The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.
Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. The main priorities of the government, as reflected in the Budget, are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.
The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.
The Budget also includes various amendments to previously announced measures, as well as a number of income tax measures that have already been enacted prior to the Budget announcement, including:
the revised stage 3 personal income tax cuts (enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Act No 3 of 2024))
Medicare levy and surcharge threshold changes (enacted by the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No 4 of 2024)), and
a specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (Act No 23 of 2024)).
These enacted measures have not been discussed in detail in this report.
The government anticipates that the tax measures put forward will collectively improve the Budget position by $3.1 billion over a 5-year period to 2027–28.
The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025.
A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of critical minerals.
A hydrogen production tax incentive will be available from 2027–28 to 2040–41 to producers of renewable hydrogen.
The minimum length requirements for content and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
A new penalty will be introduced from 1 July 2026 for taxpayers who are part of a group with more than $1 billion in annual global turnover that are found to have mischaracterised or undervalued royalty payments.
The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation.
Income tax exemptions for World Rugby and/or related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s).
Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025.
Carer payment recipients will have greater flexibility with their participation requirements.
Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week.
The maximum rates of the Commonwealth Rent Assistance will increase by 10% from 20 September 2024.
Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC 20-773; [2020] FCAFC 220.
Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay.
Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.
Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
The ATO will be given a statutory discretion to not use a taxpayer’s refund to offset old tax debts on hold.
Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023.
A pilot program of matching income and employment data of migrant workers will be conducted between the Department of Home Affairs and the ATO.
A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
The ATO will have additional time to notify a taxpayer if it intends to retain a business activity statement refund for further investigation.
The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed.
Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.
The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
Small businesses (aggregated annual turnover less than $10 million) may choose to calculate capital allowances for depreciating assets under a simplified regime in Subdiv 328-D of ITAA 1997. Under these simplified depreciation rules, an immediate write-off applies for low-cost depreciating assets. The measure will apply a $20,000 threshold for the immediate write-off, applicable to eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2025.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter. The provisions that prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out will also continue to be suspended until 30 June 2025.
The measure extends a 2023–24 Budget measure to increase the instant asset write-off threshold to $20,000 for the 2023–24 income year. A Bill containing amendments to increase the instant asset write-off threshold for 2023–24 is currently before parliament. The Bill was amended by the Senate to increase the instant asset write-off threshold for 2023–24 to $30,000 and extend access to the instant asset write-off to entities that are not small business entities but would be if the aggregated turnover threshold were $50 million.
The foreign resident CGT regime will be strengthened for CGT events that occur on or after 1 July 2025. In respect of such CGT events, the amendments will:
clarify and broaden the types of assets that foreign residents are subject to CGT on
change the point-in-time principal asset test to a 365-day testing period, and
require foreign residents disposing of shares and other membership interests exceeding $20 million in value to notify the ATO, prior to the transaction being executed. This new ATO notification process will improve oversight and compliance with the foreign resident CGT withholding rules, where a vendor self-assesses their sale as not being taxable real property.
This measure will ensure that Australia can tax foreign residents on direct and indirect sales of assets with a close economic connection to Australian land, more in line with the existing tax treatment applying to Australian residents. It will also align Australia’s taxation of foreign resident capital gains more closely with OECD standards and international best practice.
The government will consult on the implementation details of the measure.
A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of Australia’s 31 critical minerals to improve supply chain resilience.
In total, an estimated $7.1 billion will be spent over 11 years from 2023–24 to support refining and processing of critical minerals, as part of the government’s Future Made in Australia initiative to make Australia a renewable energy superpower. This includes:
the above critical minerals productive tax incentive, at an estimated cost of $7.0 billion over 11 years from 2023–24, and
$10.2 million in 2024–25 for pre-feasibility studies for critical mineral common-user processing facilities, in partnership with state and territory governments.
A hydrogen production tax incentive will be available from 2027–28 to 2040–41 to producers of renewable hydrogen to support the growth of a competitive hydrogen industry and Australia’s decarbonisation.
In total, an estimated $8.0 billion will be spent over 10 years from 2024–25 to support the production of renewable hydrogen, as part of the government’s Future Made in Australia initiative to make Australia a renewable energy superpower. This includes:
the above hydrogen production tax incentive, at an estimated cost of $6.7 billion over 10 years from 2024–25
$1.3 billion over 10 years from 2024–25 for an additional round of the Hydrogen Headstart program to bridge the green premium for early-mover renewable hydrogen projects, and
$17.1 million over 4 years from 2024–25 (and an additional $2.5 million in 2028–29) to deliver the 2024 National Hydrogen Strategy, including hydrogen infrastructure planning, social license and industry safety training and regulation.
The minimum length requirements for content and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
To be eligible for the producer tax offset, films are currently required to meet minimum length requirements under s 376-65(3)–(5) of ITAA 1997. Different length requirements apply depending on the format of the content.
“Above-the-line” expenditure which can be qualifying production expenditure for the purposes of the producer tax offset is currently capped at 20% of total film expenditure for all films except documentaries under s 376-170(4)(b) of ITAA 1997. Such expenditure includes development expenditure on a film and remuneration provided to the principal director, producers and principal cast associated with a film.
A new penalty will be introduced from 1 July 2026 for taxpayers who are part of a group with more than $1 billion in annual global turnover that are found to have mischaracterised or undervalued royalty payments, to which royalty withholding tax would otherwise apply.
