy to support small and medium businesses vulnerable to cyber incidents.

Holiday home claims

The ATO is continuing its crackdown on tax deductions for holiday homes by encouraging tax professionals to check how clients are using their property and if they are correctly apportioning deductions in line with the time period the property is producing income.ii

Some holiday homeowners are not reducing deduction claims if they are reserving their property during peak periods or are placing unreasonable conditions restricting the likelihood the property will be rented.

We have been requested to check the number of days the property is blocked out for the owners, how and where the property is being advertised, whether family or friends used the property, and if any parts of the property are off-limits to tenants.

Checking R&D claims

Working in conjunction with the Department of Industry, Science and Resources, the ATO will be undertaking random reviews of companies taking advantage of the government’s R&D tax incentive.

The reviews will be assessing the eligibility of company’s R&D tax incentive activities and expenditure, with companies selected for review being contacted directly.

If common errors are identified during the review process, the ATO will share them with all program participants.

Tough times may mean a payment plan

With some small businesses facing difficult trading conditions, the ATO is reminding taxpayers in financial distress they may be eligible to set up a payment plan if they are unable to pay their tax bill in full and on time.

Eligible taxpayers who have a tax bill of up to $200,000, may be able to set up their own payment plan using the ATO online or self-help phone services.

Payment plan eligibility requires the business to be viable and able to make an up front payment with completion within the shortest possible timeframe to minimise accruing GIC (currently 11.15 per cent).

Medicare safety net thresholds increase

Thresholds for the Medicare safety nets rose from 1 January 2024, resulting in an increase taxpayers need to spend on out-of-hospital medical expenses before qualifying for a higher rebate.

The increase is in line with indexation based on inflation and rose to $560.40 on the original Medicare safety net for concessional and non-concessional individuals and families.

The extended Medicare safety net increased to $811.80 for concessional individuals and families and $2,544.30 for non-concessional.

Translated cybersecurity guides available

The government’s Australian Cyber Security Centre has released five popular cyber security guides in more than 20 languages to help business owners from non-English speaking backgrounds to improve their cyber security knowledge.

The five free guides include a small business cyber security guide, personal and top tips for cyber security, easy steps to securing devices and accounts, and a seniors guide to securely using the internet.

i https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/deny-deductions-for-ato-interest-charges
ii https://www.legacy.ato.gov.au/Tax-professionals/Newsroom/Income-tax/Do-your-clients-have-a-holiday-home-/

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Insuring Your Way to Financial Security in Australia

Insuring Your Way to Financial Security in Australia

Learn about the significance of insurance in risk management and financial planning within the Australian context. It's an essential part of investment strategy to reduce the potential for losses.

Risk is not just associated with investing though - life can throw a curve ball or two and insurance is one way to manage risk in a broader context.

It’s a matter of weighing up your risks and thinking about what you would do if the worst happened. Could you afford to build a new house, buy a new car or support your family if you became too ill to work?

Various insurance products or self-insurance can help to mitigate these types of risks.

Underinsurance

While many Australians have some form of life insurance through their superannuation, the level of cover is rarely sufficient. The standard offering within the super framework is well below what your family need to live comfortably should you die or lose your ability to earn an income.

A Financial Services Council report, estimates that as many as one million Australians are underinsured for death and total permanent disability (TPD) and 3.4 million for income protection.i

Rice Warner estimates that insurance cover for a 30-year-old with dependents should equal eight times the annual family income for life insurance, four times the family income for TPD and 85 per cent of the family income for income protection. The default superannuation offering falls well short of this figure.ii

Home and contents

But it’s not just life insurance. There is also a fair amount of underinsurance in home and contents.

With the growing incidence of bushfires, floods and storms, protecting your home and possessions with insurance is more important than ever.

The biggest mistake is insufficient cover to rebuild your property particularly with the recent surge in building costs. You should also consider the costs associated with demolition and removal of debris, the cost of architects and builders and the need to find alternative accommodation while your home is being rebuilt.

It is important not to head for the cheapest policy as this may well fail to meet your needs. Read the product disclosure statement to make sure the cover delivers exactly what you need.

Health and travel

Health insurance and travel insurance are also important considerations.

