Despite the recent turbulence of significant natural disasters, ongoing COVID-19 challenges, supply-chain restraints and subsequent labour market concerns, it is commendable that many Australians and Australian businesses have continued to maintain their steadfast attitude and sound financial outcomes.

In what could be the fourth and final Federal Budget of Treasurer Josh Frydenberg, there has been a focus on providing short-term cost of living relief and incentivising small business to boost employee skills and training.

With a keen eye on the upcoming Federal Election, a largely uneventful Federal Budget was handed down yesterday with many feeling it lacked longer term measures aimed at sustainability and reducing the magnitude of the budget deficit.

In fairness to the Commonwealth Government, there have been a plethora of challenges to deal with over the past 24 months and it is certainly arguable that they have earned a pass mark for their efforts, particularly the way in which the economy has bounced back from such a difficult period. So, continuing to ‘spend’ and ease the cost-of-living burden being felt by so many Australians is, whilst a safe measure, one that will be welcomed across the nation.

The Treasurer remains optimistic that our pleasing economic recovery will endure and that the stronger than anticipated momentum in the labour market and consumer spending will continue for some time.

Conversely, we can hope that the cost-of-living measures will prove beneficial and trust that next year’s budget will prove more decisive in terms of strategic planning for a sustainable Australian future.

Some of the key tax measures from this year’s Federal Budget are noted below:

1. Cost of Living

A once-off ‘cost of living tax offset’ has been announced for the 2022 financial year, which will be provided in the form of an increase to the existing Low & Middle Income Tax Offset (‘LMITO’) scheme.

This will increase the LMITO by $420 from $1,080 for individuals and $2,160 for couples to $1,500 for individuals and $3,000 for couples. It will be paid from 1 July 2022 when individuals submit their tax returns for FY 2022 but, importantly, will not be available from the 2023 financial year and beyond.

There is also a further $250 cost of living payment aimed at vulnerable groups in the community including those who receive the age pension, disability support payments, parenting payments, youth allowance/jobseeker payments, etc.

Additionally, The Federal Government has announced an immediate temporary 50% reduction to fuel taxes form 30 March 2022 to 28 September 2022.

Under the current rates, fuels such as petrol and diesel are subject to excise or customs of 44.2 cents per litre. The change means a new rate of 22.1 cents per litre will apply from Tuesday, 29 March 2022.

2. Businesses

The Government is continuing its support of small businesses by introducing boosts for both skills/training and technological investment.

Small businesses with an aggregated annual turnover of less than $50 million, will be able to deduct an additional 20% of expenditure incurred on external training courses provided to their employees and to support digital adoption, including on the purchase of depreciable assets.

The external training courses must be delivered by entities registered in Australia and are required to be provided to employees either in Australia or online. Eligible expenditure for digital adoption includes portable payments devices, cyber security systems and subscriptions to cloud-based services.

The Government has also confirmed the costs of taking COVID-19 tests to attend a place of work will be tax deductible from 1 July 2021. This also means no Fringe Benefits Tax (FBT) will apply where employers provide or reimburse costs for the COVID-19 tests.

Further, there has been a subtle dismissal of current COVID-19 support measures, including loss carry back tax offset and temporary full expensing, which will seemingly come to an end on 30 June 2023.

3. Families

Changes have been announced to enhance the Paid Parental Leave Scheme and improve economic security for women and improve flexibility for families.

The scheme will roll Dad and Partner Pay into a single Parental Leave pay scheme of up to 20 weeks that is able to be shared between eligible working parents as they see fit.

4. Others Worth Noting

Superannuation: The temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended a further year to FY 2023.

Infrastructure: There will be an additional $17.9 billion committed to road, rail and community infrastructure projects.

Disaster Support: Disaster relief for floods in New South Wales and Queensland expected to exceed $6 billion.

Health: $547 million for targeted mental health and suicide prevention initiatives; $331 million to promote the health of women and girls, including the support the National Women’s Health Strategy; and $28 million to commence work to establish Genomics Australia.

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