Disclaimer
The information contained herein is provided on the understanding that it neither represents nor is intended to be advice or that the authors or distributor is engaged in rendering legal or professional advice. Whilst every care has been taken in its preparation no person should act specifically on the basis of the material contained herein. If assistance is required, professional advice should be obtained.
The material contained in the Budget 2023-24 Update should be used as a guide in conjunction with professional expertise and judgement. All responsibility for applications of the Budget 2023-24 Update and for the direct or indirect consequences of decisions based on the Budget 2023-24 Update rests with the user. Saab Partners Pty Ltd, directors and authors or any other person involved in the preparation and distribution of this guide, expressly disclaim all and any contractual, tortious or other form of liability to any person in respect of the Budget 2023-24 Update and any consequences arising from its use by any person in reliance upon the whole or any part of the contents of this guide.
‘Ace in the Hole’ Budget 2023-24
The ‘ace in the hole’ of the 2023-24 Federal Budget was the $4.2bn surplus; the first in 15 years.
The surplus was driven by a surge in the corporate and individual tax take. High commodity prices, inflation, and high employment have all pushed up corporate and individual tax receipts. But the gains can’t be relied on long term. The Budget is expected to deliver a deficit of $13.9 billion in 2023-24, and a $35.1bn deficit in 2024-25.
Social initiatives dominated the Budget:
- Energy bill relief for some households and small business
- Encouraging doctors to offer bulk billing by tripling the incentive for children under 16, pensioners and other Commonwealth card holders
- Increases to commonwealth rent assistance
- Increases to JobSeeker and other income support payments
- Expanding access to the single parenting payment
The legislated stage 3 tax cuts legislated to take effect on 1 July 2024 remain in place. Stage 3 radically simplifies the tax brackets by collapsing the 32.5% and 37% rates into a single 30% rate for those earning between $45,001 and $200,000.
For small business, the instant asset write-off will enable multiple assets of up to $20,000 to be written-off in the year of purchase.
What wasn’t in the Budget?
There was no mention of the loss carry back rules for companies, suggesting that these rules will expire on 30 June 2023, along with the temporary full expensing rules. The loss carry back rules allow eligible companies to apply tax losses against taxable profits made in certain previous income years, rather than carrying them forward to future years.
There is no mention of the simplification of Division 7A – Division 7A captures situations where shareholders access company profits in the form of loans, payments or the forgiveness of debts. The 2016-17 Federal Budget proposed changes to reduce the compliance burden of Division 7A. These changes were initially meant to apply from 1 July 2018 but were deferred a number of times, before the Government announced that any changes would commence from the start of the income year following the date on which the changes receive Royal Assent. Aside from a Treasury discussion paper released back in October 2018, this issue remains in limbo.
The Budget also doesn’t refer to either the Skills and Training Boost or the Technology Investment Boost. These measures, announced by the previous Government, would provide a bonus deduction equal to 20% of qualifying expenditure if the legislation containing these measures is passed in its current form (Treasury Laws Amendment (2022 Measures No. 4) Bill 2022). The Technology Investment Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2023. The Skills and Training Boost is aimed at expenditure incurred between 7:30pm (ACT) on 29 March 2022 and 30 June 2024.
If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please let us know. As always, we’re here if you need us!
Individuals & Families
From July 2023
Energy price plan relief
$1.5bn has been provided over 5 years to provide targeted energy bill relief and progressing gas market reform.
The Energy Bill Relief Fund will provide targeted energy bill relief to eligible households and small business customers, which includes pensioners, Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and small business customers of electricity retailers.
In partnership with the states and territories, the plan is expected to deliver up to $500 in electricity bill relief for eligible households and up to $650 for eligible small businesses.
Funding has also been provided to the ACCC to enforce the temporary cap of $12 per gigajoule on the price of gas and to develop and implement a mandatory gas code of conduct. And, funding for Australian Energy Regulator to monitor coal and gas markets across the National Electricity Market.
The Government expects that retail electricity price increases in 2023-24 will be around 25% smaller and retail gas price increases around 16% smaller as a result of their interventions.
Household energy upgrade fund
A $1.3bn Household Energy Upgrades Fund will be established to support home upgrades that improve energy performance. No, the Government is not giving out cash for upgrades but providing $1bn to the Clean Energy Finance Corporation to provide low-cost finance and mortgages in partnership with private financial institutions for home upgrades that save energy.
$300m is committed to upgrading social housing in collaboration with states and territories. And, over $36m to upgrade the energy ratings systems.
Incentive to provide Medicare bulk billing to concession card holders and children
From 2022-23
As previously announced, the bulk billing incentive benefits for consultations for Commonwealth concession card holders and patients aged under 16 years of age will be tripled from 2022-23.