You will pay a Medicare Levy surcharge if you do not take out private health insurance and have a taxable income above $93,000 for singles or $186,000 for a family, couple or a single parent (increased by $1,500 for each dependent child after the first child). This starts at 1 per cent of your taxable income and goes up to 2.5 per cent. So, it is worthwhile weighing up whether taking out private health insurance is the better option.iii

When it comes to travel insurance, if you can’t afford it, you can’t afford to travel overseas, according to the Federal Governments Smart Traveller website.iv The cost of medical care in other countries can be exorbitant and you may need to be transported back to Australia. The expenses can be enormous.

Of course, travel insurance can also help to compensate for cancelled or delayed trips and lost luggage.

Self-insurance alternative

An alternative to taking out an insurance policy is to self-insure. That means putting money aside regularly to build up a big enough fund to help keep a roof over your head or replace a vehicle.v

The upside is that these funds are yours and, properly invested, can grow over time. The downside is that you may not have enough money together when a disaster happens.

Insurance can be the difference between successfully recovering from an event and changing your life forever. If you would like to discuss your insurance needs, call us.

i https://fsc.org.au/resources/2537-fsc-australias-life-underinsurance-gap-research-report-2022/file page 18
ii https://www.ricewarner.com/life-insurance-adequacy/
iii https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates
iv https://www.smartraveller.gov.au/before-you-go/the-basics/insurance
v https://www.investopedia.com/terms/s/selfinsurance.asp

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Effective Anti-Ageing Lifestyle Choices for a Healthier Future

Effective Anti-Ageing Lifestyle Choices for a Healthier Future

Learn about natural anti-ageing through effective lifestyle choices. Discover how to live healthier for longer with these evidence based anti-ageing hacks.

You can’t stop the clock, so the saying goes, but humanity has spent a long time trying to slow down or even reverse the effects of aging.
Even today it can be hard to distinguish those measures that work from those that may not work and avoid those that may be downright dangerous! Fortunately, science- based public health research has some of the answers, so for some medically backed ways to stay healthy as you age- read on.

But first let’s look at mankind’s long history of trying to stop the clock, or at least slow it down a little. Anti-aging practices included the Egyptian queen Cleopatra bathing in donkey’s milk, 16th century French courtesans drinking suspended particles of gold, and the Spanish explorer Juan Ponce de Leon’s infamous quest for the legendary fountain of youth. Unfortunately, many of these measures weren’t successful and may have actually shortened rather than lengthened the live spans of those trying them.

Today the quest continues…

The quest for the fountain of youth has not ceased - it’s just taken other forms in today’s society. The anti-ageing market is ever expanding and expected to be more than $119.6 billion globally.i

American tech centimillionaire Bryan Johnson is a significant contributor to that figure, reportedly spending $2 million a year on a complex regime designed to reduce his biological age from 45 to 18, which includes injecting himself with his 17-year-old son’s plasma.

The truth is, aging is natural. Our bodies aren’t meant to stop aging entirely. But the good news is that there are some tried and true, medically proven ways to stave off many of the problems associated with aging and, in some cases, slow down the aging process. While none of these are groundbreaking discoveries, it’s worth keeping in mind that you don’t have to spend all your money or waking hours to stay healthy as you age.

Tips for living well and living long:

Move it!
That treadmill at the gym may not be a time machine but it can play a part in slowing down the clock. In fact, research showed that those who ran a minimum of 30-40 minutes, five days a week, had an almost nine-year “biological aging advantage” over those who lived a more sedentary lifestyle.”ii Doctors call physical exercise a “polypill” because it can prevent and treat many of the chronic diseases associated with aging and it’s never too late to start getting the benefits from regular exercise. Even a daily walk can do wonders!

Stress less
It’s no secret that being in a constant state of stress is wearying and can make you feel older than your biological age, but recently scientists confirmed that exposure to stress can cause inflammation and damage to DNA in cells, which in turn can accelerate aging.iii The good news is this can be reversed using stress busting techniques such as mindfulness meditation, breathing exercises and progressive muscle relaxation which can lead to improvements in various biological markers associated with aging.

Nourish yourself
While there is plenty of hype around the plethora of “superfoods” that are touted to possess anti-aging qualities there is no one food that will significantly impact the aging process and turn back the clock. However, the food and drink we put in our bodies day after day does make a difference to our health as we age. Research from the worlds “Blue Zones” - areas where people tend to reach the age of 100 - demonstrate the benefits of a relatively plant-focused diet consisting largely of vegetables, fruits, grains, and legumes.iv

Maintain a positive mindset and embrace aging
Finally, it’s also worth considering that as we can’t beat the clock, we might as well accept, if not embrace, the gifts that come with age (wisdom and a longer-term perspective come to mind!).

