The 2023 Federal budget - What are the key outcomes for Douglas Shire residents?
BUDGET
Jim Chalmers has delivered Labor’s second budget since taking office last May, however, much has changed over this 12 months. The country is now grappling with high inflation, high interest, high rents and low wage growth.
The budget does look to address these economic issues through Macro level strategies and their will be plenty of other articles you can read from well versed economists if you want to read about the countries financial outlook.
I will be focusing on how this is going to impact on everyday residents in the Douglas Shire.
COST OF LIVING
The cost of electricity is set to be subsidised by up to $500 for 5.5 million households. Detail is scant on how eligibility for this work as it varies from state to state however it is expected it will be targeted to pensioners, recipients of government payments and small businesses.
The low & middle income tax offset which was always legislated to finish on 30 June 2022, has not been replaced by any other form of tax offset. This will result in a higher tax burden in 2023 tax returns. The impact on you will depend on where your taxable income fits into the below table:
| Taxable Income | Tax Offset |
|---|---|
| $37,000 or less | $675 |
| $37,001 to $48,000 | $675 + 7.5c for every $ over $37,000 |
| $48,001 to $90,000 | $1,500 |
| $90,001 to $126,000 | $1,500 - 3c for every $ over $90,000 |
The government made broad national incentives to increase the supply of housing into the market but this will have no impact in the short term on the current rental price crisis.
INCOME TAX CUTS
The stage 3 tax cuts which are already legislated to commence on 1 July 2024, have survived the chopping block. The controversial tax cuts are certainly targeted towards those on modest to higher incomes. The below demonstrates the tax cut you can look forward to from 1 July 2024:
| Taxable Income | Current Tax Rate | New Tax Rate | Reduction |
|---|---|---|---|
| $0 - $18,200 | - | - | - |
| $18,201 - $45,000 | 19% | 19% | - |
| $45,001 - $120,000 | 32.5% | 30% | 2.5% |
| $120,001 - $180,000 | 37% | 30% | 7% |
| $180,001 - $200,000 | 45% | 30% | 15% |
| $200,001 and above | 45% | 45% | - |
**These rates exclude the Medicare levy of 2%
INSTANT ASSET WRITE OFF
In a welcome surprise, the Treasurer has announced an extension of the instant asset write off which was scheduled to finish on 30 June 2023. However, with some changes.
The current rules allow businesses with turnover up to $5b to immediately write off the cost of eligible assets regardless of the cost.
The new rules which will be in place from 1 July 2023 to 30 June 2024 for businesses with turnover less than $10m and where the cost per asset is less than $20,000.
CHILD CARE & PAID PARENTAL LEAVE
The treasurer has committed $55.3 billion over four year to make childcare more affordable for 1.2 million families however no specifics were provided in his speech or the budget papers on exactly how this will be applied to child care cost structures.
From 1 July this year, parental leave pay and Dad and partner pay will combine into a single 20-week payment. A commitment to increase this leave to 26 weeks by 2026.
GOVERNMENT PAYMENTS
The rate of Jobseeker, Youth Allowance and Austudy is set to receive a boost of $40 per fortnight. Those over 55 will now be eligible for higher payment as opposed to the current age limit of 60.
For those receiving single parenting payments, you will now be eligible to receive this payment until your youngest reaches the age of 14. This is an increase from the current age of 8.
Once you were ineligible for the single parenting payment, you would need to drop back to Jobseeker payments which is a reduction to the fortnightly payment of $176.90 and comes with a requirement to actively pursue employment.
Commonwealth rent assistance will also increase by 15% or $31 per fortnight.
AGED CARD WORKERS
Employees in this sector have done very well in this budget and rightly so in my opinion. They are set to receive a 15% pay rise.
VISITING THE DOCTOR & MEDICINE COSTS
The bulk billing incentive has been tripled which should see the cost of visiting the GP significantly reduce. The incentive will cover:
- all face-to-face and telehealth general practices services between 6 and 20 minutes long
- all other face-to-face general practice consultations
- longer telehealth and general practice consultations where a patient is registered with their regular practice through MyMedicare.
The costs of medicines is forecasted to half for at least 6 million Australians.
SUPERANNUATION
Whilst still some time away, from 1 July 2026, employers will need to pay superannuation to employees on the same day as the employees’ wages are paid. As it stands, employers are only required to superannuation quarterly.
Individuals with superannuation balances higher then $3m can look forward to higher income tax for their superfund from 1 July 2025.
HOMEBUYERS
The government guarantee scheme has been expanded to now allow family and friends to buy their first home together as opposed to just married and de facto couples.
CIGARETTES & VAPES
Oil and gas companies have worn the majority of the tax increases however your pack of ciggies will be going up by a further 5% from September 1, 2023.
Another 5% on September 1 2024 and another 5% on September 1, 2025.
Vapes will now become prescription only.
The average cost for a pack a day smoker is currently $10,585. Couldn’t think of better way to save money in a cost-of-living crisis!
*Our guest columnist Mitch Williams is the managing partner of Williams Cete & Co. The Douglas Shire’s largest accounting firm with a history of servicing the community stretching back over 90 years.
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