Key initiatives include:

• A 6 month, 50% reduction in fuel excise with effect from midnight Budget night (29 March)

• A $420 cost of living tax offset for low and middle income earners from 1 July 2022

• A one-off $250 economic support payment to some social security payment recipients   

Supporting innovation and streamlining compliance, creating transparency and more readily identifying anomalies. Single touch payroll was the digital first step, the PAYG instalment system, trust compliance, and payments to contractors are next. 

 The push of the Government towards innovation and investment in new technology. Not just the $120 tax deduction for every $100 spent on training employees and digital adoption, but also the expansion of the patent box tax concessions. There are opportunities for those pushing boundaries.

Strengthen Medicare by making it easier to see the doctor. 

Create secure local jobs by investing in Fee-Free TAFE and more university places, and to make your job more secure with better pay and conditions.

Make child care cheaper so that it’s easier for working families to get ahead.

Make more things here in Australia by working with business to invest in manufacturing and renewables to create more Australian jobs. 

Labor will deliver a future where no one is held back and no one is left behind. 

liberal

‘Super home buyer’

Announced on the 15th of May, the Coalition’s plan is to allow first home buyers to withdraw up to 40% of their super balance to a maximum of $50,000. First home buyers must then return the withdrawn amount, plus or minus any capital gain or loss when the property is sold.

This amounts to borrowing from your super account. You lose the return your super savings would have accrued, but you gain the return on your house, in the form of avoided rent and any capital gain.

labor

‘Help to buy’

On the Labor side, the plan is to become an equity partner in 10,000 homes a year, up to 40% of the cost of a new home, and 30% of the cost of an existing home. In order to qualify, individuals will need to earn under $90,000 a year, with couples needing to earn under $120,000. In addition, there will be a cap on the overall value of the property, in accordance with its location. For example, the cap for Sydney is $950,000.

Apparently, under this plan, Labor wont recoup any of their investments under this scheme. Taxpayers will therefore gift up to 40% of the rent the occupier would have otherwise have paid, worth around $15,000 a year. This is according to Steven Hamilton a Fellow in Tax & Transfer Policy from Australian National University writing for the Conversation website.

Liberal

From 1 July 2021 to 30 June 2022

The low and middle income tax offset (LMITO) currently provides a reduction in tax of up to $1,080 for individuals with a taxable income of up to $126,000.

The tax offset is triggered when a taxpayer lodges their 2021-22 tax return.

For the 2021-22, the LMITO will be increased by $420 which means that the proposed new rates for individuals are as follows:

Labor

An Albanese Labor Government will deliver tax relief for more than 9 million Australians through the legislated tax cuts that benefit everyone with incomes above $45,000.

Labor will also support cost of living relief for Australians through an increase in the low-and-middle income tax offset by $420 this year.

Labor will provide certainty and clarity on tax to Australian working families after a difficult few years for our country and the world.

Liberal

From April 2022

A one-off $250 ‘cost of living payment’ will be provided to Australian resident recipients of the following payments and concession card holders:

• Age Pension

• Disability Support Pension

• Parenting Payment

• Carer Payment

• Carer Allowance (if not in receipt of a primary income support payment)

• Jobseeker Payment

• Youth Allowance

• Austudy and Abstudy Living Allowance

• Double Orphan Pension

• Special Benefit

• Farm Household Allowance

• Pensioner Concession Card (PCC) holders

• Commonwealth Seniors Health Card holders

• Eligible Veterans’ Affairs payment recipients and Veteran Gold card holders.

 The payments are exempt from taxation and will not count as income support for the purposes of any income support payment. An individual can only receive one payment.

Labor

N/A

Liberal

The Home Guarantee Scheme guarantees part of an eligible buyer’s home loan, enabling people to buy a home with a smaller deposit and without the need for lenders mortgage insurance. The Government has extended two existing guarantees and introduced a new regional scheme.

Just prior to the Budget, the Government announced:

• First Home Guarantee – from 1 July 2022, an increase from $10,000 to $35,000 guarantees to support eligible first homebuyers purchase a new or existing home.

• Single parent Family Home Guarantee - $5,000 guarantees each year from 1 July 2022 to 30 June 2025. The family home guarantee supports eligible single parents with children to buy their first home or to re-enter the housing market with a deposit of as little as 2%.

• Introduction of a Regional Home Guarantee. This guarantee will support eligible citizens and permanent residents who have not owed a home for 5 years (including non-first home buyers) to purchase or construct a new home in regional areas with a minimum 5% deposit areas (subject to the passage of enabling legislation).