And moving through life with a positive mindset about the aging process might also give you more days to enjoy. A study recently confirmed that those with a positive view of growing older lived seven years longer than those who complained about it.v

All in all, life is to be lived to the fullest and it’s precious because it’s finite. Do what makes you feel healthy and gives you joy now and that will also help you to enjoy life in the future.

i https://www.globenewswire.com/en/news-release/2022/03/29/2412093/0/en/Anti-aging-Market-Size-to-Worth-Around-US-119-6-Bn-by-2030.html
ii https://news.byu.edu/news/high-levels-exercise-linked-nine-years-less-aging-cellular-level
iii https://www.healthline.com/health-news/stress-can-increase-your-biological-age#How-stress-ages-the-body
iv https://www.everydayhealth.com/diet-nutrition/the-blue-zone-diet-a-complete-scientific-guide/
v https://pubmed.ncbi.nlm.nih.gov/12150226/

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Smart Refinancing Tips for Home & Business Loans in Australia

Smart Refinancing Tips for Home & Business Loans in Australia

Learn how smart refinancing options can help manage your home and business loans better amidst rising living costs.

While inflation peaked at 7.8 per cent last year, cost of living pressures are still being felt by consumers and small businesses alike. In the current environment it’s important to look at your outgoings, whether it’s your personal financial situation, or your businesses’ bottom line, and see if there are any areas you could possibly cut costs and create savings. One way to reduce personal, or business costs is to review your current borrowing arrangements.

A new record has been set for external refinancing, with more than $19.5 billion of loans changing lenders in November, new data has shown.i

Refinancing your home loan

When it comes to our personal finances, mortgage repayments are likely to be one of, if not the biggest expense we incur so it can make sense to review your loan and maybe replace it with one that offers better terms.

While the most obvious reason to refinance is to obtain a more competitive interest rate and reduce the amount you are paying, it’s important to consider other factors like whether you’d prefer fixed or variable, the term of the loan, the fees involved, as well as the features associated with any options you are considering (e.g. the capacity to pay the loan off sooner or offset your interest with your savings).

Before you go to refinance, check out what rates your lender is offering to new customers. Often, you may be able to negotiate a lower interest rate or more favourable loan features with your existing lender.

Refinancing can also make your life easier if you’re juggling a number of debts (e.g. personal loans, car loans and credit cards). Debt consolidation can help you by streamlining debt under your home loan, often at a lower rate of interest.

Benefits of refinancing for small businesses

For businesses it also might be time for a review of your borrowing situation to avoid paying more interest than necessary. This can help free up cash flow within the business, and it may even be possible to access the equity you have built up in your business, enabling you to invest the extra funds into hiring more staff, buying new equipment or other business needs.

You also might be using a loan product that no longer meets the needs of your business. For many small businesses, the funding arrangements they put in place early in the businesses’ development are still in place, even though they might not be the best fit a few years down the track.

If you offered a personal asset as collateral for a loan when you first started your business, the business may now have its own assets that can be offered and if so, refinancing might offer the opportunity to release the security over your personal asset. You may even find that refinancing can allow you to access the equity you have built up in your business over the years to fund expansion.

Business loan refinancing considerations

Costs involved in refinancing a business loan can include exit fees, valuation fee, settlement fee, government fees and more, which may offset the savings you would have earned with refinancing so make sure you weigh up the possible savings against the fees you’ll need to incur.

Be mindful that lenders will look at your credit history and score, and sometimes also your personal credit history as well as that of your business so prioritise your credit management. Applying for refinance will be recorded on your credit file, which can accrue if you make several applications that are not approved so be sure you meet the criteria for approval before putting in applications.

Processes and facilities to support your business cashflow and lending

Of course, in a time of inflationary pressure its more important than ever to have in place processes to manage your businesses’ cashflow effectively.

If you need greater assistance with your businesses’ cashflow there are also debt facilities that can operate in addition to a business loan. These include:

  • Business overdrafts
  • Business credit cards
  • Invoice finance (which allows businesses to borrow money based on their unpaid invoices)
  • Merchant cash advance (where a lump sum is provided upfront in exchange for a percentage of future credit or debit card sales)

Managing your lending can be challenging and there can be tax implications associated with business borrowing, so please get in touch if we can be of assistance.

i https://www.theadviser.com.au/broker/43888-all-time-high-november-housing-refinancing-hits-19-5b-abs

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


A Quick Guide to Navigating FBT Obligations in Australia.

