Federal Budget announcement 2023 – updates for individuals

The key considerations for individuals as a result of the 2023 Federal Budget announcement are as follows:

Status of Labour Tax Reform Announcements in 2019 Election Campaign
Labour has confirmed that most of its tax reforms announced as part of their 2019 Federal Election campaign will not be proceeding. In particular:

• No changes to franking credit refund rules
• No curbing of negative gearing
• No reduction in the capital gains tax discount
• No minimum 30% tax on family trust distributions.

Paid Parental Leave scheme expanded
Paid parental leave allowance will be expanded by six weeks up to 26 weeks (six months), amounting to an extra $6499.
However, the changes won’t begin until 1 July 2024 and will be gradual until the scheme reaches its full weeks from July 2026.

It is proposed that both parents will be able to share the total paid parental leave entitlement, and sole parents having access to full 26 weeks. “Use it or lose it” weeks will be maintained to encourage and facilitate more partners to access the time off work.

Maximum childcare subsidy increased
From 1 July 2023, the maximum childcare subsidy rate will be lifted to 90% (from 85%) for families for the first child in care and increase the childcare subsidy rate for all families within the income eligibility range. Those earning less than $80,000 will receive the full benefit, reducing up to a maximum family earnings of $530,000 from July 2023. Further subsidised childcare was announced for Indigenous children increasing from 24 hours a fortnight to 36 hours over 4 year period from 1 July 2023.

Low and Middle-Income Tax Offset – not extended
The Low and middle-income tax offset (LMITO) has not been extended and came to an end on 30 June 2022. On completion of their annual income tax returns for 2023, those with taxable income between $48,000 and $126,000 will be out of pocket by $675 to $1,500 compared to 2022.

First home buyer housing assistance
Help to Buy Scheme announced to assist up to 40,000 eligible Australians to own a home with a lower deposit and mortgage, in exchange for the government taking an equity share.

Cryptocurrency – clarification of tax treatment
The Government will introduce legislation to clarify that digital currencies (such as Bitcoin) continue to be held as an investment (and not a foreign currency). This maintains the current capital gains tax treatment.

Pensioners returning to work
Pensioners who want to work will be allowed to earn up to $11,800 (instead of $7,800) before their pension is reduced. The change will have retrospective application commencing for income years starting 1 July 2022.

HECS-HELP early repayment discount scrapped
The 10% discount for students who elect to pay their student contribution upfront rather than defer payment through the Higher Education Contribution Scheme – Higher Education Loan Program (HECS-HELP) will end.

New Energy Apprenticeships
It was announced that support will be provided to 10,000 people to complete a New Energy Apprenticeship.
Eligible apprentices will be able to claim a New Energy Apprentice Support Payment of up to $10,000. The payment will be received in instalments as they progress through their apprenticeship.