Federal Budget 2022/23 – Individuals & Families
No changes to legislated tax cuts
No changes to the legislated tax cuts from 1 July 2024. The 32.5% marginal tax rate will be cut to 30% for taxable income between $45,000 and $200,000 and the 37% tax bracket will be entirely abolished.
Current Tax Rates
| Taxable Income | Current Tax Rates |
| Up to $18,200 | 0% |
| $18,201 – $45,000 | 19% |
| $45,001 – $120,000 | 32.50% |
| $120,001 – $180,000 | 37% |
| From $180,001 | 45% |
Tax Rates from 1 July 2024
| Taxable Income | Current Tax Rates |
| Up to $18,200 | 0% |
| $18,201 – $45,000 | 19% |
| $45,001 – $200,000 | 30.00% |
| From $200,001 | 45% |
Eligibility expanded for down-sizer super contributions
The eligibility for making down-sizer contributions to superannuation will be expanded by reducing the minimum age from 60 to 55.
The downsizer contribution allows an individual to make a one-off post-tax contribution to their superannuation of up to $300,000 per person from the proceeds of selling their home.
Both members of a couple can contribute and the contributions do not count towards non-concessional contribution caps.
The measure will take effect from the start of the first quarter after Royal Assent of the enabling legislation.
Paid Parental Leave Scheme
The Paid Parental Leave Scheme will be amended from 1 July 2023 so that either parent is able to claim the payment and both birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria. Parents will also be able to claim weeks of the payment concurrently so they can take leave at the same time.
From 1 July 2024, the scheme will be expanded by 2 additional weeks a year until it reach a full 26 weeks from 1 July 2026. Both parents will be able to share the leave entitlement with a proportion maintained on a “use it or lose it” basis, to encourage and facilitate both parents to access the scheme. Sole parents will be able to access the full 26 weeks.
Child Care Subsidy
The maximum Child Care Subsidy (CCS) rate be be increased from 85% to 90% for families for the first child in care the the CCS rate for all families earning less than $530,000 in household income will be increased.
The current higher CCS rate for families with multiple children aged 5 or under in child care will be maintained, with higher CCS rates to cease 26 weeks after the older child’s last sessions of care, or when the child turns 6 years old.
Increasing available housing
The budget will build on the Government’s $10 billion investment to establish the Housing Australia Future Fund. Returns from the Fund will be used to build 30,000 new social and affordable dwellings over 5 years.
The government is also expanding the remit of the National Housing Infrastructure Facility to allow it to more flexibly use $575 million of existing funds. This will help unlock a project 5,500 new dwellings.
Extension of the ATO Personal Income Taxation Compliance Program
Funding will be provided to extend the Personal Income Taxation Compliance Program a further 2 years to 30 June 2025. Similarly to the ATO Shadow Economy Program, this compliance program received funding in the 2021-22 MYEFO in December 2021 extending its application to 30 June 2023.
This program targets the key areas of non-compliance, including over-claiming of deductions and incorrect reporting of income.
Increased eligibility for Commonwealth Seniors Health Card
Self-funded retirees received a big increase in the income they can earn and still be eligible for the Commonwealth Senior Health Card.
The income threshold increased to $90,000 for singles and $144,000 for couples, so more people will qualify for the seniors health card from FY2023
The current thresholds are $61,284 a year if you’re single, and $98,054 a year for couples.
Deeming Rates frozen at current level
Deeming rates are being frozen at their current level until 30 June 2024.
Deeming rates are used when assessing eligibility for the Age Pension, based on the income test instead of the actual income arising from your financial assets.
For singles the first $56,400 of your financial assets is deemed to return income at 0.25% and for couples the first $93,600 is so deemed. For any financial assets above these levels, the deeming rate is 2.25%.
This is great news for pensioners, as many would have become ineligible for the Age Pension if the deeming rates had increased in line with inflation. For example a pensioner can receive actual interest income from a term deposit, with rates up to nearly 4% today, but still be deemed to receive only 0.25%, under these rules and therefore still qualify for the Age Pension.
Reduction in maximum prescription co-payment
The maximum co-payment on prescription drugs of $42.50 will drop to $30 a script from January, at a cost of $787.1 million over four years.
$2.9 billion package to strengthen primary care, including opening 50 Medicare Urgent Care Clinics, establishing a network of perinatal mental health and wellbeing centres and revamping GP grants.
No extension to Low and Middle Income Tax Offset
There was no extension of the Low and Middle Income Tax Offset announced, past 30 June 2022 – so the FY2022 tax return is the last you will see of that offset. In FY2023, someone earning between $48k to $90k will lose $1,500 in tax credits/refunds compared to FY2022.