A Quick Guide to Navigating FBT Obligations in Australia

Understand the essentials of FBT compliance for Australian businesses. This guide covers reporting duties, exemptions, and strategies to minimize liabilities.

Businesses looking to attract and retain staff often provide employee benefits, on top of salary, as a way to sweeten the deal.

Many of these benefits (but not all) can have potential tax consequences – known as fringe benefits tax (FBT) - so it is important to weigh up the effect on your business.

FBT is separate to income tax and is calculated on the value of the benefit provided to the employee. Employers must calculate the amount of FBT they owe each year and lodge a return with the ATO.

FBT doesn’t only apply to benefits provided to current employees. Any benefits provided to past or future employees, company directors and beneficiaries of trusts who work in the business are also subject to FBT.

It is worth noting that the FBT year is not the same as the financial year. It runs from 1 April to 31 March.

What to report

Most fringe benefits must be reported to the ATO. Some examples of benefits include: the use of a company car outside of work; free parking; gym membership; payment of school fees; tickets or vouchers for concerts, meals or movies; and living accommodation.

Some benefits do not need to be reported and do not incur FBT.i These include a number of benefits provided to employees working in remote areas such as living assistance.

Other fringe benefits that are exempt from tax include work-related items such as a portable electronic devices, computer software, protective clothing and tools of trade.

If the taxable value of an employee’s fringe benefits for the FBT year (1 April to 31 March) is less than $2,000, no reporting is required.

In adding up the fringe benefits, the ATO says you will need to make sure you include the employee’s share of any benefits they share with other employees as well as the value of any benefits provided to the employee’s associates, such as their partner.

Doing the numbers

For each employee, you’ll need to calculate their ‘reportable fringe benefits amount’ (RFBA) by multiplying the total taxable value of the benefits provided by an ATO ‘gross-up rate’.

The Type 1 gross-up rate is used where a GST credit entitlement is applicable to the benefit. The Type 2 gross-up rate is used where there is no GST credit entitlement applicable to the benefit. (For the FBT year ending 31 March 2023, the Type 1 rate is 2.0802 and the Type 2 rate is 1.8868.)

This calculation grosses up the pre-tax income the employee would have had to earn to buy the benefits themselves.

As an example, a fictitious company EFG Pty Ltd provides their employee Derek with car parking, valued at $450; a car, valued at $3,000; and home internet, worth $500.

The total taxable value of the fringe benefits is $3950 but the car parking benefit is not a reportable fringe benefit. So, the total taxable value of the reportable fringe benefits provided is $3,500.

To calculate the RFBA, the employer would multiply $3,500 by the Type 2 gross-up rate, 1.8868.

As a result, EFG Pty Ltd reports an RFBA for Derek of $6,603 through Single Touch Payroll for the year ending 30 June 2022.

FBT and salary sacrifice

Benefits provided to employees through salary sacrificing or salary packaging arrangements may also attract FBT.

Under a salary sacrificing arrangement, an employee agrees to forgo part of their salary in return for benefits of a similar value, such as more super or a car. As a result, the employee pays less income tax and the employer pays FBT on the benefits provided.

Extra super contributions made under a salary sacrificing arrangement are not subject to FBT and are treated differently. They are considered employer contributions and are taxed in the super fund.

Claiming deductions

Employers can claim income tax deductions for the FBT they are required to pay.

They can also claim an income tax deduction and GST credits for the cost of providing the fringe benefits.

The ATO provides a number of suggestions for reducing your FBT liability.ii These include:

  • Providing benefits that would be deductible for the employee. You do not incur an FBT liability if you give an employee a benefit they would have been able to claim as an income tax deduction if they had paid for it. This is called the 'otherwise deductible' rule.
  • Using employee contributions. Your FBT liability can be reduced if your employee contributes towards the cost of the fringe benefit.
  • Providing a cash bonus. You won’t have to pay FBT if you provide your employee with a cash bonus instead of a benefit. The employee will pay income tax on the amount.
  • Providing exempt or concessional benefits. Exemptions and concessions may apply to benefits including work-related items, benefits of less than $300, emergency
    assistance, retraining, taxis and public transport, work use of a vehicle, car parking and food or drink consumed on your business premises.