Less people to pay Medicare Levy
from 1 july 2022
The Medicare levy low-income thresholds for singles, families and seniors and pensioners will increase from 1 July 2022.
| Threshold | From | To |
| Singles | $23,365 | $24,276 |
| Family | $39,402 | $40,939 |
| Single seniors & pensioners | $36,925 | $38,365 |
| Family seniors & pensioners | $51,401 | $53,406 |
For each dependent child or student, the family income thresholds will increase by a further $3,760 instead of the previous amount of $3,619.
Exempting lump sum payments in arrears from Medicare Levy
The Government will introduce a technical amendment to ensure that low income earners who receive eligible lump sum payments are not subject to a higher amount of the Medicare Levy. For example, if an individual receives a lump sum compensation payment for underpaid wages.
To qualify, taxpayers must be eligible for a reduction in the Medicare levy in the 2 most recent years to which the lump sum accrues. Taxpayers must also satisfy the eligibility requirements of the existing lump sum payment in arrears tax offset, including that a lump sum accounts for at least 10% of the taxpayer’s income in the year of receipt.
Increasing JobSeeker
The Government will increase support for people receiving working age payments including JobSeeker.
The base rate of working age and student payments will increase by $40 per fortnight from 20 September 2023. The increase applies to the JobSeeker Payment, Youth Allowance, Parenting Payment (Partnered), Austudy, ABSTUDY, Disability Support Pension (Youth), and Special Benefit.
In addition, eligibility for the existing higher single JobSeeker Payment rate for recipients aged 60 years and over will be extended to recipients aged 55 years and over who are on the payment for 9 or more continuous months.
Single parent payment increase
From 20 Sept 2023
As previously announced, the age cut-off for the Parenting Payment (Single) will increase from 8 to 14.
From 20 September 2023, (subject to the passage of legislation), single parents will no longer have to transfer to JobSeeker when their youngest child turns eight. Instead, they will continue to receive the higher support, with a current base rate of $922.10 per fortnight until their youngest child turns 14.
As a result, eligible single parents currently on JobSeeker will receive an increase to payments of $176.90 per fortnight.
Single parents moving to Parenting Payment (Single) 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.
Resources: Media Release: Extending the financial safety net for single parents
Increased rent assistance
The maximum rates of the Commonwealth Rent Assistance (CRA) allowances will increase by 15% from 2022-23.
Scheme enabling pensioners to earn more extended
The measure enabling age pensioners and veterans to earn more money before their pension is reduced has been extended for another 6 months, until 31 December 2023. Under this measure, pensioners can earn up to $11,800 before their pension is reduced.
In-home aged care increase
An additional 9,500 Home Care Packages will be available in 2023-24. The $338.7m package also includes a trial to test products and services for a new assistive technologies loan program, commencing in July 2024 within 2 states and territories.
Access to home guarantee scheme expanded to friends and siblings
As previously announced, from 1 July 2023, access to the Government’s Home Guarantee Scheme will be expanded to joint applications from “friends, siblings, and other family members” and to those who have not owned a home for at least 10 years.
| Scheme | Current eligibility | From 1 July 2023 |
| First Home Guarantee – guarantees part of a first home owner’s home loan enabling them to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance. Guarantee capped at 15% of the value of the property.35,000 places are available to the scheme per year. | Applying as an individual or couple (married / de facto) First home buyers who have not previously owned, or had an interest in, a property in Australia.An Australian citizen(s) at the time they enter into the loanAt least 18 years of ageEarning up to $125,000 for individuals or $200,000 for couples, as shown on the Notice of Assessment (issued by the Australian Taxation Office)Intending to be owner-occupiers of the purchased property | Friends, siblings, and other family members will be eligible for joint applications not just an individual or couple (married de facto)First home buyers and non‑first home buyers who haven’t owned a property in Australia in the last ten yearsAustralian citizens and permanent residents at the time they enter the loanAll other criteria remain the same |
| Regional First Home Buyer Guarantee – An extension of the First Home Guarantee applicable to regional areas only 10,000 places are available to the scheme each year to 30 June 2025. | As above for the First Home Guarantee plus the borrower must have lived in the regional area (or adjacent) they are purchasing in for the preceding 12-month period to the date they execute the home loan agreement. | As above for the First Home Guarantee plus the regional area eligibility requirement. |
| Family Home Guarantee – guarantees the home loan of an eligible single parent with at least one dependent child enabling them to purchase a home with as little as 2% deposit without paying Lenders Mortgage Insurance. Guarantee capped at 15% of the value of the property.5,000 places are available to the scheme each year to 30 June 2025. | Applying as an individualA single parent with at least one dependent child (natural or adopted) An Australian citizen at the time they enter into the loan At least 18 years of age Be earning no more than $125,000 per year Intending to be owner-occupier of the purchased property Not currently a property owner | A single parent with at least one dependent child including legal guardians of children such as aunts, uncles and grandparentsAustralian citizens and permanent residents at the time they enter into the loan |