Liam Drady
Contact West Carr & Harvey

Federal Budget 2022- Individuals

Low and middle income tax offset to be increased
The Government will increase the low and middle income tax offset (LMITO) by $420 for the 2021-22 income year. The LMITO for the 2021-22 income year will be paid from 1 July 2022 when Australians submit their tax returns.

Other than those that do not require the full offset to reduce their tax liability to zero, all LMITO recipients will benefit from the full $420 increase. The benefit to be received will be as follows:

  • Individuals between $37,000 and $48,000 of taxable income will receive $675 plus 7.5% of the amount of the income that exceeds $37,000;
  • Individuals between $48,000 and $90,000 of taxable income will receive the increased maximum of $1,500;
  • Individuals over $90,000 in taxable income will have the maximum amount of $1,500 reduced by 3 cents for every dollar above $90,000, tapering off to an offset of $420 at $126,000 taxable income.

Cost of Living Payment
The Government will provide a $250 economic support payment to help eligible recipients with higher cost of living pressures. The payment will be made in April 2022 to individuals who are currently in receipt of an Australian government allowance or pension, and certain concession card holders.

The payments are exempt from income tax and will not count as income support for the purposes of any income support payment. A person can only receive one economic support payment.

Medicare low-income thresholds for 2021–22
The Government will increase the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2021 to take account recent movements in the consumer price index.

The thresholds will be increased to

  • for singles —$23,226 (previously $23,365);
  • for families — $39,167 (previously $39,402);
  • for single seniors and pensioners — $36,705 (previously $36,925); and
  • for family seniors and pensioners — $51,094 to (previously $51,401).

For each dependent child or student, the family income thresholds increase by a further $3,619 (previously $3,597).

Tax deductibility of COVID-19 tests
The Government announced that the costs of taking a COVID 19 test to attend a place of work are tax deductible for individuals from 1 July 2021. Further, employers will not incur fringe benefits tax if they provide COVID-19 tests to their employees for work-related purposes.

Affordable housing and home ownership
The Government announced it will increase the number of guarantees under the Home Guarantee Scheme to 50,000 participants per year for 3 years from 2022-23 and then 35,000 a year thereafter to support homebuyers to purchase a home with a lower deposit. The guarantees will be allocated as follows:

  • 35,000 guarantees per year ongoing for the First Home Guarantee (formerly the First Home Loan Deposit Scheme)
  • 5,000 places per year to 30 June 2025 for the Family Home Guarantee
  • 10,000 places per year to 30 June 2025 for a new Regional Home Guarantee that will support eligible citizens and permanent residents who have not owned a home for 5 years to purchase a new home in a regional location with a minimum 5% deposit.

Paid Parental Leave scheme changes
The current paid parental leave scheme will be enhanced by combining the current parental leave payment (18 weeks paid leave for primary carer) with the Dad and Partner Pay (2 weeks paid leave) into a single Parental Leave Pay scheme of up to 20 weeks. The leave will be flexible and both parents will be able to choose how they split the leave periods between themselves.

The Paid Parental Leave can be taken any time within 2 years of the birth or adoption of their child. The income test will also be broadened to have an additional household income eligibility test.