Fringe benefits can be a valuable and strategic tool in your recruitment and retention toolbox. We can help you understand and comply with the reporting requirements and be clear about the impact of FBT on your business.

Case study

FBT on a gym membershipiii
Jenni runs a small consulting firm. She provides her employee, Anton, with a gym membership that costs $1,100 (including $100 GST).

This is a fringe benefit. Jenni works out the FBT as follows:

Taxable value of the benefit ($1,100)

× the gross-up rate (for a GST-inclusive fringe benefit the rate is 2.0802)
× the FBT rate (47%)
= FBT of $1,075.46.

Jenni must prepare and lodge an annual FBT return, and pay her FBT liability.

She may also need to calculate and report Anton's reportable fringe benefits amount in his end-of-year payment information.

As the gym membership is subject to FBT, Jenni can claim:

  • an income tax deduction and GST credit for the cost of the gym membership
  • an income tax deduction for the FBT paid.

Source: Australian Taxation Office
i Fringe benefits tax - a guide for employers | Legal database (ato.gov.au)
ii https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/fringe-benefits-tax/exemptions-concessions-and-other-ways-to-reduce-fbt/reducing-your-fbt-liability
iii How fringe benefits tax works | Australian Taxation Office (ato.gov.au)

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Decoding Australia's New Superannuation Tax Rule for 2025

Decoding Australia's New Superannuation Tax Rule for 2025

Explore the essentials of Australia's $3 million super tax law and its impact on your retirement planning.

This much debated tax is inching closer and if your balance is nearing or above the $3 million mark, it's time to consider the implications.

Although it is not yet law, the Division 296 tax should be taken into account when it comes to investment strategy and planning, particular in relation to any end-of-financial-year (EOFY) contributions into super.

Tax for higher account balances

The new tax follows a Federal Government announcement it intended to reduce the tax concessions provided to super fund members with account balances exceeding $3 million.

The draft Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 was introduced to Parliament on 30 November 2023.i

The legislation has been referred to the Senate Economics Legislation Committee, with its report due on 19 April 2024. Once it passes through Parliament and receives Royal Asset, Division 296 will take effect from 1 July 2025.

Who Division 296 applies to

Division 296 legislation imposes an additional 15 per cent tax (on top of the existing 15 per cent) on investment earnings of a super account where your total super balance (TSB) exceeds $3 million at the end of the financial year.ii

The extra 15 per cent is only applied to the amount that exceeds $3 million.

When law, Division 296 will represent a significant change to the super rules, particularly for fund members with significant account balances.

Given the complexity of the new rules, it will be important to seek professional advice so you can make informed decisions about your super and wealth creation strategies in coming years.

How the new rules work

A crucial part of the new legislation is the Adjusted Total Super Balance (ATSB), which determines whether you sit above or below the $3 million threshold.

When assessing your ATSB, the ATO will consider the market value of assets regardless of whether or not this value has been realised, creating a significant impact if your super fund holds property or speculative assets. The legislation also introduces a new formula for calculating your ATSB for Division 296 purposes.

The legislation outlines how deemed earnings will be apportioned and taxed, based on the amount of your account balance over the $3 million threshold.

Negative earnings in a year where your balance is greater than $3 million may be carried forward to a future financial year to reduce Division 296 liabilities at that time.

If you are liable for Division 296 tax, you can choose to pay the liability personally or request payment from your super fund.

Strategic rethink may be needed

For many fund members, superannuation remains an attractive investment strategy due to its favourable tax treatment.iii

But those with higher account balances need to understand the potential effect of the Division 296 tax and check their investment strategies offer the best possible outcomes.

For example, you may need to consider whether high-growth assets should automatically be held inside super given the new rules.

Holding long-term investments that may be more difficult to liquidate, such as property, within super may be less attractive in some cases, because the new rules create the potential to be taxed on a gain that is never realised. This could occur where the value of an asset increases during a financial year but drops in value by the time it is actually sold.

For some, holding large commercial property assets (such as your business premises) within your SMSF may be less attractive.

Reconsider your investment vehicles

If you are likely to be affected by Division 296, an important issue will be to review the most tax-effective investment structures in which to hold assets.

