Federal Budget 2022 - 2023
Budget Overview
On Tuesday 29 March 2022, the Treasurer, the Hon. Josh Frydenberg MP, delivered the Federal Budget 2022–23, his fourth Budget. The economic outlook has improved significantly since the Mid-Year Economic and Fiscal Outlook (MYEFO) 2021–22 in December last year. According to the Budget papers, the deficit over the 5 years to 2025–26 is estimated to improve by $103.6 billion compared to the MYEFO estimates. This is partly due to higher near-term commodity prices. The underlying cash balance is projected to improve from a deficit of 3.4% of Gross Domestic Product (GDP) in 2022–23 to a deficit of 0.7% of GDP by the end of the medium term (2032–33). Net and gross debt as a share of GDP are both forecast to be lower than in MYEFO and decline over time. Net debt is forecast to be 31.1% of GDP at 30 June 2023, stabilise at 33.1% of GDP at the end of the forward estimates (2025–26) and fall to 26.9% of GDP by the end of the medium term. Gross debt is expected to peak at 44.9% of GDP for 2024–25 before falling to 40.3% of GDP by the end of the medium term. Budget forecasts assume prices of key exports will drop from the current high levels to levels more consistent with long-term fundamentals by the end of September this year. However, the Treasurer said that if the current high prices stay in place for the next six months, ‘that will be worth an additional A$30 billion to the budget bottom line’.
One eye-catching figure — the cost of direct economic support in response to the COVID-19 pandemic — is $314 billion.
Is it an election Budget? Some measures — the 50% temporary reduction in the fuel excise, one-off $250 payments to income support recipients and a $450 increase in the amount of the Low and Middle Income tax offset (LMITO) for 2021–22 — could be vote winners. However, they are not permanent measures and many taxpayers will pay more tax in 2022–23 because the Government has not extended the LMITO beyond 2021–22. We will leave it to the commentators to discuss the Budget’s impact on the upcoming Federal election. If you want to read the Budget papers, you can find them at budget.gov.au.
Tax and Super
Highlights
Budget measures for individuals
These are the Budget tax and superannuation measures that will affect individuals.
Low and Middle Income tax offset increased
Medicare levy thresholds
No change to tax rates
Deduction for COVID -19 tests
New deductible donations
Temporary reductions in superannuation minimum drawdown rates extended
Budget measures for businesses
This section of TaxWise reports Budget measures that affect businesses. Some of these measures were first announced before the Budget was handed down.