The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
An anti-avoidance rule was proposed in the 2022–23 Budget to prevent significant global entities (SGEs) from claiming tax deductions for payments made directly or indirectly to related parties in relation to intangibles held in low- or no-tax jurisdictions. The measure would apply to payments made on or after 1 July 2023. Exposure draft legislation was then released on 31 March 2023. In its 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO) the government announced that further amendments would be made to better target this measure.
This measure is now being discontinued. The integrity issues will instead be addressed through Australia’s implementation of the global and domestic minimum taxes as part of the OECD’s Two Pillar solution to address the tax challenges arising from the digitalisation of the economy under Action 1 of the Base Erosion and Profit Shifting (BEPS) project.
The start date of a 2023–24 Budget measure to expand the scope of the general anti-avoidance rule in Pt IVA of ITAA 1936 will be deferred to income years commencing on or after assent of enabling legislation.
The government had announced in the 2023–24 Budget that the general anti-avoidance rule would be expanded to capture schemes that result in reduced Australian tax via lower withholding tax rates on income paid to foreign residents. The changes announced also included extending Pt IVA to schemes with a dominant purpose to reduce foreign income tax where the scheme achieved an Australian income tax benefit.
When first announced, the changes were to apply for income years starting on or after 1 July 2024. The changes will now apply for income years commencing on or after assent of enabling legislation, regardless of whether the scheme was entered into before that date.
Further to the measure “Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s)” announced in the Coalition government’s 2022–23 Budget, income tax exemptions will be provided to World Rugby and/or related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s) events (RWC events).
The exemptions will apply to income derived in relation to the RWC events for the 2023–24 to 2030–31 income years (inclusive). An exemption will also be provided from interest, dividend and royalty withholding tax liabilities arising from payments relating to RWC events.
The list of specifically listed deductible gift recipients (DGRs) will be updated to list the following organisations as DGRs:
The Hillview Foundation Australia Limited for gifts received from 1 July 2024 to 30 June 2029
Skip Foundation Ltd for gifts received from 1 July 2025 to 30 June 2030, and
Combatting Antisemitism Fund Limited for gifts received from 1 July 2025 to 30 June 2030.
DGR status has also been approved for the Australian Muslim Advocacy Network’s AMAN Foundation Ltd.
The listing of Combatting Antisemitism Fund Limited and Skip Foundation Ltd is subject to charity registration with the Australian Charities and Not-for-profits Commission.
In addition, the listing of Skip Foundation Ltd is subject to the condition that DGR funds can only be used for purposes consistent with existing DGR categories in the tax law, and it will maintain minimum annual distributions consistent with the current requirements for ancillary funds.
The following organisations will be removed from the list of specifically listed DGRs as they are no longer operating:
Don Chipp Foundation Ltd
Ian Clunies Ross Memorial Foundation
Ian Thorpe’s Fountain for Youth
Layne Beachley — Aim for The Stars Foundation Limited
National Congress of Australia’s First Peoples Limited
Sir William Tyree Foundation
SouthCare Helicopter Fund Pty Limited, and
The Lingiari Policy Centre Limited.
Further, the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Regulation 2016 will be remade with an extension of the current charity transitional reporting arrangement for 5 years.
Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025. The lower deeming rate will remain at 0.25% and the upper deeming rate will remain at 2.25%.
Carer payment recipients will have greater flexibility with their participation requirements.
From 20 March 2025, the existing 25 hours per week participation limit for carer payment recipients will be amended to 100 hours over 4 weeks. In addition, the participation limit will only apply to employment and will no longer include study, volunteering activities and travel time.
Carer payment recipients exceeding the participation limit or their allowable temporary cessation of care days will have their payments suspended for up to 6 months, rather than cancelled. Recipients will also be able to use single temporary cessation of care days where they exceed the participation limit, rather than the current 7-day minimum.
Eligibility for the higher rate of Jobseeker payment will be extended to single recipients with a partial capacity to work of zero to 14 hours per week from 20 September 2024.
The higher Jobseeker payment rate is currently provided to single recipients with dependent children and those aged 55 and over who have been receiving an income support payment for 9 continuous months or more.
Source: Budget Paper No 2, p 164; Budget Factsheet — Easing cost-of-living pressures, p 2.
The maximum rates of the Commonwealth Rent Assistance (CRA) will increase by 10% from 20 September 2024 to help address rental affordability challenges for recipients.
This measure builds on the 2023–24 Budget measure to increase the CRA maximum rates by 15%.
Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC 20-773; [2020] FCAFC 220. In that case, the court held that, from 1 July 2007, certain invalidity pension payments for veterans and their beneficiaries were to be treated as superannuation lump sums, not as superannuation income stream benefits.
The funding of $11.9 million over 5 years from 2023–24 (and $0.9 million per year ongoing) will ensure that the Douglas decision does not affect income support payment rates for veterans who receive an invalidity payment from the Military Superannuation and Benefits Scheme and the Defence Force Retirement and Death Benefits Scheme, relative to the pre-Douglas arrangements.
Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay. Social security agreements enable Australia and the agreement countries to share the costs of providing retirement income support to those who have split their working life between countries. Australia currently has 32 bilateral social security agreements in operation.
Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.
The lower foreign investment fee will be conditional on the property continuing to be operated as a build-to-rent development. Foreign investors are generally prohibited from purchasing established dwellings unless the purchase is to redevelop the land resulting in an increase in dwellings or for a temporary resident’s accommodation during the period of their Australian residency. An exception also applies for foreign companies providing accommodation for Australian-based staff.
Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025. Eligible parents will receive an additional payment based on the superannuation guarantee (12% of their PPL payments), as a contribution to their superannuation fund.
Payments will be made annually to individuals’ superannuation funds from 1 July 2026.
The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.
The Commissioner of Taxation will be given a discretion to not use a taxpayer’s refund to offset old tax debts where that debt had been put on hold before 1 January 2017. The tax law will be amended to provide for this ATO discretion which will apply to individuals, small businesses and not-for-profits. The discretion will maintain the ATO’s current administrative approach to such debts.
Indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index, effective from 1 June 2023, subject to the passage of legislation. The measure will apply retrospectively.
A pilot program matching income and employment data will be conducted between the Department of Home Affairs and the ATO to mitigate the exploitation of migrant workers and abuse of Australia’s labour market and migration system. This measure forms part of broader reforms to the migration system.
The ATO will be provided additional funding to continue various compliance programs. The current ATO Personal Income Tax Compliance Program will be extended for another year from 1 July 2027 to enable the ATO to continue its focus on emerging risks to the tax system. The Shadow Economy Compliance Program and the Tax Avoidance Taskforce will be extended for 2 years from 1 July 2026.
Funding will be provided to the ATO to improve its detection of tax and superannuation fraud, including to upgrade its information and communications technologies to be able to identify and block suspicious activity in real time. A new compliance task force will also be established to recover lost revenue and block attempts to obtain refunds fraudulently. Funding will also be provided to improve ATO’s management and governance of its counter-fraud activities.
The ATO will also be given additional time within which to notify a taxpayer if it intends to retain a business activity statement (BAS) refund for further investigation. The current required notification period of 14 days will be extended to 30 days, aligning it with time limits for non-BAS refunds. This measure will take effect from the start of the first financial year after assent of the enabling legislation.
The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed as integrity issues are being addressed through enhanced administrative processes implemented by the ATO.
Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme (ITCS).
The Square Kilometre Array Observatory (SKAO) will have ITCS access upgraded for additional concessions to be claimed for the purchase of vehicles for personal use by SKAO officials or a member of their family. Additional concessions for commercial rent will also be formalised for existing ITCS packages for Bangladesh, Costa Rica, El Salvador and the Taipei Economic and Cultural Office. Construction and renovation concessions will be formalised for the existing ITCS package for the Netherlands. Concessions for both commercial rent and construction and renovation will be formalised for the existing ITCS package for Pacific Trade Invest.
Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
The measure will permanently set to “free” the rate of duty in sch 3 and sch 4A–15 of the Customs Tariff Act 1995 on 457 tariff lines. These tariffs had been identified as a nuisance to Australian businesses, imposing unnecessary administrative costs and compliance burdens. Tariffs that will be removed relate to a range of imported goods, including household necessities such as toothbrushes, tools, fridges, dishwashers and clothing.
The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.
Components of the measure that relate to streamlining licence application and renewal requirements will commence the later of 1 July 2024 or the day following assent. The requirement for the ATO to publish on its website a public register of excise licences and excise equivalent warehouse licences will apply from 30 days following commencement of enabling legislation. In addition, the removal of regulatory barriers applying to bunker fuels for commercial shipping industries will apply from 1 January 2025, instead of 1 July 2024.
The changes were first announced in the Coalition government’s 2022–23 Budget with a start date of 1 July 2023. The start date for these changes was later deferred to 1 July 2024 in the 2023–24 Budget.
The Federal Treasurer, Dr Jim Chalmers, handed down the 2023–24 Federal Budget at 7:30 pm (AEST) on 9 May 2023.
The Budget forecasts the underlying cash balance to be in surplus by $4.2 billion in 2022–23, the first surplus since 2007–08, followed by a forecast deficit of $13.9 billion in 2023–24.
Putting forward a “responsible budget” for uncertain economic times, the Treasurer has described the tax measures as “modest, but meaningful”, including changes to the Petroleum Resources Rent Tax and confirmation of a 1 January 2024 implementation of the BEPS Pillar Two global minimum tax rules.
A range of measures provide cost-of-living relief to individuals such as increased and expanded JobSeeker payments and better access to affordable housing. No changes were announced to the Stage 3 personal income tax cuts legislated to commence in 2023–24.
As part of the measures introduced for small business, a temporary $20,000 threshold for the small business instant asset write-off will apply for one year, following the end of the temporary full expensing rules.
Several tax measures of the former Coalition government have also been amended or dropped, including the patent box tax incentive measures.
The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au. The tax, superannuation and social security highlights are set out below.
The instant asset write-off threshold for small businesses applying the simplified depreciation rules will be $20,000 for the 2023–24 income year.
An additional 20% deduction will be available for small and medium business expenditure supporting electrification and energy efficiency.
FBT exemption for eligible plug-in hybrid electric cars will end from 1 April 2025.
An increased capital works deduction rate and reduced withholding on managed investment trust (MIT) payments will apply to new build-to-rent projects.
The clean building managed investment trust (MIT) withholding tax concession will be extended from 1 July 2025 to eligible data centres and warehouses, where construction commences after 7:30 pm (AEST) on 9 May 2023.
The start date of a measure to prevent franked distributions funded by certain capital raisings announced in the 2016–17 Mid-Year Economic and Fiscal Outlook has been postponed from 19 December 2016 to 15 September 2022.
The patent box regime announced in the Coalition government’s 2021–22 Budget, and expanded in the 2022–23 Budget, will not proceed.