Super has been the clear winner in the past but, once the new rules are in place, other vehicles such as companies or discretionary trusts may also be useful options.

It will also be important to balance asset protection against tax effectiveness. For some people, the asset protection provided by the super system may outweigh the tax benefits of other investment vehicles, such as a family trust.

Division 296 will require more frequent and detailed asset valuations, so you will need to balance this administrative burden with the tax benefits provided by super.

Estate planning implications

Your estate planning and the succession plan for your SMSF will also need to be revisited once Division 296 is law.

The tax rules for super death benefits are complex and will need to be carefully reviewed to ensure you don’t leave an unnecessary tax bill for your beneficiaries.

If you still have many years to go before retirement and decide to hold high-growth assets in your fund, you will need to closely monitor your super balance.

If you want to learn more about how Division 296 tax could affect your super savings, contact our office today.

Quick ways to grow your super
If your super balance is under $3 million, you will be unaffected by Division 296 and the current concessional tax rates continue to apply.

For most people, super remains the most attractive place to save for retirement and making additional contributions prior to EOFY is a sensible idea. Options to consider include:

  • Take advantage of any concessional cap amounts you have not used since 2018-19 to make a carry-forward contribution, if your total super balance is less than $500,000 at June 30 of the previous year
  • Make a personal tax-deductible contribution to give your account a boost and provide a tax deduction
  • Make a personal (non-concessional) after-tax contribution
  • Make a larger non-concessional contribution using a bring-forward arrangement
  • Talk to your employer and put in place a salary sacrifice arrangement to make pre-tax contributions
  • Make a contribution for your spouse (provided they are under age 75), which may also give you a tax offset of up to $540
  • Consider a downsizer contribution of $300,000 if you are aged 55 and over and plan to sell your current home.

Most contributions have eligibility criteria and annual caps you must not exceed, so talk to us before you make any contributions.

i https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r7133
ii https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf
iii https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/understanding-concessional-and-non-concessional-contributions

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Collage of budget time Parliament House in the background, man looking at phone and some Australian families

Federal Budget 2023 Analysis: What does it mean for you?

Collage of budget time Parliament House in the background, man looking at phone and some Australian families

Federal Budget 2023 Analysis: What does it mean for you?

The 2023 Federal Budget is a significant milestone for Australia, marking the first surplus in over a decade. This article breaks down the budget's key elements, including measures to ease cost-of-living pressures and investments in renewable energy, defence, and the arts. Let's explore what it all means for you.

A surplus for now but stormy seas ahead

Treasurer Jim Chalmers bills his 2023 Federal Budget as an economic strategy to help ease cost-of-living pressures.

To that end, he has delivered a modest but welcome package of cuts to healthcare, housing and energy costs as well as boosts to welfare payments for single parents and the unemployed.

Banking an unexpected bonus in increased tax revenue and rising commodity prices, the Albanese government has aimed to help the most disadvantaged while also looking ahead with new plans for renewable energy, defence and the arts.

But it has kept its spending under control to deliver a forecast $4.2 billion budget surplus – the first in 15 years.

The Treasurer sums up his second budget as “a plan for security, for prosperity, for growth”.

The big picture

While the first budget surplus in a decade and a half is to be celebrated, the joy will be short-lived. By next year’s budget, it’s expected there will be a return to small deficits for the next few years.

That’s because the global economy is slowing thanks to persistent inflation and higher interest rates. Aside from the pandemic and the 2007 Global Financial Crisis, the next two years are expected to be the weakest for global growth in more than two decades.

As a result, the government expects Australia’s economic growth to slow from 3.25 per cent in 2022-23 to just 1.5 per cent the following year, before recovering a little to 2.25 per cent.

In this environment, the treasurer continues to mark inflation as the government’s primary economic challenge. He says that is why the budget is “calibrated to alleviate inflationary pressures, not add to them”.

The good news is that the Reserve Bank says inflation is falling slightly faster than it had first forecast and has now passed its peak.i It is expected to be around 4.5 per cent by the end of the year, a long way from last year’s CPI rate of 7.8 per cent.ii

Easing the cost of living

The government’s $14.6 billion package of cost cuts aimed at helping some of those most affected by rising costs covers energy bills, health and medical services, and welfare payments.

There will be energy bill relief to around five million households and one million small businesses. From July 2023, eligible households will receive up to $500 and eligible small businesses up to $650.

