2022/23 October Federal Budget Update
Author na1616mewedewd
On 25 October 2022, Treasurer Jim Chalmers handed down an updated 2022/23 Federal Budget with following summary updates.
FBT exemption on electric cars
From 1 July
2022, the measure will exempt battery, hydrogen fuel cell and plug-in hybrid electric cars from fringe benefits tax and import tariffs if they have a first retail price below the luxury car tax threshold for fuel-efficient cars. The car must not have been held or used before 1 July 2022. Employers will need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount.
COVID-19 business grants are non-assessable non-exempt
The following state and territory COVID-19 grant programs are non-assessable non-exempt for income tax.
- Victoria Business Costs Assistance Program Four – Construction
- Victoria Licenced Hospitality Venue Fund 2021 – July Extension
- Victoria Licenced Hospitality Venue Fund 2021 – Top Up Payments
- Victoria Business Costs Assistance Program (Round Two Top Up, Round Three, Round Four, Round Five)
- Victoria Impacted Public Events Support Program Round Two
- Victoria Live Performance Support Program (Presenters) Round Two
- Victoria Live Performance Support Program (Suppliers) Round Two
- Victoria Commercial Landlord Hardship Fund 3
- Australian Capital Territory HOMEFRONT 3
- Australian Capital Territory Small Business Hardship Scheme
Changes to unlegislated taxation and superannuation measures introduced by previous government
Certain tax and super measures that were announced but not legislated by the previous Government will not be proceeded, including:
- The previous Government announced it would change the annual audit requirement to a three-yearly requirement for SMSFs with a history of good record-keeping and compliance.
- The 2018/19 Budget proposed introducing a limit of $10,000 for cash payments made to businesses for goods and services.
Certain tax and superannuation measures will be deferred to allow more time for policies to be legislated and implemented including:
- Introducing a sharing economy reporting regime for transactions relating to the supply of ride sourcing and short-term accommodation from 1 July 2022 will be deferred to 1 July 2023.
- Other reportable transactions including asset sharing, food delivery and tasking-based services will be deferred from 1 July 2023 to 1 July 2024.
- Relaxing residency requirements for SMSFs, from 1 July 2022 to the income year commencing on or after the date of Royal Assent of the enabling legislation. The previous Government announced that it would relax residency requirements for SMSFs by extending the ‘central control and management test’ safe harbour from two years to five years and removing the ‘active member test’. This measure is intended to allow SMSF members to continue to contribute to their superannuation fund whilst temporarily overseas.
Expanding the eligibility for downsizer contributions
The minimum eligibility age for the downsizer contribution will be reduced from 60 to 55 years from the start of the first quarter after Royal Assent of the enabling legislation. The downsizer contribution allows people 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.
The Government has also announced further measures to reduce the financial impact on pensioners looking to downsize their homes as:
- Extending the assets test exemption for principal home sale proceeds from 12 months to 24 months for income support recipients.
- Changing the income test to apply only the lower deeming rate (0.25%) to principal home sale proceeds when calculating deemed income for 24 months after the sale of the principal home.
Boosting Paid Parental Leave
Reforms will be introduced from 1 July 2023 so that either parent is able to claim the payment and birth parents and non-birth parents are allowed to receive the payment if they meet the eligibility criteria.
From 1 July 2024, the scheme will be expanded by two additional weeks a year until it reaches 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. Sole parents will be able to access the full 26 weeks.
Digital currencies are not taxed as foreign currency
The Government will introduce legislation to confirm that digital currencies such as Bitcoin will continue to be excluded from the Australian income tax treatment of foreign currency. This maintains the current tax treatment of digital currencies where they are held as an investment. This measure removes uncertainty following the decision of the Government of El Salvador to adopt Bitcoin as legal tender and will be backdated to income years that include 1 July 2021.
The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency.
Reverse self-assessment of the effective life of intangible assets
The previous Government announced it would allow taxpayers to self-assess the tax effective lives of eligible intangible depreciating assets, such as patents, registered designs, copyrights and inhouse software.
This measure will not be proceeded.
Increase in Commonwealth penalty unit
The Commonwealth penalty unit will be increased from $222 to $275, from 1 January 2023. The amount will be indexed every three years in line with the CPI with the next indexation occurring on 1 July 2023.
