With a federal election looming, Budget 2022/23 was never going to be radical, nevertheless, Josh Frydenberg’s fiscal roadmap for the next 12 months unveiled a number of initiatives that will have implications and impacts for the Australian economy, and Australian businesses, business owners, industries and sectors. Here, Matthews Steer Partner Charith Mandadige shares the five budget announcements that caught his eye, and flags the government grants you should keep your eye on in the lead-up to, and wake of, Election 2022.
Increase to low and middle income tax offset (LMITO)
What is the LMITO: In recognition of the ever-increasing cost of living, low and middle-income earners will receive a one-off $420 ‘cost of living tax offset’ for the 2022 income year, provided as an increase to the existing LMITO. This offset increase will bring the LMITO benefit to a maximum $1,500 for individuals and $3,000 for couples. With the exception of the additional cost of living offset for 2022 the terms and conditions of the LMITO remains unchanged. The LMITO will not be available for the 2023 financial year.
Am I Eligible for the LMITO: Paid from July 1, 2022 (following submission of an income tax return) all eligible will receive the full $420 offset unless it’s not required to reduce their tax liability to zero.
Calculate your LMITO for 2022
| INCOME | CURRENT LMITO | ADDITIONAL COST OF LIVING OFFSET |
| $0 – $37,000 | $255 | $420 |
| $37,001 – $48,000 | $255 + 7.5% of excess over $37,000 | $420 |
| $48,001 – $90,000 | $1,080 | $420 |
| $90,001 – $125,999 | $1,080 – 3% of excess over $90,000 | $420 |
| $126,000+ | Nil | Nil |
Skills and training boost
What is the Skills and Training Boost: Designed to support small and medium-sized businesses to train and upskill their employees, the boost will apply to eligible businesses (aggregated annual turnover of less than $50 million) for expenditure incurred from 7:30pm (AEDT) on March 29 2022 until June 30 2024. The boost will enable eligible businesses to deduct an additional 20% of expenditure incurred on external employee training courses, delivered in-person or online by registered Australian training providers. Exclusions include in-house and on-the-job training, and courses provided to non-employees.
How to claim the skills and training boost: For eligible expenditure incurred by June 30 2022, the boost will be claimed in tax returns for the following income year. For eligible expenditure incurred between July 1 2022 and June 30 2024, the boost will be claimed in the income year in which the expenditure is incurred.
Technology investment boost
What is the Tech investment boost: The government is introducing the technology investment boost to encourage small and medium Australian businesses to ‘go digital’. The boost will enable businesses with aggregated annual turnover of less than $50 million to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support digital adoption. This includes portable payment devices, cyber security systems and subscriptions to cloud-based services. Under an annual cap, expenditure up to $100,000 will be eligible for the boost in each qualifying income year, representing a maximum additional deduction of $20,000 per eligible year.
How to claim the Tech Investment Boost: The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on March 29 2022 until June 30 2023. For eligible expenditure incurred by June 30 2022, the boost will be claimed in tax returns for the followingincome year. For eligible expenditure incurred between July 1 2022 and June 30 2023, the boost will be claimed in the income year in which the expenditure is incurred.
Extending reduction in minimum superannuation drawdowns
What is the reduction in minimum superannuation drawdowns: The 50% reduction of superannuation minimum drawdown requirements for account-based pensions (‘ABPs’) and similar products will be extended to June 30 2023.
Reduced minimum percentage factors for ABPs (including TRISs)
| RECIPIENT’S AGE | MINIMUM % FACTOR | REDUCED MINIMUM % FACTOR |
| Under 65 | 4% | 2% |
| 65 to 74 | 5% | 2.5% |
| 75 to 79 | 6% | 3% |
| 80 to 84 | 7% | 3.5% |
| 85 to 89 | 9% | 4.5% |
| 90 to 94 | 11% | 5.5% |
| 95 and above | 14% | 7% |
*NB: Note that, for ABPs and TRISs that commence or cease part-way through the 2023 income year, a pro-rated minimum pension payment applies (unless the pension commenced on or after 1 June 2023, in which case, no minimum pension payment is required).*
$250 cost of living payment
What is the cost of living Payment: To help offset the increased cost of living domestically, eligible Australian residents will receive a one-off $250 cost of living payment. Made in April 2022, the one-off payment will be exempt from tax and will not count as an income support payment.
Am I eligible to receive the cost of living payment: Recipients of a range of income support measures, and concession card holders, are eligible for the cost of living payment.
To learn more about how the announcements from Federal Budget 2022 might impact you, please contact Charith Mandadige on (03) 9325 6300
Key government funding announcements
Increased funding for manufacturing grants
The government has committed an additional $1-billion for the Modern Manufacturing Strategy, including:
- $750-million to support transformational manufacturing projects and catalyse private sector investment in Australian manufacturing via the Modern Manufacturing Initiative.
- $200-million to strengthen supply chain resilience and sovereign manufacturing capability via the Regional Accelerator Program.
- $53.9-million to help small and medium manufacturing businesses to adopt new technologies, scale up, grow and compete internationally via Round 3 of the Manufacturing Modernisation Fund.
Increased funding for Export Market Development Grants (EMDG)
The government has committed an additional $100-million to provide financial support to existing regional and rural small to medium-sized exporters to promote their goods and services, including tourism, in new markets via EMDG program. This is in addition to the $80-million EMDG funding announced in December 2021.
This new government grant funding is unlikely to take effect prior to the federal election but Gary Twomey and Richard Wraith from our Government Grants Advisory Team are available now on (03) 9325 6300 to help you understand your eligibility for government funding, and what’s involved in submitting a successful government grant application.