The government will also introduce a number of energy saving programs for households including low-interest loans and funds for upgrades to social housing. And there will be access to better information on reducing energy bills.

Health and medical

Countering a major expense for many, the government is pouring in billions of dollars to ease health and medical costs and access to services.

It will spend an extra $3.5 billion to provide incentives to doctors to bulk bill Concession Card holders and children under 16. It’s expected that the increased bulk billing incentive will help around 11.6 million people.

The cost of medicines is also likely to change for many who suffer chronic health conditions. From 1 September 2023, some patients will be eligible to be prescribed two months’ worth of medicine at a time, instead of one month’s worth. It’s expected this change will cut the number of visits to GPs and pharmacies, and the government estimates at least six million people will see their bills for medicines reduced by half.

The government is also providing $2.2 billion over five years for new and amended listings to the PBS, including treatment for cystic fibrosis.

Meanwhile, to improve access to care and reduce the strain on hospitals, a further $358.5 million will be spent to open a further eight Urgent Care Clinics. The clinics will bulk bill and remain open for longer hours.

Welfare boost

Income support payments including JobSeeker, Austudy and Youth Allowance will rise by $40 a fortnight following a concerted campaign by lobby groups in the months leading up to the budget.

And, recognising the extra challenges faced by older people looking for work, those aged 55 and over and out of work for at least nine continuous months, will now receive the higher rate JobSeeker payment currently paid to those over 60. Around 52,000 people will receive the increase of $92.10 a fortnight.

There will be more support for eligible single parents from September 2023. They will receive the Parenting Payment until their youngest child turns 14 (currently up to eight years old). Those receiving the payment will also benefit from more generous earning arrangements compared to JobSeeker. Eligible single parents with one child will be able to earn an extra $569.10 per fortnight, plus an extra $24.60 per additional child, before their payment stops.

Housing assistance

While rents continue to climb sharply around the country, the government has provided only limited assistance to renters. Those receiving Commonwealth Rent Assistance will see a 15 per cent increase in their payments from 20 September 2023.

Eligibility for the Home Guarantee Scheme will be expanded beyond first home buyers to include any 2 eligible borrowers beyond married and de facto couples, and non-first home buyers who have not owned a property in Australia in the preceding 10 years.

The government’s other housing initiatives are medium to long term solutions to the housing crisis.

There are new tax incentives to encourage the construction of more build-to-rent developments. The government claims an extra 150,000 rental properties could be delivered as a result in ten years.

The government is also focusing on providing more affordable housing by supporting more lending to community housing providers for social and affordable housing projects.

Pay rise for aged care workers

Severe staff shortages in the aged care sector, largely been driven by low wages, may abate a little with the government’s commitment to fund a pay rise.

More than $11 billion has been allocated to support an interim 15 per cent increase in award wages.

Support for families

Childcare will be cheaper from July 10, when the government subsidy will increase to 90 per cent for families on a combined income of $80,000 or less.

For families earning over $80,000, the subsidy rate will taper down by 1 percentage point for every additional $5,000 of family income until the subsidy reaches 0 per cent for families earning $530,000.

A more flexible and generous Paid Parental Leave scheme will also be introduced in July. A new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year.

Superannuation

Superannuation is in the government’s sights and employers and individuals with larger balances will be affected.

The concessional tax for those with balances exceeding $3 million will increase from 1 July 2025 to 30 per cent. Earnings on balances below $3 million will continue to be taxed at the concessional rate of 15 per cent.

Meanwhile from 1 July 2026, employers will have to pay their employees’ super at the same time they pay their wages. The government says that in 2019-20, employers failed to pay $3.4 billion of super owing to their employees.

Looking ahead

The stormy global economic outlook will keep Australia on its toes for the next two years or so but the government has attempted both to support those who are particularly vulnerable now and keep an eye to the future with some bigger thinking.

Moving forward, the government wants to position Australia a “renewable energy superpower” with a new Net Zero Authority to help attract new clean energy industries and help workers in coal regions to find new jobs.iii

The arts received a boost with almost $1 billion going to art galleries, museums, arts organisations and the film sector to help address “a decade of chronic underfunding”.iv,v

And there is the much debated investment in defence – more than $30 billion over the next ten years. Treasurer Chalmers says that while we may have a lot “coming at us – we have a lot going for us too”.

Information in this article has been sourced from the Budget Speech 2023-24 and Federal Budget Support documents.

