Federal Budget 2022-23

THE LABOR GOVERNMENT’S Tuesday night budget offered little in the way of surprises, formally announcing several proposals aimed at relieving the mounting expense pressures on families and enhancing existing policies aimed at affordable housing.

Superannuation update: Confirmations and commitments

As expected, there were no new superannuation measures announced in this Budget. The Budget confirmed several initiatives that the Government has previously announced, or Coalition policies that the Government had indicated they would support, including:

• Extending access to downsizer contributions to people aged 55 to 59 (currently only available to those 60 and above).  Downsizer contributions rules allow contributions of up to $300,000 per person from the sale of their home into a super fund. 

• Effectively increasing the Pension Work Bonus threshold from $7,800 to $11,800 for the 2022-23 financial year (only). The Pension Work Bonus is the maximum income an Age Pension recipient can earn before their pension is reduced. 

• Increasing the exemption period for the proceeds of a home sale from the Age Pension assets test from 12 to 24 months. This allows pensioners additional time to sort out their affairs—post a home sale and before their Age Pension is impacted—and is designed to encourage pensioners to downsize.

• Unexpectedly, no changes to the proposed FY25 Marginal Tax Rates were announced and at this stage, remain in place. Of course, changes may be announced prior to the proposed implementation within the next two Budgets.

• From a personal taxation perspective, the Government have proposed to remove FBT on eligible electric cars. Under the arrangement, the electric car would need to have been used after 1 July 2022 and does not apply to luxury cars (valued over $84,916 in FY23).

• A new Pandemic Support Payment system has been proposed for high-risk workers in aged care, disability care, aboriginal healthcare and hospital sectors to replace the general Pandemic Support Payment system which expired mid-October.

On the family front, it is proposed to increase Child Care Subsidy Rates from 85% to 90% and increase the maximum family income threshold to $530,000. Higher subsidy rates will apply for subsequent children under school age.

Additionally, the Paid Parental Leave Scheme will be extended from 18 for the birth parent to 20 weeks to either parent. This will replace the current 2 week Dad/Partner Pay as either Parent will have access and can either take the leave at the same time, or share it between them. By FY27, the Government proposes to extend this Leave to 26 weeks. Eligibility will also be expanded to include family income up to $350,000, instead of the current individual income test.

If you wish to discuss how any of these proposed measures may affect you, please don’t hesitate to reach out to us.