ATO Compliance Programs
The Government has announced it will extend the following ATO compliance programs:
- Personal Income Taxation Compliance Program
The Government will provide funding to the ATO to extend its Personal Income Taxation Compliance Program for two years from 1 July 2023. This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, including overclaiming deductions and incorrect reporting of income. - Shadow Economy Program
The Government will extend the existing ATO Shadow Economy Program for a further three years from 1 July 2023. The extension of the Shadow Economy Program will enable the ATO to continue a strong and co-ordinated response to target shadow economy activity, protect revenue and level the playing field for those businesses that are following the rules. - Tax Avoidance Taskforce
The Government has boosted funding for the ATO Tax Avoidance Taskforce by around $200 million per year over four years from 1 July 2022, in addition to extending this Taskforce for a further year from 1 July 2025. The boosting and extension of the Tax Avoidance Taskforce will support the ATO to pursue new priority areas of observed business tax risks, complementing the ongoing focus on multinational enterprises and large public and private businesses.
Multinational Tax Integrity Package
The Government has announced the following changes in relation to its Multinational Tax Integrity Package:
- From 1 July 2023 the following changes will be made in relation to Thin capitalisation rules:
The safe harbour and worldwide gearing tests will be replaced with earnings based tests to limit debt deductions in line with an entity’s profits. The changes will apply to multinational entities operating in Australia and any inward or outward investor. Financial entities will continue to be subject to the existing thin capitalisation rules.
- The Government will introduce rules to prevent significant global entities from claiming tax deductions for payments made to related parties in relation to intangibles held in ‘low-or no-tax’ jurisdictions from 1 July 2023.
- The Government will require large multinationals to release tax information to public on a country-by-country basis and a statement on their approach to taxation and Australian public companies to disclose information on the number of subsidiaries and their country of tax domicile; and tenderers for Australian Government contracts worth more than $200,000 to disclose their country of tax domicile.
The information provided in this update is general in nature and if you have any queries of require further information or assistance with the above, please contact our office.
Crawford News
$20,000 instant asset write-off is extended Small business instant asset write off is extend to 30 June 2026. If a business has an aggregated annual turnover of less than $10 million, they may be able to use the instant asset write-off to immediately deduct the business portion of the cost of eligible assets that are $20,000. Eligible assets must be first used between 1 July 2025 and 30 June 2026. The $20,000 limit is per asset. Cash in hand sales The ATO is cracking down on businesses that use cash to avoid paying tax, employer and business obligations. Some examples of such situations are: Failure to report all sales Failure to pay GST, income tax, PAYG withholding, super guarantee, insurance and work cover Reporting income below $75,000 to avoid GST registration Failure to meet employment awards and work cover Workers who are paid cash-in-hand risk losing their entitlements and if they are injured at work, they may not be protected. Contractors income Data matching records indicate some contractors are incorrectly reporting or omitting income. Contractors need to report all their income in their tax return, including payments made by businesses for their contracting work. Note that, as part of the taxable payments reporting system, businesses in some industries must lodge a Taxable payments annual report to report contractor payments for providing the following services: Building and construction; Courier; Cleaning; Information technology; Road freight; and Security, investigation or surveillance. Contractors who provide the above services must note that the businesses they contract to report their payments to the ATO on their TPAR. Contractors must then report their income in their tax returns to avoid data matching discrepancies. If the ATO suspects a contractor may have omitted TPRS income on their tax return, it may contact them to request they amend their tax return. If the contractor does not take action, the ATO may conduct a review and audit of their business, and penalties and interest may apply. Government payments programs The ATO is reminding taxpayers that receive government payments for delivering services under a Commonwealth program, such as healthcare, disability support or child care, that they have an obligation to: Keep accurate records; and Report any such income they receive in their tax return. The ATO recently advised that it would be contacting taxpayers and tax agents in February by email to ensure that income received from government agencies such as the Aged Care Subsidy or under the National Disability Insurance Scheme is reported correctly in their tax returns. The ATO has updated its Government Payments Program data-matching program protocol to better detect non-compliance, and work more effectively with other government entities. Work-related expense claims rejected by ART The Administrative Review Tribunal recently disallowed a taxpayer's claims for many different types of work-related expenses. The taxpayer was employed full-time as an engineer, working from home two days a week. For the 2023 income year, he claimed deductions totalling over $61,000, in relation to car expenses, travel expenses, clothing expenses, and home office expenses, all of which he claimed were work-related. The ATO largely disallowed these deductions, and the ART affirmed the ATO's decision, primarily due to problems with substantiating these claims. For example, in relation to the car expenses, the ART noted that none of the log books were contemporaneous, and the log book entries were inconsistent with independent records. In relation to travel expenses, the ART noted that the taxpayer did not provide evidence clearly identifying which travel expenses had been reimbursed by his employer, and the ride share documentation did not include the date, time or destination of travel. In relation to home office utility expenses, the ART noted that the taxpayer only provided calculations estimating the business use proportion of those expenses, without providing any documentary evidence to substantiate the expenses. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