It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.

i RBA says inflation has passed its peak
ii https://www.rba.gov.au/publications/smp/2023/feb/economic-outlook.html
iii https://www.pm.gov.au/media/national-net-zero-authority
iv https://www.arts.gov.au/news/2023-24-federal-budget-revitalise-arts-sector
v https://minister.infrastructure.gov.au/burke/media-release/budget-2023-24-albanese-government-revives-australias-arts-and-culture

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Aerial view of complex road interchange

Federal Budget 2023 Tax Focus: Small Biz Tax Relief & Energy Boost

Aerial view of complex road interchange

Federal Budget 2023 Tax Focus: Small Biz Tax Relief & Energy Boost

Australia's Federal Budget 2023 reveals the first surplus in 15 years, highlighting tax measures and energy incentives for small businesses. Our in-depth analysis covers the Budget's focus on electrification and efficient energy use, as well as the tax support and relief available to over 2 million eligible small businesses.

Tax measures were less central to this year’s Federal Budget than they have been in recent years. While there were some new tax measures, the Budget this year was more about the first surplus in 15 years and various spending measures.

After highlighting the gloomy outlook for the global economy, Treasurer Jim Chalmers emphasised Australia’s future as an “energy superpower”, with small business to be a key beneficiary.

Energy incentives for small business

The new Small Business Energy Incentive will provide businesses with annual turnovers under $50 million with a bonus 20 per cent deduction on expenditure supporting electrification and more efficient energy use.

Up to $100,000 of total expenditure will be eligible, with the maximum bonus tax deduction being $20,000 per business.

The assets or upgrades must be first used or installed ready for use between 1 July 2023 and 30 June 2024.

Tax support continues for business

Over 2 million eligible small businesses will also enjoy welcome cashflow relief, with the government halving the increase in quarterly tax instalments for GST and income tax in 2023-24. Instalments will only increase by 6 per cent, instead of the expected 12 per cent.

While businesses may enjoy the extra cashflow, the government is also increasing efforts to reduce tax avoidance and minimisation. There will be greater scrutiny of GST returns as the ATO will receive extra resources over the next four years to promote GST compliance.

The ever-popular instant asset write-off received another year of life, with small businesses permitted to immediately deduct eligible assets costing up to $20,000 from 1 July 2023 to 30 June 2024.

Super payments crackdown

The days of businesses having access to employee super payments for a quarter are over, with employers required to pay their employees’ super at the same time they pay their wages from 1 July 2026.

The ATO picked up an additional $27 million in 2023-24 to improve its data matching capabilities and $13.2 million for a new compliance system to identify in near-real time instances of under or unpaid super. There will also be new unpaid super recovery targets set for the ATO in 2023-24.

The Budget also confirmed legislation for the new tax on earnings from super balances exceeding $3 million will be introduced to Parliament. From 1 July 2025, these earnings will attract an increased concessional tax rate of 30 per cent.

New tax incentives for housing

Businesses in the residential housing sector are now eligible for some attractive incentives, with the Budget providing two new perks.

The capital works deduction (depreciation) rate will be increased from 2.5 per cent to 4 per cent a year for eligible new build-to-rent projects, while the withholding tax rate for eligible fund payments for build-to-rent developments will be reduced from 30 per cent to 15 per cent.

Support measures for smaller business

The Budget unveiled several support measures, including timely relief for businesses’ electricity bills. From July 2023, an estimated one million eligible small businesses will receive up to $650 in assistance.

Over $23 million will also be invested to help small businesses train in-house cyber wardens to deal with cyber security attacks.

A further $392 million Industry Growth Program will be available help support small to medium sized businesses and start-ups develop new products and services.

Other tax measures

The Budget also included changes to the Petroleum Resources Rent Tax (PRRT). These will collect an additional $2.4 billion over four years by limiting to 90 per cent the proportion of PPRT assessable income that can be offset by deductions.

Tobacco excise taxes will also increase, rising by 5 per cent each year for three years from 1 September 2023.

The government is also getting behind the OECD’s push for a minimum 15 per cent tax rate for multinationals.

Despite strong lobbying, the planned third tranche of tax cuts legislated to come into effect next year survived the Budget process and as expected, the low and middle income tax offset was not extended beyond 2021-22.

Information from this article has been sourced from: https://budget.gov.au/

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.