The introduction of tradeable biodiversity stewardship certificates issued under the Agriculture Biodiversity Stewardship Market scheme will be delayed to 1 July 2024.
The Location Offset rebate and the Qualifying Australian Production Expenditure thresholds will be increased to boost investment in film production in Australia.
Income support payment base rates will be increased by $40 per fortnight.
The minimum age for which older people qualify for the higher JobSeeker Payment rate will be reduced from 60 to 55 years.
The workforce participation incentive measures to support pensioners who want to work without impacting their pension payments will be extended for another 6 months to 31 December 2023.
Eligibility for Parenting Payment (Single) will be extended to support single principal carers with a youngest child under 14 years of age.
Housing measures will be introduced to increase support for social and affordable housing and improve access for home buyers.
The maximum rates of the Commonwealth Rent Assistance (CRA) allowances will be increased by 15% to help address rental affordability challenges for CRA recipients.
CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors and pensioners for the 2022–23 year announced.
Eligible lump sum payments in arrears will be exempt from the Medicare levy from 1 July 2024.
Australia will implement key aspects of the Pillar Two solution of the OECD/G20 BEPS Project, meaning certain large multinationals will be subject to a 15% minimum tax in the jurisdictions in which they operate.
The scope of the general anti-avoidance rules in Pt IVA of ITAA 1936 will be expanded from 1 July 2024.
Changes will be made to petroleum resource rent tax (PRRT), including the introduction of a cap on deductible expenditure at 90% of assessable income for projects that produce liquefied natural gas from 1 July 2023.
The meaning of “exploration for petroleum” in the petroleum resource rent tax legislation will be amended to reflect the government’s intent and ATO guidance.
Taxation legislation will be amended to realign the taxation law with the reissued AASB 17: Insurance contracts effective for income years beginning from 1 January 2023.
Superannuation earnings tax concessions will be reduced for individuals with total superannuation balances in excess of $3 million from 1 July 2025.
Employers will be required to pay their employees’ superannuation guarantee entitlements at the same time as they pay their salary and wages from 1 July 2026.
The non-arm’s length income (NALI) provisions will be amended to provide greater certainty to taxpayers.
Funding will be provided to the ATO over 4 years to lower the tax-related administrative burden for small and medium businesses, cut paperwork and reduce time small businesses spend doing taxes.
Reduction in GDP adjustment factor for pay as you go and GST instalments.
Funding to improve the administration of student loans.
Additional funding will be provided to address the growth of businesses’ tax and superannuation liabilities, and a temporary lodgment penalty amnesty program will be provided to small businesses.
The Personal Income Tax Compliance Program will be extended for 2 years from 1 July 2025 and its scope expanded from 1 July 2023.
Funding for GST compliance will be extended for a further 4 years to address emerging risks to GST revenue.
The Heavy Vehicle Road User Charge rate will increase 6% per year from 2023–24 to 2025–26.
Indirect Tax Concession Scheme: diplomatic and consular concessions extended.
The start date for streamlining of excise administration measures announced in the Coalition government’s 2022–23 Budget will be amended.
Tobacco excise and excise-equivalent customs duty will be increased by 5% per year for 3 years from 1 September 2023, in addition to ordinary indexation.
The instant asset write-off threshold for small businesses applying the simplified depreciation rules will be $20,000 for the 2023–24 income year.
Small businesses (aggregated annual turnover less than $10 million) may choose to calculate capital allowances on depreciating assets under a simplified regime in Subdiv 328-D of ITAA 1997. Under these simplified depreciation rules, an immediate write-off applies for lowcost depreciating assets. The measure will apply a $20,000 threshold for the immediate write-off, applicable to eligible assets costing less than $20,000 first used or installed between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write-off multiple low-cost assets. The threshold had been suspended during the operation of temporary full expensing from 6 October 2020 to 30 June 2023.
Assets costing $20,000 or more will continue to be placed into a small business depreciation pool under the existing rules.
The provisions that prevent a small business entity from choosing to apply the simplified depreciation rules for 5 years after opting out will continue to be suspended until 30 June 2024.
An additional 20% deduction will be available for small and medium business expenditure supporting electrification and energy efficiency.
The additional deduction will be available to businesses with aggregated annual turnover of less than $50 million. Eligible expenditure may include the cost of eligible depreciating assets, as well as upgrades to existing assets, that support electrification and more efficient use of energy. Certain exclusions will apply, including for electric vehicles, renewable electricity generation assets, capital works, and assets not connected to the electricity grid that use fossil fuels.
Examples of expenditure the measure will apply to include:
assets that upgrade to more efficient electrical goods (eg energy-efficient fridges)
assets that support electrification (eg heat pumps and electric heating or cooling systems), and
demand management assets (eg batteries or thermal energy storage).
Total eligible expenditure for the measure will be capped at $100,000, with a maximum additional deduction available of $20,000 per business.
When enacted, the measure will apply to eligible assets or upgrades first used or installed ready for use between 1 July 2023 and 30 June 2024. Full details of eligibility criteria will be finalised in consultation with stakeholders.
An increased capital works deduction rate and reduced withholding on managed investment trust (MIT) payments will apply to eligible new build-to-rent projects where construction commences after 7:30 pm (AEST) on 9 May 2023.
The capital works deduction rate will increase from 2.5% to 4% per year for eligible new build-to-rent projects. Taxpayers can claim a deduction for capital expenditure incurred in constructing capital works, such as income-producing buildings, under Div 43 of ITAA 1997. Currently, the capital works deduction rate of 4% per year only applies in relation to income-producing buildings used mainly for industrial activities and certain buildings providing short-term traveller accommodation.
