The 2023-24 Federal Budget focuses on providing cost of living relief through lower power bills, higher welfare payments and more support for small business and housing. Note: These changes are proposals only and may or may not be made law.
Cost of living
- Energy bill relief: An electricity bill credit of up to $500 will be available in 2023/24 for: – Pensioners
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- Commonwealth Seniors Health Card holders and other concession card holders
- Recipients of Carer Allowance and Family Tax Benefit A and B
- Veterans, and
- those eligible for existing State and Territory electricity concession schemes.
Eligible small businesses will receive a credit of up to $650. The amount of the credit will vary depending on the location, with no further details revealed in the Budget.
- Pharmaceutical Benefits Scheme changes: Individuals will be allowed to buy twice as many common medicines for the price of one script under changes to the Pharmaceutical Benefits Scheme from 1 July 2023. This will allow a patient access to 60 days worth of medicine for each script.
The change will save general patients up to $180 a year per subsidised prescription. Concession card holders are expected to save up to $43.80 a year per medicine.
- Increased bulk billing: Children under the age of 16, pensioners and other Commonwealth concession cardholders will have increased access to free healthcare under this measure, with bulk billing incentives being tripled for the most common consultations. This includes face‑to‑face, telehealth and video conference consultations.
- Household energy upgrades: A number of low-cost loans will be provided to access energy-saving home upgrades, such as battery-ready solar panels, modern appliances and other energy efficiency improvements.
Personal taxation
- No changes to personal income tax: The Budget did not contain any measures announcing changes to personal income tax. This includes:
- no changes to the Stage 3 tax cuts which will take effect from 1 July 2024, and
- No extension of the Low and Middle Income Tax Offset, which ended 30 June 2022.
With nothing new announced in this year’s Federal Budget regarding the stage 3 tax cuts, they remain legislated to take effect on 1 July 2024. However, it’s worth noting that there is more than a year, and a further Federal Budget, between now and commencement.
- Increasing the Medicare levy low-income thresholds: The Government will increase the Medicare levy low-income thresholds for singles, families and seniors or pensioners from the 2022-23 income year. This is a routine increase and applies retrospectively from the beginning of the financial year.
This means low-income earners will be able to earn more income before being liable to pay Medicare levy.
The following table compares the level of taxable income below which no Medicare Levy is payable.
Superannuation
- Better targeted superannuation concessions: The Government will reduce tax concessions on certain superannuation accounts for individuals with a ‘total super balance’ (TSB) of more than $3 million (unindexed). The earnings on any balance that exceeds the $3 million threshold will be subject to an additional tax of 15% (up to 30% in total). Individuals with a TSB less than $3 million will not be impacted by this change, and investment earnings on the accumulation balance will continue to be taxed at the maximum rate of 15%.
- Increasing the payment frequency of employer super payments: Employers will be required to pay their employees’ super at the same time as their salary and wages from 1 July 2026.
Small business support
- Small Business Energy Incentive: The Government has extended support for small and medium businesses to save on energy bills through incentivising the electrification of assets and improvements to energy efficiency.
Small and medium businesses (those with aggregated annual turnover of less than $50 million), will be able to deduct an additional 20% of the cost of eligible depreciating assets that support 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 being $20,000 per business.
Eligible assets or upgrades will need to be first used or installed and ready for use between 1 July 2023 and 30 June 2024. These will include assets that upgrade to more efficient electrical goods such as energy efficient fridges, assets that support electrification such as heat pumps and electric heating or cooling systems, and demand management assets such as batteries or thermal energy storage.
- $20,000 instant asset write-off: A temporary extension of the instant asset write-off threshold of $20,000. From 1 July 2023 until 30 June 2024. Small businesses with an annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
Small businesses can instantly write off multiple assets as the $20,000 threshold will apply on a per asset basis.
Improved aged care support
From 1 July 2022
The government will provide additional funding over 5 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. Funding includes:
- extension of Disability Support for Older Australians Program
- introduction of 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
- a new place assignment system, allowing older Australians to select their residential aged care provider.
This measure extends the 2022–23 October Budget measure titled Implementing Aged Care Reform
Pay rise for aged care workers
From 1 July 2023
Severe staff shortages in the aged care sector, largely been driven by low wages, may abate a little with the government’s commitment to fund a pay rise.
More than $11 billion has been allocated to support an interim 15 per cent increase in award wages.
The increase will benefit 250,000 people including registered nurses, enrolled nurses, assistants in nursing, personal care workers, head chefs and cooks, recreational activities officers (lifestyle workers), and home care workers.
Social security
- Increase to working age payments: The fortnightly rate of JobSeeker Payment and certain other benefits will increase by $40 ($1,040 pa) on 20 September 2023. The minimum age for the higher rate of JobSeeker Payment will also reduce from age 60 to 55 and over for those who have received the payment for nine or more continuous months. Single recipients aged 55 to 59 with nine continuous months on payment will receive an extra $99.40 pf as a result of both changes.
- Increasing Rent Assistance: The maximum rates of Rent Assistance will increase by 15% on 20 September 2023. This will provide recipients with up to $31 extra per fortnight.
- Increase to Home Care packages: As part of a package to improve the in-home aged care system, the Government will increase the number of Home Care packages by 9,500 in 2023/24. This may help reduce the wait time for individuals who are waiting for a package to be assigned to them.
- Parenting Payment (Single) – improved support for single parents
The Government will provide $1.9 billion over 5 years (and $0.5 billion per year ongoing) to extend eligibility for Parenting Payment (Single) to support single principal carers with a youngest child under 14 years of age. The existing eligibility provides support to single principal carers with a child aged under 8 years of age.
In addition, the Government will abolish ParentsNext from 1 July 2024 and develop a replacement voluntary program, to provide high-quality pre-employment support. This will end the risk of losing payments and take away unnecessary stress and anxiety from participants, who are mostly women and single parents.
- Support for families
Cheaper childcare commences in July. Legislated measure to take effect from July 2023 .
The government has re-announced their commitment to a previously legislated measure(3) aimed at providing more affordable childcare. The measure, which was legislated in November 2022, will commence from July 2023. The government says around 1.2 million families will begin to benefit from cheaper childcare. Child Care Subsidy rates will increase up to 90 per cent for eligible families and up to 95 per cent for any additional children in care aged 5 years and under.
For families earning over $80,000, the subsidy rate will taper down by 1 percentage point for every additional $5,000 of family income until the subsidy reaches 0 per cent for families earning $530,000.
A more flexible and generous Paid Parental Leave scheme will also be introduced in July. A new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year.
Housing assistance
- Changes to eligibility for home buyer guarantee schemes: From 1 July 2023, joint applications may be made by friends, siblings and other family members under the First Home Guarantee and the Regional First Home Buyer Guarantee. Non-first home buyers who have not owned a property in Australia in the last ten years will also be eligible.
Eligibility for the Family Home Guarantee is also expanding to include eligible borrowers who are single legal guardians of children such as aunts, uncles and grandparents.
The number of guarantees available and other eligibility criteria are unchanged.
Contact advice@evalesco.focusedgrowth-dev1.com.au or your Personal Financial Adviser to discuss any part of this year’s Federal Budget and how it may impact you.
Information in this article has been sourced from the Budget Speech 2023-24 and Federal Budget Support documents.
It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.
Sources
(1) Family Assistance Legislation Amendment (Cheaper Child Care) Bill 2022
