The Federal Budget is due to be handed down tomorrow, Tuesday 9th May 2023.

Please remember that legislation must be passed before any of the measures are law.

Keep an eye out for our 2023 Federal Budget Summary later this week, but here’s what we know so far:

Employee super payments move from quarterly to ‘payday’ from 1 July 2026

From 1 July 2026, employers will be required to pay employee superannuation at the same time that they pay their salary and wages.

$20k Small business energy incentive

The Government has committed to a Small Business Energy Incentive Scheme that offers a bonus tax deduction of up to $20,000.

The Small Business Energy Incentive encourages small and medium businesses with an aggregated turnover of less than $50 million to invest in spending that supports “electrification” and more efficient use of energy.

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction of $20,000 per business. Eligible assets or upgrades will need to be first used or installed ready for use between 1 July 2023 and 30 June 2024 to qualify for the bonus deduction.

Incentives to improve residential rental property supply

The Government has announced a series of measure to boost Australia’s rental stock:

• Increasing depreciation from 2.5% to 4% on new built-to-rent projects where construction commenced after 9 May 2023.
• Reducing the withholding tax rate from 30% to 15% for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties after 1 July 2024 (subject to further consultation on eligibility criteria).
• Affordable housing through the NHFIC - An additional $2bn has been allocated to the National Housing Finance and Investment Corporation (NHFIC), increasing the NHFIC’s cap from $5.5 billion to $7.5 billion from 1 July 2023 to support more social and affordable rental housing.

Access to home guarantee scheme expanded to friends and siblings

From 1 July 2023, access to the Government’s Home Guarantee Scheme will be expanded to joint applications from “friends, siblings, and other family members” and to those who have not owned a home for at least 10 years.

Future earnings for super balances above $3m taxed at 30% from 2025-26

The Government has announced that:

• An additional 15% tax on earnings will be imposed on members with superannuation and pension balances above $3 million from 1 July 2025 (not indexed); and
• The additional 15% tax will apply to ‘unrealised gains’. This will mean that a tax liability will arise if the value of fund assets increases even if they are retained.

$1,500 low and middle income tax offset ends

The Government has confirmed that they will not extend the $1,500 Low and Middle Income Tax Offset beyond 2021-22. 

Low income and renters electrification package

As part of the deal to enable the Government to cap gas prices, the Greens secured an electrification package in the upcoming Budget. The Government will examine support that could be provided to households to electrify their space heating, water heating, cooking and other appliances and equipment. The focus is on households that most need support, such as low-income households, renters, public and community housing residents and apartment dwellers, given the additional barriers they face.

Sovereign “Green Bonds” Program

The Government has announced the introduction of a Sovereign Green Bonds Program enabling investors to support public projects to drive Australia’s net zero transformation. The Australian Office of Financial Management will engage with the investment community on the Green Bonds Program, with the first issuance scheduled for mid‑2024.

We will provide more detail on the Budget measures after they are handed down.

Please remember that legislation must be passed before any of the measures are law.

As always, do not hesitate to contact us.

Kind regards,

SaabTeece