The final withholding tax rate on fund payments from eligible MIT investments will be reduced to 15% for income from new residential build-to-rent projects. Fund payments to non-residents attributable to MIT residential housing income are currently subject to a final withholding tax rate of 30%. The reduced rate will apply to income attributable to eligible residential build-to-rent projects from 1 July 2024. The reduction was previously proposed in 2019 as part of a Labor party pre-election announcement.
The measure will apply to build-to-rent projects consisting of 50 or more apartments or dwellings made available for rent to the general public. The dwellings must be retained under single ownership for at least 10 years before being able to be sold and landlords will be required to offer a lease term of at least 3 years for each dwelling. Consultation will be undertaken on implementation details, including any minimum proportion of dwellings being offered as affordable tenancies and the length of time dwellings must be retained under single ownership.
The clean building managed investment trust (MIT) withholding tax concession will be extended from 1 July 2025 to eligible data centres and warehouses, where construction commences after 7:30 pm (AEST) on 9 May 2023.
A final withholding tax rate of 10% applies to fund payments from eligible clean building MITs that are made to non-residents in information exchange countries. An eligible clean building MIT refers to a withholding MIT that holds one or more clean buildings. A clean building MIT cannot derive assessable income from any taxable Australian property other than its clean buildings and assets “reasonable incidental to” those clean buildings.
Eligibility for the concession will be extended to data centres and warehouses that meet the relevant energy efficiency standard, where construction commences after 7:30 pm (AEST) on 9 May 2023. The measure will also raise the minimum energy efficiency requirements for existing and new clean buildings to a 6-star (currently 5-star) rating from the Green Building Council Australia or a 6-star (currently 5.5-star) rating under the National Australian Built Environment Rating System. Consultation will be undertaken on transitional arrangements for existing buildings.
The measure will apply from 1 July 2025 when enacted.
The start date of a measure to prevent franked distributions funded by certain capital raisings announced in the 2016–17 Mid-Year Economic and Fiscal Outlook (MYEFO) has been postponed to 15 September 2022.
Certain distributions funded by capital raisings made on or after 15 September 2022 will be prevented from being frankable. The measure ensures such arrangements cannot be put in place to release franking credits that would otherwise remain unused where they do not significantly change the financial position of the entity.
When originally announced, the 2016–17 MYEFO measure was to apply for distributions made after 12:00 pm (AEDT) on 19 December 2016.
The patent box regime announced in the Coalition government’s 2021–22 Budget, and expanded in the 2022–23 Budget, will not proceed. The patent box regime proposed to tax certain corporate income at an effective tax rate of 17%. The patent box measures were to apply to medical and biotechnology, agricultural and low emission innovation.
Some $400 million will be spent over 4 years to establish an Industry Growth Program supporting Australian small and medium-sized businesses (SMEs) and startups. This support will be directed towards businesses operating in the priority areas of the National Reconstruction Fund (NRF).
The NRF is a fund designed to invest, by way of loans, equity or guarantees, in:
renewables and low emissions technologies
medical science
transport
value-add in agriculture, forestry and fisheries, and resources
defence and enabling capabilities.
Over $50 million has been allocated to the establishment and operation of the National Reconstruction Fund Corporation (NRFC), with an additional $8 million over 4 years to oversee the NRFC.
The commencement of the issue of biodiversity stewardship certificates under the Agriculture Biodiversity Stewardship Market scheme, the sale of which would be treated as primary production income, will be delayed from 1 July 2022 to 1 July 2024. This measure was announced in the Coalition government’s 2022–23 Budget. The delayed introduction aligns the commencement with the Nature Repair Market (NRP), which is part of the government’s Nature Positive Plan.
The NRP will receive $7.7 million in 2023–24 for the development of a foundation, including detailed rules, or methods, for different types of projects.
The Location Offset rebate for films will be increased to 30% of Qualifying Australian Production Expenditure (QAPE) from the current 16.5% rate. The increase is intended to attract investment from large-budget screen productions and provide domestic employment and training opportunities. The minimum QAPE thresholds will be increased to $20 million for feature films (currently $15 million) and $1.5 million per hour for television series (currently $1 million). Funding for these measures have been allocated for 4 years beginning from 2024–25.
Funding of $0.5 million has also been allocated over 3 years from 2024–25 (and $0.2 million per year ongoing) for the Australia-India Audio-Visual Co-Production Agreement to enable eligible producers to access the Producer Offset (a refundable tax offset for approved Australian expenditure).
The list of specifically listed deductible gift recipients (DGRs) will be updated to list the following organisations as DGRs for the following dates:
The Voice No Case Committee from the day after the entity is registered with the Australian Charities and Not-for-profits Commission to 30 June 2024
Justice Reform Initiative Limited from 1 July 2023 to 30 June 2028
Susan McKinnon Charitable Foundation Ltd from 1 July 2023 to 30 June 2028, and
Transparency International Australia from 1 July 2023.
The following organisations’ DGR endorsement will also be extended for the following dates:
Victorian Pride Centre Ltd from 9 March 2023 to 8 March 2028, and
Australian Sports Foundation Charitable Fund from 1 July 2023.
The start date for the previously announced listing of 28 entities related to community foundations affiliated with the peak body Community Foundations Australia will be deferred from 1 July 2022 to the date of assent of relevant amendments to the tax law. The 30 June 2027 end date for the listing is removed. DGR status for these foundations will be subject to ongoing endorsement by the Commissioner under new ministerial guidelines.
