Shuffling the Deck: 2022-23 Budget 2.0

Last night the Treasurer, Jim Chalmers, handed down his first Federal Budget. Given the rapidly escalating economic risks – a deteriorating global growth outlook, rising inflation and structural spending pressure, he promised a “solid and sensible budget”.

There is nothing in this Budget that would create a UK style crisis. The stage 3 tax cuts legislated to commence on 1 July 2024 are not mentioned, and most funding initiatives appear to be a reallocation of previous Government initiatives. And, the commodity-driven $54.4 billion improvement in tax receipts has largely been banked, not spent.

Key announcements included:

• The Budget bottom line is to improve now, but worsen later; tough decisions are still to come
• No change to legislated Stage 3 tax cuts for individuals subsidy increase
• Added flexibility and an expansion of Paid Parental Leave
• Aged care reforms
• Change to the taxation of off-market share buy-back by listed companies
• The scrapping of the initiative to self-assess the effective life of intangible assets
• Scrapping of the announced but not legislated 3-year audit cycle for SMSFs
• Energy grants for SMEs (but no detail yet)
• Tightening of the thin cap rules and the denial of deductions for intangible assets between related parties in certain circumstances
• More cash to the ATO to pursue personal income tax non-compliance and multi-nationals
• More funding for the Tax Practitioners Board to pursue dodgy tax agents

With seven months before the 2023-24 Budget released in May 2023, this Budget is a shuffling of the deck, not a new set of cards.

To read the Federal Budget Overview, click here.