Resources

• Media release: 2022-23 Budget Backs Aspiring Homeowners

• National Housing Finance and Investment Corporation

Labor

Labor’s Regional First Home Buyer Support Scheme will help 10,000 first home buyers a year in regional Australia to buy a home. 

This will approximately triple the number of people in regional areas who can access a government guarantee scheme.

Labor’s Regional First Home Buyer Support Scheme will provide a government guarantee of up to 15 per cent for eligible first home buyers, so locals with a 5 per cent deposit can avoid paying mortgage insurance – saving up to $32,000. 

To take advantage of the scheme, locals will need to:

• Live outside a capital city.

• Be a first home buyer who is an Australian citizen over 18.

• Live in the house purchased.

• Have a taxable income of up to $125,000 per year for singles and $200,000 a year for couples.

• Have been living in the region for at least 12 months.

• Meet the property price thresholds for the region under the existing First Home Loan Deposit Scheme.

Existing houses, townhouses and units will be part of the scheme. Along with house and land packages, off-the-plan apartments and land with a contract to build. 

Labor will also improve the operation of the current scheme by reviewing and updating the price caps on a six-monthly basis and improving the process of reallocating unused guarantees. 

Labor’s First Home Buyer Support Scheme will start in January 2023 and cost $12.1m to the end of 2024-25.

Liberal

From 1 July 2024

Trust and beneficiary income reporting and processing will be digitalised with all trusts being provided with the option of lodging income tax returns electronically.

While this measure will reduce compliance costs, it will also increase transparency and provide the ATO with a greater insight into anomalies that may be occurring.

Labor

N/A

Age 

Under 65 

65-74 

75-79 

80-84 

85-89 

90-94 

95 or more 

Default minimum drawdown rates (%) 

4 

5 

6 

7 

9 

11 

14 

Reduced rates by 50% for the 2019-20 to 2022-23 income years (%) 

2 

2.5 

3 

3.5 

4.5 

5.5 

7 

Liberal

From 7:30pm AEDT, 29 March 2022 until 30 June 2023

The Government intends to provide a 120% tax deduction for expenditure incurred by small businesses on business expenses and depreciating assets that support their digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud based services.

The technology boost will be available to small business with an aggregated annual turnover of less than $50 million.

An annual expenditure cap of $100,000 will apply to the boost.

The boost for eligible expenditure incurred by 30 June 2022 will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2023 will be included in the income year in which the expenditure is incurred. That is, the additional deduction available under this measure is expected to be claimed in the 2023 tax return.

Resources

• Media release: Digital and skills tax boost for small businesses

Labor

N/A

Normally, GST and PAYG instalment amounts are adjusted using a GDP adjustment or uplift. For the 2022-23 income year, the Government is setting this uplift factor at 2% instead of the 10% that would have applied.

The 2% uplift rate will apply to small to medium enterprises eligible to use the relevant instalment methods for instalments for the 2022-23 income year and are due after the amending legislation comes into effect:

• Up to $10 million annual aggregated turnover for GST instalments and

• $50 million annual aggregated turnover for PAYG instalments

Resources

• Media release: Cash flow support and red tape reduction to help small business

Labor’s Better Deal for Small Business will:

• Guarantee that an Albanese Labor Government will consider the specific needs of small businesses in times of crisis, giving the confidence and certainty to grow and plan for the future. Labor will work closely with states, territories, industry groups and communities to end the uncertainty that surrounds when and the extent of support small businesses are able to access in a crisis.

• Ensure small businesses are paid on time to sustain growth across the economy with a mechanism to ensure payment within 30 days. The current average contract payment time sits at 37 days – well above the 30-day benchmark.

• Make unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners.

• Drive a genuine collaboration with small businesses and government to reduce the time small businesses spend doing taxes, cut paperwork and target support. Eight out of 10 small businesses find government regulation overly complex.

• Draw on Labor’s history of working with unions, workers and industry to deliver better outcomes with settings that are simpler, more accessible, and fair.

• Reduce small business transaction costs at the point of payment with a clear timeline for implementing least cost routing or similar. Small businesses are disproportionately impacted by higher transaction fees that eat into profits - around $804 million a year.

Liberal

In broad terms, an Employee Share Scheme (ESS) is a scheme under which shares in a company, or rights to acquire shares in a company, are issued to an employee or their associate in respect of their employment.