The listings of Lord Mayor’s Charitable Foundation and Foundation Broken Hill Limited will be made consistent with that for other community foundations, including removal of end dates where applicable.
Income support payment base rates will be increased by $40 per fortnight.
The increase will apply to JobSeeker Payment, Youth Allowance, Parenting Payment (Partnered), Austudy, ABSTUDY, Disability Support Pension (Youth) and Special Benefit from 20 September 2023.
Sources: Budget Paper No 2, p 199; Budget Factsheet — Stronger foundations for a better future, p 17.
The minimum age for which older people qualify for the higher JobSeeker Payment rate will be reduced from 60 to 55 years. This applies to those who have received the payment for 9 or more continuous months.
Eligible recipients will receive an increase in their base rate of payment of $92.10 per fortnight.
Sources: Budget Paper No 2, p 199; Budget Factsheet — Stronger foundations for a better future, p 17.
The workforce participation incentive measures to support pensioners who want to enter the workforce, or work more hours, without impacting their pension payments will be extended for another 6 months to 31 December 2023.
Originally announced in the Labor government’s 2022–23 Budget, the measure provides age and veterans pensioners a once-off credit of $4,000 to their Work Bonus income bank and temporarily increases the maximum income bank.
Under this measure, pensioners can earn up to $11,800 before their pension is reduced.
Eligibility for Parenting Payment (Single) will be extended 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.
Improved support for single parents will provide wellbeing benefits particularly for single mothers, who are overwhelmingly the recipients of this payment, and their children. This measure recognises that caring responsibilities can act as a barrier to employment while also recognising that connections with the labour force are likely to improve economic outcomes throughout a carer’s lifetime.
A number of housing measures will be introduced to increase support for social and affordable housing and improve access for home buyers, including:
increasing the Government-guaranteed liability cap of the National Housing and Finance Investment Corporation (NHFIC) by $2.0 billion to $7.5 billion to enable NHFIC to increase its support for social and affordable housing through loans from the Affordable
Housing Bond Aggregator
amending NHFIC’s Investment Mandate to require NHFIC to take reasonable steps to allocate a minimum of 1,200 homes to be delivered in each state and territory within 5 years of the Housing Australia Future Fund commencing operation
expand the eligibility of the Home Guarantee Scheme to:
— allow any 2 eligible people to be joint applicants for a guarantee beyond spouses and de facto partners
— allow non-first home buyers who have not owned a property in Australia for at least 10 years to access the First Home Guarantee and Regional Home Guarantee
— allow a single legal guardian of children to access the Family Home Guarantee
— allow Australian permanent residents to access the Scheme
redirecting interest earnings on unallocated NHFIC funds to support more social and affordable housing and delivery of housing priorities.
This measure expands on the Labor government’s 2022–23 Budget measure titled “Safer and More Affordable Housing”.
The maximum rates of the Commonwealth Rent Assistance (CRA) allowances will be increased by 15% to help address rental affordability challenges for CRA recipients.
The CPI indexed Medicare levy low-income threshold amounts for singles, families, and seniors and pensioners for the 2022–23 year of income have been announced. The new thresholds are:
Medicare levy low income threshold (at or below which no Medicare levy payable)
Class of people
Single
Family
Individual
$24,276 ($23,365)
$40,939 ($39,402)
Senior Australians and eligible pensioners
$38,365 ($36,925)
$53,406 ($51,401)
Threshold increment for each additional dependent child/student
Eligible lump sum payments in arrears will be exempt from the Medicare levy from 1 July 2024.
This measure will ensure low-income taxpayers do not pay higher amounts of the Medicare levy as a result of receiving an eligible lump sum payment, eg as compensation for underpaid wages.
Eligibility requirements will ensure that relief is targeted to taxpayers who are genuinely low-income and should be eligible for a reduced Medicare levy. To qualify, taxpayers must be eligible for a reduction in the Medicare levy in the 2 most recent years to which the lump sum accrues. Taxpayers must also satisfy the existing eligibility requirements of the existing lump sum payment in arrears tax offset, including that a lump sum accounts for at least 10% of the taxpayer’s income in the year of receipt.
Australia will implement key aspects of the Pillar Two solution to address tax challenges from digitalisation of the economy for Action 1 of OECD/G20 Base Erosion and Profit Shifting (BEPS) Project.
A 15% global minimum tax will apply to large multinational enterprises, with the Income Inclusion Rule (IIR) applying to income years starting on or after 1 January 2024 and the Undertaxed Profits Rule (UTPR) applying to income years starting on or after 1 January 2025.
A 15% domestic minimum tax will apply to income years starting on or after 1 January 2024.
Both the global and domestic minimum tax will be based on the OECD’s Global Anti-Base Erosion Model Rules (or GloBe rules). These rules impose a top-up tax on a resident multinational parent or subsidiary company if the group’s income is taxed below 15% overseas.
The IIR would allow Australia to apply a top-up tax on a resident multinational company, where the group’s income in another jurisdiction is being taxed below the global minimum rate of 15%. The UTPR would allow Australia to apply a top-up tax on a resident subsidiary member of a multinational group if the group’s income in another jurisdiction is being taxed below the global minimum rate of 15% and where no IIR applies.
The domestic minimum tax gives Australia first claim on top-up tax for any low-taxed domestic income. If a large multinational company’s effective Australian tax rate is below 15%, the domestic minimum tax enables Australia to collect the revenue that would otherwise be collected via another country’s global minimum tax.
