What the 2022 Federal Budget means for you and the Climate
Credit - Parliment House, Amritpal Singh Mann
Here’s a run-down of Federal Budget proposals that were announced by Treasurer Josh Frydenburg earlier this week, on 29 March. There have been relatively minor changes proposed to tax and superannuation but not to climate change!
While several proposals had been announced by the Government (or mentioned in the media) before budget night, there was a big government spend allocated in education, aged care and childcare; and
Most likely there’ll be more measures announced during the election campaign as the budget papers mention a spend of $2.4 billion for this year and next year for “decisions taken but not yet announced."
And less funds to be allocated to addressing climate change.
The Budget is a set of proposals...
Please remember, that whilst many Budget measures are expected to go through on proposed dates, don’t get too excited...as these are just proposals! The Budget announcements have to go through the legislation and regulations process before any proposal becomes law, and actually has some impact on your day-to-day life.
So what does the Budget say about your money, super, tax and the Climate ?
The Key Points
Superannuation and minimum pension drawdown:
Temporary extension of minimum pension draw-down with the proposed effective date 1 July 2022 (and extended to 30 June 2023)
This will allow people to minimise having to draw-down on their pension assets and applies to account based, TTR and term-allocated pension, as market volatility continues.
See the ATO for rates that apply to you. These are age-based and the proposal means that your minimum 2022/23 pension drawdown amount will be the same as 2021/22 rates.
Tax:
1. Temporary cuts to government petrol tax (fuel excise)
Proposed effective date 30 March 2022 and ending 28 September 2022
Fuel excise will be cut by 22.1c per litre, saving families an estimated $30/week.
Not a budget proposal, however it’s interesting to note that France, Ireland, and New Zealand have all recently cut petrol tax in response to high fuel costs in their respective countries.
2. Income Tax rates - Cost of Living tax offset
Temporary increase to Low and Middle Income tax offset (LMITO)
Proposed effective date 1 July 2021, end date 30 June 2022
The Government will increase the LMITO for the 2021/22 income year to provide a one-off cost of living tax offset. and paid from 1 July 2022 when individuals lodge their tax returns for the 2021/22 income year. This proposal:
will increase the LMITO by $420 for the 2021/22 income year, so
the maximum LMITO benefit in 2021/22 will be:
$1,500 for individuals, and
$3,000 for couples.
Apart from people who do not require the full offset to reduce their tax liability to $0, all LMITO recipients can access the full $420 increase.
All other features of the current LMITO remain unchanged, i.e. taxpayers with incomes of $126,000 or more will not receive the additional $420.
3. Increasing Medicare levy low-income thresholds
Proposed effective date 1 July 2021
The Government will increase the Medicare levy low-income thresholds for seniors, pensioners, families and singles from 1 July 2021.
Low income tax payers will generally continue to be exempt from paying the medicare levy.
4. Social Security, Families and Aged Care - one off cost of living payment of $250
Proposed effective date 1 July 2021
The proposal is for a one-off tax-free payment of $250 to Australians with qualifying social security payments or eligible concession cards.
5. Paid Parental Leave scheme
Proposed effective date 1 July 2023
There are plans to
replace the current scheme with up to 20 weeks shareable between working parents within the child’s birth or adoption, and
broaden the income test for the scheme will also be broadened.
The extended 20-week entitlement may also benefit single parents.
6. Lowering PBS threshold
Proposed effective date 1 July 2022
The Pharmaceutical Benefits Scheme (PBS) safety net threshold will be lowered, which will allow patients to reach the safety net sooner.
Concessional patients will require approximately 12 fewer scripts and general patients will require approximately two fewer scripts.
Other proposals
Housing Affordability: Expanding the Home Guarantee Scheme
Proposed effective date 1 July 2022, or 1 October 2022 depending on the specific scheme
The Home Guarantee Scheme allows first home buyers to build or buy a newly-built home with a low deposit, and thus avoid having to pay for the usual commercial lenders mortgage insurance (LMI).
Part of this package will enable single parents to buy a home with a deposit of 2% and first homeowners with a deposit of 5%.
Climate spending - 35% annual cut over 4 years:
The coalition government plans to cut climate spending if it is returned to government at the election.
The 2022/23 budget papers show the climate spend is expected to fall from $2 billion next financial year to $1.9b, $1.5b and $1.3b in the three years that follow. The fall represents a 35% annual cut over four years.
The figures are spelled out in a section of the papers added under the former prime minister Tony Abbott, who wanted people to be able to see how much total climate spending – which he opposed – was contributing to government debt.
Next steps:
Call us for a quick chat or drop us a line if you have any questions about the budget and what it means for you.
Reference sources and thanks to -
The Age - David Crowe and Jessica Irvine, AWM services (part of the AMP group), the Climate Council.
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