Treasurer Jim Chalmers handed down his second federal budget on 9 May 2023. This budget placed a strong focus on welfare and cost of living support for low income earners, with little to no support for middle income earners and small business.
Better targeted superannuation concessions
This budget placed a strong focus on welfare and cost of living support for low income earners, with little to no support for middle income earners and small business.
Individuals with a total superannuation balance of less than $3 million will not be affected.
It will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15 per cent or zero per cent if held in a retirement pension account
Securing superannuation Australians – increasing the payment frequency of the Superannuation Guarantee (SG) and investing in SG compliance
From 1 July 2026, employers will be required to pay their employees’ SG entitlements on the same day that they pay salary and wages.
Currently, employers are only required to pay their employees’ SG on a quarterly basis. By increasing the payment frequency of superannuation to align with the payment of salary and wages, this measure will both ensure employees have greater visibility over whether their entitlements have been paid and better enable the ATO to recover unpaid superannuation.
Cost of living relief
Energy relief plan
The Government will provide $1.5 billion over five years from 2022–23 (and $2.7 million per year ongoing) to reduce the impact of rising energy prices on Australian households and businesses by providing targeted energy bill relief and progressing gas market reforms.
$1.5 billion over two years from 2023–24 to establish the Energy Bill Relief Fund to support targeted energy bill relief to eligible households and small business customers, which includes pensioners, Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and small business customers of electricity retailers.
The Government will provide $5.7 billion over five years from 2022–23 as an initial investment to provide better access and more affordable care for patients in response to the Strengthening Medicare Taskforce Report. This investment will improve the quality and accessibility of multidisciplinary primary care, modernise Australia’s digital health infrastructure, improve the financial sustainability of general practices, grow, and upskill Australia’s health workforce, and ease the pressure on hospitals.
Funding to support greater access to primary care services includes:
• $3.5 billion over five years from 2022–23 to address the decline in general practitioners’ bulk billing of patients on low incomes, and children. This funding will triple the bulk billing incentive benefits for consultations for Commonwealth concession card holders and patients aged under 16 years of age.
These increased incentives would apply to:
– all face to face general practice consultations more than 6 minutes in length
– all telehealth general practice services which are between 6 and 20 minutes in length (Level B consultations)
– longer telehealth general practice consultations where a patient is registered with their GP through MyMedicare
• $98.9 million over four years from 2023–24 to connect frequent hospital users to a general practice to receive comprehensive, multidisciplinary care in the community which will reduce the likelihood of hospital re admission
• $19.7 million over four years from 2023–24 (and $3.2 million per year ongoing) to implement MyMedicare to formalise the relationship between patients and their primary care providers to improve patient care and health outcomes
• $5.9 million over five years from 2022–23 to enable access to longer telehealth consultations through the MBS for patients and general practices under MyMedicare from 1 November 2023.
Funding to support the expansion of national digital infrastructure includes:
• $429 million over two years from 2023–24 to modernise My Health Record (MHR) including by creating a new National Repository platform which supports easier, more secure data sharing across all healthcare settings, investment to improve the sharing of pathology and diagnostic imaging information, and targeted investment to increase allied health professionals’ connection to MHR
Increase to working age payments
The Government will provide $4.9 billion over five years from 2022–23 (with $1.3 billion per year ongoing) to increase support for people receiving working age payments including the JobSeeker Payment.
This measure will:
• Increase the base rate of working age and student payments by $40 per fortnight. This increase applies to the JobSeeker Payment, Youth Allowance, Parenting Payment (Partnered), Austudy, ABSTUDY, Disability Support Pension (Youth), and Special Benefit. It will commence on 20 September 2023
• Extend eligibility for the existing higher single JobSeeker Payment rate for recipients aged 60 years and over to recipients aged 55 years and over who are on the payment for 9 or more continuous months.
Jobs and skills summit - incentivise pensioners into the workforce - six month extenstion
The Government will provide $3.7 million in 2023–24 to extend the measure to provide age and veterans pensioners a once off credit of $4,000 to their Work Bonus income bank and temporarily increase the maximum income bank until 31 December 2023.
Under this measure, pensioners can earn up to $11,800 before their pension is reduced, supporting pensioners who want to work, or work more hours, to do so without losing their pension. There is expected to be a minor increase in personal income tax receipts in 2024–25 as a result of this measure.
Funding pay increases for aged care workers
The Government will provide $515 million over five years from 2022–23 (and $956.9 million over 10 years from 2022–23) to fund the outcome of the Fair Work Commission’s decision on the Aged Care Work Value Case. The decision was to increase award wages by 15 per cent from 30 June 2023 for many aged care workers including registered nurses, enrolled nurses, assistants in nursing, personal care workers, home care workers, recreational activity officers, and some head chefs and cooks.
Improving aged care support
The Government will provide $827.2 million over five years from 2022–23 to continue to improve the delivery of aged care services and respond to the Final Report of the Royal Commission into Aged Care Quality and Safety.
• $112.0 million over four years from 2023–24 to introduce a new General Practice in Aged Care incentive payment to improve general practitioner attendance and continuity of care in residential aged care homes, and to reduce avoidable hospitalisations
• $41.3 million over four years from 2023–24 (including $11.9 million in capital funding from 2022–23) to build a new place assignment system, allowing older Australians to select their residential aged care provider
Delivering the Referendum to recognise Aboriginal and Torres Strait Island Peoples in the Constitution through a Voice to Parliament
The Government will provide $364.6 million over three years from 2022–23 to deliver the Referendum to recognise Aboriginal and Torres Strait Island Peoples in the Constitution through a Voice to Parliament.
$336.6 million over two years from 2023–24 for the Australian Electoral Commission to deliver the Referendum, including $10.6 million to produce information pamphlets for the ‘yes’ and ‘no’ cases for distribution to all Australian households
$10.5 million in 2023–24 to the Department of Health and Aged Care to increase mental health supports for Aboriginal and Torres Strait Island Peoples during the period of the Referendum
What was not in the buDget
Low and Middle Income Tax Offset (LMITO)
The LMITO has not been extended and has lapsed in the 2021-22 financial year. The offset of up to $1,500 applied to those earning $126,000 a year or less. Cutting the offset will save the government $4.1 billion.
Stage 3 tax cuts
The stage three tax cuts were left untouched in the Federal Budget. The tax cuts, to commence in the 2023-24 financial year, will apply a 30 per cent marginal tax rate to those that earn between $45,000 and $200,000. Although controversial as the cuts are estimated to cost $20 billion a year, they were not addressed as they have already been legislated.
The Government will provide $57.3 million over four years from 2023–24 (and $12.4 million per year ongoing) to improve the culture of parliamentary workplaces for both parliamentarians and staff.
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This article was written by Chris Holloway, Senior Manager of our Taxation Services team.