The rules apply to multinational enterprises with an annual global revenue of EUR750 million (approximately $1.2 billion) or more.
Sources: Budget Paper No 2, pp 20–21; Budget Factsheet — Stronger foundations for a better future, p 63.
The scope of the general anti-avoidance rules in Pt IVA of ITAA 1936 will be expanded to capture schemes that result in reduced Australian tax via lower withholding tax rates on income paid to foreign residents. The reach of this regime will also extend to schemes with a dominant purpose to reduce foreign income tax, so long as it achieves an Australian income tax benefit. The changes will apply to income years starting on or after 1 July 2024, regardless of whether the scheme was entered into before 1 July 2024.
Pt IVA generally applies to schemes entered into with the sole or dominant purpose of obtaining a tax benefit. A “scheme” means any agreement, arrangement, understanding, promise or undertaking — whether express or implied and whether legally enforceable or not — and any scheme, plan, proposal, course of action or course of conduct (s 177A of ITAA 1936). If Pt IVA applies to a scheme, the ATO may cancel the tax benefit, make compensating adjustments and impose substantial penalties.
The cap will limit deductible expenditure to 90% of each taxpayer’s PRRT assessable receipts in respect of each project interest in the relevant income year (applied after mandatory transfers of exploration expenditure). Unused denied deductions will be carried forward and uplifted at the government long-term bond rate. Projects will not be subject to the cap until 7 years after the year of first production or from 1 July 2023, whichever is later, to minimise the impacts of upfront payments on project economics. The cap will not apply to certain classes of deductible expenditure in the PRRT — closing-down expenditure, starting base expenditure and resource tax expenditure.
requiring projects make an irrevocable election to use the shorter or longer asset life formula from 1 July 2024. This will remove the integrity risk that projects change the operating life of capital projects to benefit from higher rates of return allowable under the shorter asset life formula.
equalising the treatment of the notional upstream and downstream entities between loss situations and profit situations from 1 July
2024 under the residual pricing method (RPM).
updating the comparable uncontrolled price (CUP) rules from 1 July 2024 to align with the OECD guidelines. In particular, the analysis for the CUP should be broadened to consider all reasonable conditions of a comparable transaction. Reasonably accurate adjustments would continue to be permitted.
modifying the Advance Pricing Arrangement (APA) rules from 1 July 2024 to provide guidance to industry and the Commissioner on the principles that the Commissioner must have regard to in agreeing an APA. If the RPM is retained, the use of an APA should be limited to circumstances where it is required to give practical effect to the statutory residual profit split.
updating the regulations for tolling arrangements from 1 July 2024 to support the effective operation of the RPM and to ensure that arm’s length/commercial transactions for parts of the LNG production chain (that reflect the underlying resource ownership and risks to parties) are used as far as possible as a reference for establishing a gas transfer price.
updating both the PRRT general anti-avoidance rule and the arm’s length rule from 1 July 2023 to clarify that they apply to the
Petroleum Resource Rent Tax Assessment Regulation 2015 (PRRT Regulation). This follows a recommendation made by the Callaghan Review that the Government amend the PRRT anti-avoidance rules to be in line with the income tax anti-avoidance rules (see below).
updating the PRRT Regulation to ensure that, from 1 July 2024, where an LNG facility enters the PRRT regime (either solely for the purposes of the PRRT Regulation or for broader PRRT calculations) for the first time for backfill or tolling purposes, the value of the plant for use in PRRT calculations is the historical cost of the LNG facility, uplifted by the GDP deflator to the date of first production for PRRT purposes.
Recommendations from the Callaghan review
The government will proceed with the following 8 recommendations of the Callaghan Review, which were announced but unenacted measures of the former Coalition government:
allowing PRRT taxpayers to lodge annual returns after they start holding an interest in an exploration permit, retention lease or production lease rather than having to wait until they receive assessable receipts from the project
granting power to the Commissioner to treat a new project as a continuation of an earlier project, where it would be reasonable to do so
granting discretion to the Commissioner to recognise more than one project from a production licence area where there are genuinely separate and independent petroleum operations
extending the option to have all interests held by a group taken together and reported as a single PRRT return to offshore projects • allowing PRRT taxpayers to adopt a substituted accounting period for PRRT so it can align with their choice to use a substituted accounting period for income tax
allowing PRRT taxpayers operating with a multiple entry consolidated (MEC) group to make a functional currency choice for PRRT purposes that aligns with the functional currency choice made for income tax purposes
granting power to the Commissioner to administratively exempt projects from PRRT obligations where they are clearly unlikely to pay PRRT in the foreseeable future, and amending the PRRT anti avoidance rules to be in line with the income tax anti-avoidance rules.
The government will consult on the design and implementation details for the deductions cap and draft PRRT rules later this year. Consultation on other policy changes, including recommendations from the Callaghan Review and the anti-avoidance rules, will be undertaken in early 2024. The government will not remake the PRRT Regulation (due to sunset on 1 April 2026) until legislation implementing the deductions cap has been enacted.
Legislative amendments will be made confirming that mining, quarrying and prospecting rights can only be depreciated for income tax purposes from the time they are used not from the time they are held.
Legislative amendments will be made to the reflect the decision of the Full Federal Court in FC of T v Shell Energy Holdings Australia Ltd 2022 ATC ¶20-816, the Commissioner’s application for special leave to appeal to the High Court having been refused.
