In the 2022-23 Budget, no changes have been made to Stage 3 tax cuts and no extension of the low and middle income tax offset (which will no longer be available going forward). The Government has also announced additional funding for its personal income taxation compliance program, its Pandemic Leave Disaster Payment and the new High Risk Settings Pandemic Payments. Additionally, an update to the list of deductible gift recipients has been made.
Cessation of the LMITO
The Government has not sought to extend the low and middle income tax offset (LMITO), which was paid for tax returns for the 2021-22 income year. The LMITO will not be available going forward.
No changes have however been made to the low income tax offset (LITO). The LITO will accordingly continue to apply going forward and is available for taxable incomes up to $66,667.
No change to Stage 3 Tax Cuts
There was no announcement in the Budget in relation to personal tax rate changes.
Equally, the Budget did not announce changes to the Stage 3 tax cuts, which are set to commence from 1 July 2024. Under these changes, the 37% tax bracket will be abolished and the 32.5% tax rate will lowered to 30% (so as to apply to taxable incomes between $45,000 to $200,000).
Personal Income Taxation Compliance Program
The Government has announced additional funding for the ATO of $80.3 million to extend the Personal Income Taxation Compliance Program for 2 years from 1 July 2023. The extension and funding will allow the ATO to deliver various proactive, preventative and corrective activities in areas of non-compliance. The measure is estimated to increase receipts by $550 million over 4 years.
Updating list of deductible gift recipients
The Government will specifically list Australians for Indigenous Constitutional Recognition as a deductible gift recipient for donations made between 1 July 2022 to 30 June 2025. The Government will also extend the listing of Australian Women Donors Network as a deductible gift recipient for gifts made from 9 March 2023 and 8 March 2028.
Taxpayers who have made donations of $2.00 or more to the above entities during the relevant period will accordingly be able to claim a tax deduction.
Extension of pandemic support payments
The Government has extended the Pandemic Leave Disaster Payment until mandatory isolation requirements end on 14 October 2022, providing an additional $399.8 million.
Additionally, the Government will provide a further $29.5 million for the High Risk Settings Pandemic Payment to target financial support to workers in sectors that involve frequent close contact with those in care (e.g. aged care, disability care and hospital care workers). The cost of the High Risk Settings Pandemic Payment program will be shared equally between the Commonwealth and the State and Territory governments.