At a commercial level, ESS arrangements are often used to better align the interests of employers and employees, as employees are provided with an opportunity to share in the profitability and growth of the business. The arrangements can also be useful in situations where a business is in start-up mode and does not have significant cash flow or reserves to attract top quality employees with high salaries. 

The Government has flagged changes to the ESS rules to expand access to schemes so that employees at all levels can directly share in the growth of the business.

 Where employers make larger offers in connection with employee share schemes in unlisted companies, participants can invest up to:

•  $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus 70 per cent of dividends and cash bonuses; or

• Any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.

The Government will also remove regulatory requirements for offers to independent contractors, where they do not have to pay for interests.

While these changes might expand access to employee share schemes, it is important to consider the tax implications that can arise for an employee when they receive shares or options at a discount to their market value. There are a number of different ways that employees can be taxed in this area and the treatment will often depend on how the ESS arrangement has been structured by the company.

Labor

N/A

Liberal

From 1 July 2022

The sale of Australian Carbon Credit Units (ACCUs) and biodiversity certificates generated from on-farm activities to be treated as primary production income for the purposes of the Farm Management Deposits (FMD) scheme and tax averaging from 1 July 2022.

In addition, the taxing point of ACCUs for eligible primary producers will change to the year when they are sold, and similar treatment will be extended to biodiversity certificates issued under the Agriculture Biodiversity Stewardship Market scheme, from 1 July 2022. Currently, ACCU holders are taxed based on changes in the value of their ACCUs each year, which can result in tax liabilities prior to sale. Eligible primary producers are those who are currently eligible for the FMD scheme and tax averaging.

Labor

N/A

Liberal

From 1 January 2024

As announced prior to the Budget, companies will be able to choose to have their pay as you go (PAYG) instalments calculated using current financial performance, extracted from business accounting software, with some tax adjustments.

The move is intended to ensure that instalment liabilities are aligned to the businesses cashflow. In addition, the digitisation of PAYG instalments will improve transparency and provide more accurate data on performance.

Resources

• Media release: Cash flow Support and Red Tape Reduction to Help Small Business

Labor

N/A

Liberal

From 1 January 2024

As announced prior to the Budget, businesses will be able to report Taxable Payments Reporting System data via their accounting software on the same lodgment cycle as their activity statements.

The measure is expected to reduce the costs of complying with the system and increase transparency.

Labor

N/A

Liberal

As announced prior to the Budget, the Government will commit $6.6 million for the development of IT infrastructure that will enable the ATO to share Single Touch Payroll (STP) data with State and Territory Revenue Offices on an ongoing basis.

The funding will be deployed following further consideration of which states and territories are able and willing to make investments in their own systems and administrative processes to pre-fill payroll tax returns with STP data in order to reduce compliance costs for businesses.

Labor

N/A

Liberal

From 1 July 2022

Back in the 2019-20 Budget, the Government announced that Australian Business Number (ABN) holders would be stripped of their ABNs if they failed to lodge their income tax return. In addition, ABN holders would be required to annually confirm the accuracy of their details on the Australian Business Register.

This measure has been deferred for 12 months, which means that the tax return lodgement obligation is due to commence from 1 July 2022 with the annual confirmation of ABN details to commence from 1 July 2023.

Labor

N/A

Liberal

The measure that enables payments from certain state and territory COVID-19 business support programs to be treated as non-assessable non-exempt (NANE) income has already been extended until 30 June 2022.

The Government has announced that the following state and territory grant programs have been made eligible for this treatment since the 2021-22 MYEFO, although it is not clear whether the relevant legislative instruments have been issued as yet:

• New South Wales Accommodation Support Grant

• New South Wales Commercial Landlord Hardship Grant

• New South Wales Performing Arts Relaunch Package

• New South Wales Festival Relaunch Package

• New South Wales 2022 Small Business Support Program

• Queensland 2021 COVID 19 Business Support Grant

• South Australia COVID 19 Tourism and Hospitality Support Grant

• South Australia COVID 19 Business Hardship Grant.

This builds on the list of existing grants paid by New South Wales and Victoria that can already qualify for NANE income treatment.

Labor

N/A

Liberal

From 1 July 2021

As previously announced, work‑related COVID‑19 test expenses incurred by individuals will be made tax deductible.

Changes will also be made to ensure that FBT will not be payable by employers if they provide fringe benefits relating to COVID‑19 testing to their employees for work‑related purposes.

The changes for deductions will be effective from 1 July 2021, with the FBT changes to apply from 1 April 2021.