Cash acceptance is mandated for essential purchases From 1 January 2026, food and grocery retailers must accept cash for in-person transactions of $500 or less between 7am and 9pm. Small businesses with aggregate annual turnover under $10 million are generally exempted from the mandate. However, this mandate still applies to small businesses that share a trademark with a large retailer. The Government noted that, in addition to the cash mandate for fuel and groceries, consumers also already have the option to pay their bills, including utilities, phone bills and council rates, in cash at their local Australia Post outlet through Post Billpay. The Government will review this mandate after three years, to ensure it is functioning as intended. ATO child support data-matching program ATO will acquire child support data from Services Australia for the 2025 to 2027 income years, including the following: The ATO estimates that records relating to up to 300,000 individuals will be obtained each financial year, which will be matched against ATO records. The objectives of this program are to: allow Services Australia to more accurately assess child support obligations, and maximise opportunities to collect child support debts; and identify and educate individuals who may be failing to meet their lodgment obligations and help them to finalise their lodgment obligations, or notify the ATO that an income tax return is not required. Paying super guarantee Employers need to pay a minimum of 12% of each employee's ordinary time earnings into a complying super fund on a quarterly basis (the due date for the March 2026 quarter is 28 April 2026). In most cases, employees can choose the super fund. Employers who do not pay in full, on time or to the correct super fund will have to pay the SG charge, which is made up of the super they owe, nominal interest on those amounts (currently 10%), and an administration fee of $20 per employee, per quarter. These payments must be made through SuperStream. Small Business Superannuation Clearing House service will be permanently closed from 1 July 2026. Existing users should switch to an alternative method to pay their employees' super guarantee. When new employees start, employers must comply with the 'choice of fund rules' if the new employee does not choose a super fund. Employers may now need to request the new employee's 'stapled super fund' details from the ATO. Time limits on GST and fuel tax credit claims GST credits and fuel tax credits will expire if not claimed within the 4-year credit time limit (generally four years from the due date of the original BAS in which the taxpayer could have claimed them). Once credits expire, the ATO has no discretion or ability to amend the assessment to include those credits. There may be situations where the ATO is able to amend for overpaid or underpaid GST or overclaimed credits, but additional credits cannot be included in an amendment assessment. If credits are near expiry, taxpayers should consider: claiming the credits in their next BAS that is still within the 4-year credit time limit; requesting the amendment by lodging a revised BAS for the tax period to which the credits are attributable; or lodging a valid objection against their assessment for the period to which the GST credits are attributable before the end of the 4-year credit time limit. Departure Prohibition Orders for overdue tax debts The ATO is actively using departure prohibition orders as part of a broader shift towards debt collection. A DPO is an enforcement action available to the ATO to prevent certain persons with tax liabilities from leaving Australia without paying their outstanding tax. Since July 2025, the ATO has issued 21 DPOs, more than the total number issued in the entire financial year ended 30 June 2025. The ATO notes that a taxpayer was recently prevented from boarding a flight in the early hours of the morning due to a DPO imposed because of deliberate non-payment of a significant debt. The dog breeding activities treated as an enterprise The ART recently held that a taxpayer had carried on an enterprise of dog breeding for GST purposes. He had lodged activity statements for the quarters ended 30 September 2018 to 31 December 2021 inclusive, claiming input tax credits for the dog breeding activities he carried on from his home. The ATO disallowed the taxpayer's claims for the above periods, arguing that enterprises were not carried on, and that there was a lack of appropriate substantiation. The ART however held that the taxpayer's dog breeding operation was an enterprise for GST purposes, noting that his activities had "the necessary commercial character." Therefore, the taxpayer was entitled to ITCs for that enterprise. However, the ART affirmed the ATO's decision to reduce the taxpayer's other ITC claims, such as in relation to stamp duty on the acquisition of a property and for café and grocery expenses. The ART also admonished the taxpayer for apparently using artificial intelligence in the presentation of his case, as he appeared to rely on cases and principles that did not exist. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
