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
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.
Reminder of September Quarter Superannuation Guarantee Employee super contributions for the quarter ending 30 September 2025 must be received by the relevant super funds by Tuesday, 28 October 2025. If the correct amount of SG is not paid by an employer on time, they will be liable to pay the SG charge, which includes a penalty and interest component. Dealing with rental property repairs Taxpayers who have had work done on their rental property should ensure the expense is categorised correctly to avoid errors when completing their tax return. A deduction for repairs and maintenance expenses can be claimed for work done to remedy, or prevent defects, damage or deterioration from using the property to earn income. These expenses can be claimed in the year they were incurred. However, some capital expenditure may not be immediately deductible, such as for initial repairs, capital works, improvements and depreciating assets. Initial repairs include fixing any pre-existing damage or deterioration that existed at the time of purchasing the property, even if the damage or deterioration was unknown to the taxpayer at the time of purchase. Initial repairs are treated as part of the acquisition cost and included in the cost base of the property for CGT purposes, unless they are capital works or depreciating assets. Capital works are structural improvements, alterations and extensions to the property, and can generally be claimed at 2.5% over 40 years. Capital works deductions can only be claimed after the work has been completed, regardless of when the taxpayer pays the deposit and instalments. Improvements or renovations that are structural are also capital works. Work that goes beyond remedying defects, damage or deterioration that improves the function of the property is regarded as an improvement. Repairs to an entirety are capital and cannot be claimed as repairs. Repairs to an entirety generally involve the replacement or reconstruction of something separately identifiable as a capital item. ATO warns private use of work vehicles and FBT Employers who provide vehicles to their employees need to check how the vehicles are used and whether any exemptions apply to determine if they attract fringe benefits tax. FBT generally applies when a work vehicle is made available for private use, even if it is not actually used. Private use includes any travel not directly related to the employee's job. Exemptions may apply depending on the vehicle's specifications and the nature of the private use. The most common issues the ATO sees include: incorrectly treating private use as business use; assuming dual cab utes are exempt from FBT — exemptions only apply if the vehicle is eligible for the specific FBT exemption and private use is limited; incorrectly classifying vehicles; poor record keeping that does not support the claims or the FBT calculations made Tips to help sole trader clients The ATO is seeing sole traders make mistakes in the following areas: not reporting all income — this includes income earned outside their business (like a 'side hustle'), cash jobs, or payments in-kind/barter deals; overclaiming expenses — this includes claiming the portion of an expense related to personal use, or overstating the cost of goods sold and other business expenses; calculating business losses; incorrectly claiming and offsetting losses from non-commercial business activities against other income sources; misreporting personal services income ('PSI') to gain tax benefits; not registering for GST if they are in the taxi or ride-sourcing industry, or when they reach the GST threshold; and not keeping accurate and complete records. 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.
Are you covered in the event of an audit or a review? With government revenue authorities increasingly using data matching, artificial intelligence, and even social media, they can compare disclosures made in your lodged tax returns to those of other taxpayers or benchmarks. If a data matching check escalates to an official audit, inquiry, investigation, or review, costs in defending your position can accumulate quickly, regardless of whether any adjustments are made to your returns The Audit Shield service is designed to cover such unexpected costs in the event of an audit or a review, and the policy is underwritten by AAI Limited. Benefits of our Audit Shield service: Audits and reviews of Employer Obligations (PAYG/FBT/SG), Income Tax, and GST covered. Previously lodged returns are covered automatically. Fees of any other external specialist (e.g. taxation lawyers) or relevant consultant engaged or instructed by us to assist us in a response to audit activity are also covered. Payment is tax deductible. Please contact our office for more information. Reducing student debt is now law 2026 Federal budget announcement of reducing student debt is now law. A 20% reduction will apply to Higher Education Loan Program debts and other student loans that were incurred before 1 June 2025. The minimum repayment threshold is also increased from $54,435 to $67,000 in 2026 financial year and a new marginal repayment system will apply to taxpayers with income above $ 67,000 for repayment calculations. Previously the repayments were based on a percentage of the repayment income. Small Business Superannuation Clearing House is closing The Small Business Superannuation Clearing House will close on 1 July 2026. SBSCH is a free online service provided by the Australian Government through the ATO to enable superannuation payments. New user registrations will close on 1 October 2025. Existing users must now transition to alternative solutions such as Xero. ATO will include on hold debts in account balances From August 2025 ATO will be including debts on hold in taxpayer ATO account balances. A debt on hold is an outstanding tax debt which ATO has previously put debt collection actions on hold. ATO is currently offsetting such debts on hold against any refunds or credits the taxpayer may get, and ATO has not historically recorded these debts on taxpayer statements of account. If you have debts on hold, more than $100, you will receive a letter before it is added to your ATO account balance. If you have a debt on hold of less than $100, the debt will be included in their ATO account balance but will not receive a letter. PAYGW reminders for activity statements ATO will be sending employers a reminder to lodge their activity statements which include the amounts the ATO has on record for them such as PAYGW reported via STP, GST instalments and PAYG instalments. The ATO's reminders are intended to provide a timeframe for employers to review the prefilled information before lodging activity statements. If the employers do not lodge by the specified date, the ATO will lodge the activity statements based on the information they have, and the debt will be payable. If employers do not make any changes to correct the data or lodge by the due date and the activity statement has been finalised by ATO, they will need to adjust these amounts by lodging a revised activity statement. 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.