At this stage it is not entirely clear whether the deduction rules will cover expenses incurred where the employee is able to work from home. The initial media release indicates that the measure will cover situations where the individual has the option of working remotely, while the Budget only refers to costs of taking a COVID-19 test to attend a place of work but doesn’t specifically refer to employees who can work from home.

Resources

• Media release: Tax deductibility of COVID-19 test expenses

Labor

N/A

liberal

From 7:30pm AEDT, 29 March 2022 until 30 June 2024

The Government intends to provide a 120% tax deduction for expenditure incurred by small businesses on external training courses provided to employees. The deduction will be available to small business with an aggregated annual turnover of less than $50 million. External training courses will need to be provided to employees in Australia or online, and delivered by entities registered in Australia.

Some exclusions will apply, such as for in-house or on-the-job training and expenditure on external training courses for persons other than employees.

We assume there will need to be a nexus between the employee’s employment and the training program undertaken for the boost, although we are waiting on further details of this initiative to be released.

The boost for eligible expenditure incurred by 30 June 2022 will be claimed in the tax return for the following income year (that is, the 2023 tax return). The boost for eligible expenditure incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred.

Resources

• Media release: Digital and skills tax boost for small businesses

Labor

Fee Free TAFE

Hundreds of thousands of Australians will be able to earn a qualification or upskill with Labor’s fee free TAFE plan. Labor’s 465,000 fee free TAFE places – including 45,000 new places – will help people find decent jobs and help businesses find employees, by making fee free places available to students studying for industries with skills shortages.

Labor will make sure at least 70% of all public funding for vocational education goes to TAFE to strengthen our public education system. And we’ll deliver $50 million to boost technology on campuses, creating world-leading TAFE training centers.

This will help fix areas of skills shortages and fill future skills needs by training Australians in jobs including engineering, nursing, tech, and teaching.

A stronger university system

An Albanese Labor Government will invest $481.7 million to deliver up to 20,000 extra university places over 2022 and 2023, making it easier for Australians to find a spot at university and get a job.

Labor will aim to prioritise the new funding for universities which are able to offer additional courses in national priority areas like clean energy, advanced manufacturing, health and education, or where there are skills shortages.

Labor will also establish an Australian Universities Accord to drive lasting reform at our universities. The Accord will help deliver accessibility, affordability, quality, certainty, sustainability and prosperity to the higher education sector and the country.

Australian Skills Guarantee

Labor will train thousands of workers by ensuring one in ten workers on major government projects is an apprentice, trainee or cadet.

Jobs and Skills Australia

Labor will establish Jobs and Skills Australia as an independent body to bring together the business community, states and territories, unions, education providers and regional organisations to match skills training with the evolving demands of industry and strengthen workforce planning.

New Energy Apprenticeships

Labor will invest $100 million to support 10,000 New Energy Apprenticeships. Our investment will encourage apprentices to train in the new energy jobs of the future and provide them the support they need to complete their training.

Labor will also invest $10 million in a New Energy Skills Program to tailor skills training to meet the needs of new energy industries. The New Energy Skills Program will work with the states, industry and unions to ensure workers have access to training pathways that are fit-for-purpose.

StartUp Year

Labor will introduce a Startup Year that has the potential to create up to 2,000 new firms and provide a platform for future job growth and economic opportunity. Under this program, Labor will offer income contingent loans to 2,000 final year students and recent graduates to support their participation in accelerator programs, helping them start a new business.

Liberal

An additional $652.6m has been set aside to extend the ATO’s Tax Avoidance Taskforce by 2 years to 30 June 2025.

In that time, the taskforce is expected to increase receipts by $2.1bn and increase payments by $652.6m.

Labor

N/A

Liberal

Australia’s unemployment rate is at 4%: the lowest rate in 48 years.

Amid the ongoing COVID 19 pandemic and natural disasters, the Australian economy has experienced a strong recovery in output and employment from pre pandemic levels. The recovery is expected to continue with the unemployment rate forecast to reach 3.75% in the September quarter of 2022, nearly 3% below the forecast 2 years ago.

The Wage Price Index (WPI) is forecast to increase from 2.75% through the year to the June quarter of 2022 to 3.25% through the year to the June quarter of 2023. But, there is “significant uncertainty around the pace at which wages growth will accelerate.”

Real GDP is forecast to grow by 4.25% in 2021‑22. And, by 3.5% in 2022‑23 and 2.5% per cent in 2023‑24.

The deficit for 2022‑23 is expected to be $78 billion or 3.4% of GDP.