December 2025 Superannuation Guarantee is due on 28 January 2026 Employee super contributions for the quarter ending 31 December 2025 must be received by the relevant super funds by 28 January 2026. If the correct amount of SG is not paid by an employer on time, the employer must lodge a superannuation guarantee statement and pay the superannuation guarantee charge which includes admin fees and interest. ATO Small Business Superannuation Clearing House is closing ATO Small Business Superannuation Clearing House will close on 1 July 2026. Employers must make arrangements to move to an alternative clearing house now to avoid any unexpected delays with superannuation payments. Following are few key dates in relation to the clearing house. 10 December 2025 — Super payments, along with instructions, must be received by 5.30 pm AEDT on this date. Payments received after this time will be processed from 2 January 2026. 28 January 2026 — December SG due February to March 2026 — Employers should move to an alternative clearing house 28 April 2026 — March SG due 30 June 2026 — Final day of the service. Make final payments. Employers may already have other options readily available so they can exit from using the SBSCH ahead of time and your existing software and payroll packages may already include super functions they can use to pay SG. Popular software packagaes such as Xero contain their own clearing house. ATO's approach to holiday home expenses ATO now takes the view that, if a taxpayer's rental property is also being used as a private holiday home, certain deductions relating to holding it will not be deductible in total as opposed to being apportioned. Expenses relating to ownership and use of the holiday home such as interest, rates and maintenance will not be deductible, unless the holiday home is 'mainly' used to produce assessable income. Whether a holiday home is used 'mainly' to produce assessable income will be determined based on a consideration of a number of factors. However, this will generally not apply to expenses incurred in relation to holiday homes that are rental properties before 1 July 2026, if those expenses are incurred under an arrangement entered into prior to 12 November 2025. ATO warns about barter credit tax scheme The ATO is warning the community to steer clear of an emerging tax scheme involving barter credits — a type of alternative currency used in some business networks. A tax scheme that involves artificially inflating deductions for donations of barter credits to deductible gift recipients is on the rise. While it may seem enticing, promoters and taxpayers could face potentially significant consequences if they are involved. The ATO is concerned that such schemes are being enabled by several barter exchanges that are allowing participants to access barter credits with a nominal face value that is much more than any payments actually made to the exchange. Participants then donate these barter credits to a DGR and claim a larger tax deduction than they are entitled to. Dental expenses are not deductible ATO has noted a number of claims for dental expenses this tax time. Dental expenses, including preventative and necessary dental treatment, medical expenses and other costs relating to personal appearance are not deductible. These expenses are generally private expenses, even if an employer expects an employee to maintain a certain appearance, or pays them an allowance to cover grooming expenses. A deduction can only be claimed for an expense that directly relates to earning their income. Private expenses cannot be claimed as a deduction. Taxpayers should have written evidence of all their expenses, and be able to show a direct connection with those expenses to their employment income. The information provided in this Newsletter is general in nature and if you have any queries or require further information or assistance with the above, please contact our office.
ATO Focus on Small Business The ATO is actively identifying and addressing errors among businesses with turnovers between $1 million and $10 million. Key industries under scrutiny include property and construction, as well as professional, scientific, and technical services such as engineering, IT, design, and consulting. Common issues observed include: Omitted income or sales in Business Activity Statements and tax returns, including income from related entities. Overstated expenses or GST credits. Private expenses incorrectly reported as business-related or not properly apportioned. Failure to register for GST when required. Incorrect R&D tax incentive claims for ineligible activities. Lack of independent advice from registered tax agents, particularly in contractor arrangements. By highlighting these issues, the ATO aims to help small business operators improve compliance and avoid common mistakes. Dual Cab Utes and FBT Dual cab utes are not automatically exempt from fringe benefits tax. If an employer provides a dual cab ute for work purposes and it is available for personal use, it may be subject to FBT. To qualify for an exemption, the vehicle must: Be an eligible vehicle , meaning it is designed to carry at least one tonne, more than eight passengers, or it is not primarily designed for passenger use. Be used only for limited private purposes , such as minor, infrequent, or irregular trips. If these conditions are not met, the employer may be liable for FBT. Employers should monitor employee vehicle use and maintain proper documentation to determine eligibility. Claiming Business Expenses Taxpayers can claim deductions for most business expenses if they comply with the ATO’s three key rules which are: The expense must relate directly to business use. If the expense has both business and private use, only the business portion can be claimed. Taxpayers must keep records to substantiate their claims. New ATO Data-Matching Programs The ATO continues to enhance its data-matching programs to improve compliance, detect errors, and prevent fraud. Data is used to pre-fill returns, verify accuracy, and identify taxpayers who may need assistance. When discrepancies arise, the ATO may contact tax agents or their clients to clarify the differences. Rental Properties ATO will issue letters to taxpayers where its data suggests that rent income was omitted or incorrect in previously lodged returns. If you receive such a letter, please contact our office for assistance. Offshore Merchant Data-Matching The ATO will collect merchant transaction data from Australia’s major banks for the 2025–2027 financial years. Around 9,000 offshore merchant records will be acquired annually. SMSF Compliance and Release Authorities The ATO has noted an increase in self-managed super funds failing to comply with release authorities such as excess contributions or Division 293 tax. Common issues include: Failure to respond within the required 10 business days. Incorrect responses, such as not releasing the full amount or not submitting a release authority statement. Non-compliance can attract significant penalties. Trustees should ensure robust systems are in place to respond promptly and correctly to ATO release authorities. The information in this publication is general in nature and should not be relied upon as professional advice. Individuals should seek specific guidance to ensure applicability to their personal circumstances.