Taxpayers who need to lodge a TPAR Taxpayers may need to lodge a Taxable payments annual report online by 28 August if they have paid contractors to provide any of the following services on their behalf: building and construction; cleaning; courier and road freight; information technology; or security, investigation or surveillance. If the ATO is expecting a TPAR from a taxpayer who does not need to lodge one, they can complete a 'TPAR non-lodgment advice form' by 28 August. Taxpayers who no longer pay contractors can also use this form to tell the ATO they will not need to lodge a TPAR in the future Please contact our office if you need assistance with completing and/or lodging a TPAR. Note that paper lodgments of TPARs will no longer be accepted after 28 August 2025. Changes to tax return amendment period for business Businesses with an annual aggregated turnover of less than $50 million now have up to four years from the date of their tax return assessment to request amendments increased from two years. This applies to assessments for the 2024/25 and later income years. If businesses make a mistake on a tax return and need to request an amendment, they should lodge their requests well before the end of the amendment period to make sure the ATO can process it within the time limit. They should keep accurate and complete records to support their amendment request. Paid parental leave changes have now commenced As from 1 July 2025, the amount of Paid Parental Leave available to families increased to 24 weeks, and the amount of Paid Parental Leave that parents can take off at the same time has also increased from two weeks to four weeks. Superannuation will now also be paid on Government Paid Parental Leave from 1 July 2025, at the new super guarantee rate of 12%, paid as a contribution to their nominated superannuation fund. Parents will also benefit from an increase in the weekly payment rate of Paid Parental Leave, increasing from $915.80 to $948.10 (in line with the increase to the National Minimum wage). This means a total increase of $775.20 over the 24-week entitlement. ASIC warning about pushy sales tactics urging quick super switches ASIC is warning Australians to be on alert for high-pressure sales tactics, click bait advertising and promises of unrealistic returns which encourage people to switch superannuation into risky investments. The warning comes amid increasing concerns from ASIC that people are being enticed to invest their retirement savings in complex and risky schemes. These calls may not have the hallmarks of a typical scam. The caller will seemingly have your best interests at heart, and they say they want to help you find a better super product or locate lost super for free. Consumers should always ask questions about salespeople's connections to funds, particularly in circumstances where a particular fund appears in the pitch, as there may be a commission arrangement. Taxpayer's claim for travel expenses denied In a recent decision, the Administrative Review Tribunal denied an offshore worker's claim for work-related travel expenses, although it did allow his claim for home office expenses. During the relevant period, the taxpayer resided in Queensland with his family, while his employment as an engineer was primarily based at an offshore facility located off the coast of Western Australia. In his tax return for the 2022 income year, the taxpayer claimed work-related expenses of over $30,000, relating to accommodation, meal and incidental expenses for stays in Perth, Darwin and Broome between rotations on the offshore facility. The ART noted that the taxpayer's permanent work location was the offshore facility. It accordingly largely disallowed the work-related expenses on the basis that they were "either preliminary to the commencement of those duties, or occurred after employment duties had ceased, and the taxpayer was on leave." The ART also did not accept the taxpayer's claim for travel-related expenses with reference to the substantiation exception, as the allowances he received were not 'travel allowances'. However, the ART did accept the taxpayer's claim for home office expenses of $579, noting that "As an engineer, he is required to engage in continuing professional development and the Masters and other studies completed in the home office were for this purpose." 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.