Since the Mid Year Economic and Fiscal Outlook (MYEFO), the underlying cash balance has improved by $103.6 billion over the 5 years to 2025-26. Gross debt as a share of the economy is expected to peak at 44.9% of GDP at 30 June 2025, 5.4% lower and 4 years earlier than projected at MYEFO. Gross debt is projected to fall to 40.3% of GDP by the end of the medium term, 9.6% or $236 billion lower than at the end of the medium term in MYEFO.

The Budget projects a halving in the deficit to 1.6% of GDP by 2025‑26 before falling to 0.7% of GDP by the end of the medium term.

Commodity prices are near record high levels, in part due to the Russian invasion of Ukraine. Metallurgical and thermal coal spot prices have recently reached highs that are 62%  and 53% above previous peaks.

Inflation is expected to rise to 4.25% through the year to the June quarter of 2022. This reflects higher global oil prices and ongoing supply chain pressures as well as price pressures in the housing construction sector. Equality is equated to moderate to 3% in 2022‑23 and 2.75%  in 2023‑24.

The recent floods in Queensland and New South Wales have had a devastating impact on many communities. The Government expects to spend over $6 billion in total on disaster relief and recovery (in addition to the $3.6 billion already allocated to households, businesses and communities).

On COVID-19, the Budget assumes:

• Community transmission of COVID‑19 will continue to occur.

• A further Omicron wave is assumed to occur over winter 2022, which may again see elevated rates of absenteeism and pressure on supply chains.

• Beyond winter, it is assumed that Australia will continue to experience intermittent, localised waves of Omicron, or other new COVID‑19 variants. However, it is assumed that high vaccination rates and improved medical treatments, together with continued community adaptation to COVID‑19, will see the economic impact of future outbreaks continue to moderate.

• It is assumed that public health measures such as physical distancing and density restrictions are phased down, but reimposed in a targeted way in response to future COVID‑19 outbreaks. These public health measures are not expected to materially affect the economic forecasts.

• Australia’s international borders are assumed to be open to migrants and fully vaccinated tourists.

Expenditure: How the 2022-23 Budget will be spent

As the Government’s response to the COVID-19 pandemic reduces, expenses decrease from $640 billion in 2021-22 to $628 billion in 2022-23 – an impact that is primarily reflected in the health, social security and welfare, and other economic affairs functions. Expenses are expected to reach $687 billion in 2025-26. While, low unemployment and increased economic growth has reduced expenditure on income support programs, higher inflation and wages growth forecasts have impacted indexation rates and led to increased expenditure estimates on government payments to individuals.

Labor

A better future relies on a stronger, broader, more inclusive and more sustainable economy – powered by cleaner and cheaper energy, a better-trained workforce with higher participation and key investments in the care economy, digital economy and a future made in Australia.

This will give Australians the best chance to earn a decent living, keep up with the skyrocketing costs of living, make ends meet, secure more of the opportunities of a recovering economy and get ahead.

As we emerge from the pandemic, Australia is unprepared for the most pressing economic challenges – rising inflation, falling real wages and not having enough economic benefit to show for a trillion dollars in public debt.

Even with the unemployment rate falling in welcome ways, we aren’t seeing the wages growth we need in a labour market characterised by skill shortages, underemployment and insecure work. A policy setting of the government are deliberately designed to keep wages low.

Labor’s five-point Economic Plan is calibrated to reduce the costs of living; drive productivity growth and expand the capacity of the economy to alleviate supply side pressures; get wages growing so that Australians aren’t held back or left behind; and invest public money in a way that delivers genuine economic value for Australians.

Of course, this needs to be a private sector-led recovery. Labor knows that it’s Economic Plan will only be successful through genuine partnerships and collaboration with business.

Achieving this broad, sustainable and inclusive economic growth together through productivity gains will be the key factor in creating and maintaining more jobs, better pay and better living standards, and putting the Budget on a more sustainable footing.

That’s why Labor’s Budget Strategy is tailored to Australia’s economic conditions and is designed to:

• Make room for smart, targeted investments that expand the capacity of the economy, so that it can grow stronger, broader and more sustainably.

• Improve the quality of spending to generate a budget position that will allow us to reduce debt as a share of the economy over time, while delivering real outcomes for Australians in essential areas like Medicare, aged care and child care.

Labor will do this by:

• Prioritising smart, responsible and targeted investments that deliver economic value.

• Dealing with the Governments wasteful spending including by trimming spending on contractors, consultants and labour hire in the public service.

• Conducting a waste and rorts audit.

• Closing down loopholes which allow multinationals to avoid their tax obligations to Australians.