AUSTRALIAN FEDERAL BUDGET OCTOBER
2022-23
The new Government has taken a ‘steady as she goes’ approach to the October 2022-23 Federal Budget emphasising its fiscal responsibility credentials and providing certainty to the community that it will constrain excessive spending to help reduce inflation.
The Labor Government’s 2022-23 October Budget presents a ‘modest’ budget that focuses on economic growth measures to address cost of living and productivity issues, as well as spiralling costs of structural programs. It sets out to do this without adding to the inflationary pressures that are permeating through the Australian economy and without putting downward pressure on GDP over the next few years.
A number of key factors have helped support the Australian economy as it emerges from the COVID years. These include record low unemployment rates and high commodity export prices that have meant budget deficit forecasts have been substantially reduced by $42 billion over the next four years as additional revenues are banked rather than spent. Working against these factors are increasing inflationary factors, which are expected to peak at 7.75% in the December 2022 quarter, and the growing cost of structural programs such as NDIS, welfare support (which is indexed to inflation), health, defence and aged care.
While the Budget does not announce significant tax changes, it introduces a number of important tax integrity measures. The key tax-related measures announced in the Budget include:
- Off-market share buy-backs – The Government has announced an intention to align the tax treatment of off-market share buy-backs undertaken by listed public companies with the treatment of on-market share buy-backs.
- A Multinational Tax Integrity Package – The Government will tighten the thin capitalisation rules for multinationals, deny deductions for certain payments for intangibles to low or no tax tax jurisdictions and improve multinational tax transparency reporting.
- Tax treatment of digital currencies – The Government announced measures to clarify that digital currencies will continue to be excluded from the income tax treatment of foreign currency.
- Intangible assets depreciation – The Government has recommitted its intention to set the effective lives of certain intangible assets by statute. In doing so, the Labor Government has reversed a previously announced measure of the former Coalition Government that would have allowed taxpayers to self-assess the effective life for these assets.
- Increased funding for tax avoidance taskforce - The Government has boosted funding for the ATO Tax Avoidance Taskforce by ~$200 million p.a. The Government has also extended the Taskforce for a further year until 1 July 2026.
The Government has also sought to improve productivity over the longer term, with enhanced measures in other areas such as parental leave and childcare. The Budget also focuses on spending reductions such as to selected infrastructure and grants programs.
The new Government has clearly taken a ‘steady as she goes’ approach to emphasise its fiscal responsibility credentials and provide certainty to the community that it will constrain excessive spending. The recent experience in the UK has shown what can happen when governments get their fiscal policy out of control. However longer-term measures and promises, such as the stage 3 tax cuts and ‘real growth’ in wages, remain.
Whether the Government can maintain its moderate stance going forward - particularly with the greater impact of factors outside its control such as geopolitical events - remains to be seen. Fortunately, it will have another opportunity to fine tune its economic approach in May next year when the normal cycle of Budgetary planning returns.
All Budget 2022-23 October documents are available to download from the Treasury's October 2022-23 Budget website.
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FEDERAL BUDGET INSIGHTS
Australian Federal Budget October 2022-23: The digital economy
This year’s Budget has a strong focus on investing in Australia’s broadband and telecommunications capabilities.
25 October 2022
Australian Federal Budget October 2022-23: Health & aged care
This year’s Budget has a strong focus on health and aged care.
25 October 2022
Federal Budget October 2022-23: Corporate Tax
The Government has announced a new integrity measure to align the tax treatment of off-market share buy-backs undertaken by listed public companies with the treatment of on-market share buy-backs.
25 October 2022
Australian Federal Budget October 2022-23: Defence
The Government is committed to ensuring the Australian Defence Force is well positioned to meet Australia’s security challenges over the next decade and beyond, with defence funding increasing beyond two per cent of GDP over the forward estimates - the highest level in decades.
25 October 2022
Australian Federal Budget October 2022-23: Small business
The Government is amending the Fair Work Act 2009 to provide access to 10 days of paid family and domestic violence leave and will provide support to small businesses to understand and implement the new entitlement. The leave will apply to all types of employees, including casuals.
25 October 2022
Australian Federal Budget October 2022-23: Personal tax
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).
25 October 2022
Federal Budget October 2022-23: International
The package is geared towards combating multinational tax avoidance and consists of initiatives in relation to:
25 October 2022
Australian Federal Budget October 2022-23: Tax compliance
The Government has extended the terms of, and increased funding for, several tax compliance programs including those targeting tax avoidance and the shadow economy.
25 October 2022
Australian Federal Budget October 2022-23: Energy
The Government will also provide $14.0 million over 4 years from 2022–23 for the Australian Automobile Association to conduct on-road emissions and fuel consumption testing of light vehicles sold in Australia.
25 October 2022
Australian Federal Budget October 2022-23: Jobs & Family
The Government is further expanding the Paid Parental Leave scheme, by increasing the number of weeks available to families from a total 20 weeks leave in July 2023 up to a total 26 weeks leave by July 2026, at a cost to the budget of $531.6 million over 4 years from 2022–23 (and $619.3 million per year ongoing).
25 October 2022
Australian Federal Budget October 2022-23: Infrastructure
The Government has committed $55 billion of funding towards new and existing infrastructure projects across Australia.
25 October 2022
Australian Federal Budget October 2022-23: Funds & Superannuation
The Labor Government has reviewed and will not proceed with the following superannuation measures announced by the former Coalition Government in the 2018–19 Budget:
25 October 2022
STATE BUDGET INSIGHTS
Insight
2022-23 Queensland Budget Update
The 2022-23 Queensland State Budget was delivered on Tuesday 21 June 2022.
05 July 2022
Insight
2022-23 Tasmanian Budget Update
The 2022-23 Tasmanian Budget was delivered on Thursday 26 May 2022.
05 July 2022
Insight
2022-23 New South Wales Budget Update
The Budget seeks to both address current challenges and deliver transformational reform in NSW. A number of new measures have been announced, which are underpinned by the strong recovery in the NSW economy since the Delta lockdown and a robust economic outlook.
23 June 2022
Insight
2022-23 Western Australia Budget Update
The 2022-23 Western Australia State Budget was delivered on Thursday 12 May 2022.
17 May 2022
Insight
2022-23 Northern Territory Budget Update
The Northern Territory Budget for 2022-23 was delivered on Tuesday 10 May 2022. Despite
13 May 2022
Insight
2022–23 Victorian Budget Update
The 2022-23 Victorian State Budget was handed down on Tuesday 3 May.
06 May 2022