Amendments will be made to clarify that mining, quarrying and prospecting rights can only be depreciated for income tax purposes from the time they are used. Merely, holding such assets does not trigger depreciation deductions. The circumstances in which the issue of new rights over areas covered by existing rights lead to tax adjustments will be limited. This limitation will apply in respect of all rights that are acquired or commence to be used from the date of the announcement, ie 9 May 2023.
The meaning of “exploration for petroleum” in the Petroleum Resource Rent Tax Assessment Act 1987 s 37(1) will also be amended to be consistent with the government’s policy intent and the ATO’s administrative guidance, as set out in Taxation Ruling TR 2014/9, namely it is limited to the discovery and identification of the existence, extent and nature of the resource, and does not extend to an evaluation of the commercial recoverability of the resource. The amendments will apply to expenditure incurred from 21 August 2013, being the date of application of the ruling.
Audited financial reporting information forms the basis of income tax returns for general insurers. The reissue of Australian Accounting Standard AASB 17: Insurance contracts, operative from 1 January 2023, resulted in a misalignment between taxation law and accounting standards and increased compliance costs for general insurers.
The government will amend the taxation legislation to realign the taxation law with the reissued accounting standard, effective for income years beginning on or after 1 January 2023.
Superannuation earnings tax concessions will be reduced for individuals with total superannuation balances in excess of $3 million.
From 1 July 2025, earnings on balances exceeding $3 million will incur a higher concessional tax rate of 30% (up from 15%) for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million. The change does not impose a limit on the size of superannuation account balances in the accumulation phase and it applies to future earnings, ie it is not retrospective.
Earnings relating to assets below the $3 million threshold will continue to be taxed at 15%, or zero if held in a retirement pension account.
Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests.
Sources: Budget Paper No 2, p 15; Budget Factsheet — Stronger foundations for a better future, p 63; Treasurer’s press release “Superannuation tax breaks”, 28 February 2023.
Employers will be required to pay their employees’ superannuation guarantee (SG) entitlements at the same time as they pay their salary and wages from 1 July 2026.
Employers are currently required to make SG contributions for an employee on a quarterly basis to avoid incurring a superannuation guarantee charge.
The proposed commencement date of 1 July 2026 is intended to provide employers, superannuation funds, payroll providers and other stakeholders sufficient time to prepare for the change.
Changes to the design of the superannuation guarantee charge will also be required to align with the increased payment frequency. The government will consult with relevant stakeholders on the design of these changes, with the final framework to be considered as part of the 2024–25 Budget.
In addition, funding will be provided to the ATO to, among other things, improve data matching capabilities to identify and act on cases of SG underpayment.
Sources: Budget Paper No 2, p 26; Budget Factsheet — Stronger foundations for a better future, p 62; Assistant Treasurer’s press release “Introducing payday super”, 2 May 2023.
The non-arm’s length income (NALI) measure announced by the Coalition government in 2022 will be amended to provide greater certainty to taxpayers.
The Coalition government announced on 22 March 2022 that the non-arm’s length expense provisions would be amended to ensure they operated as intended from 1 July 2022.
On 24 January 2023, Treasury released a consultation paper on the following potential amendments to the NALI provisions:
self-managed superannuation funds (SMSFs) and small APRA funds would be subject to a factor-based approach which would set an upper limit on the amount of fund income taxable as NALI due to a general expenses breach. The maximum amount of fund income taxable at the highest marginal rate would be 5 times the level of the general expenditure breach, calculated as the difference between the amount that would have been charged as an arm’s length expense and the amount that was actually charged to the fund. Where the product of 5 times the breach is greater than all fund income, all fund income will be taxed at the highest marginal rate, and
large APRA-regulated funds would be exempted from the NALI provisions for general expenses of the fund.
To provide greater certainty to taxpayers, the NALI provisions which apply to expenditure incurred by superannuation funds will be amended by:
limiting income of SMSFs and small APRA regulated funds that are taxable as NALI to twice the level of a general expense.
Additionally, fund income taxable as NALI will exclude contributions
exempting large APRA regulated funds from the NALI provisions for both general and specific expenses of the fund, and
exempting expenditure that occurred prior to the 2018–19 income year.
The government will provide $21.8 million over 4 years from 2023–24 (and $1.4 million per year ongoing) to the ATO to lower the tax related administrative burden for small and medium businesses.
Funding includes:
$12.8 million over 3 years from 2023–24 to trial an expansion of the ATO independent review process to businesses with aggregated turnover between $10 million and $50 million subject to an ATO audit. The trial will commence on 1 July 2024 and run for 18 months
$9.0 million over 4 years from 2023–24 (and $1.4 million per year ongoing) for 5 new tax clinics from 1 January 2025 to improve access to tax advice and assistance for 2.3 million businesses. Eligibility for funding will be extended to TAFE institutions to improve access to tax clinic services in regional areas.
The measure also delivers reforms to cut paperwork and reduce the time small businesses spend doing taxes:
from 1 July 2024, small businesses will be permitted to authorise their tax agent to lodge multiple Single Touch Payroll forms on their behalf, reducing paperwork for small businesses
from 1 July 2024, small businesses will benefit from faster, safer and cheaper income tax refunds by reducing the use of cheques
from 1 July 2025, small businesses will be permitted up to 4 years to amend their income tax returns, reducing the burden of making revisions.
The GDP adjustment factor for pay as you go (PAYG) and GST instalments will be set at 6% for the 2023–24 income year, a reduction from 12% under the statutory formula.
The 6% GDP adjustment rate will apply to small businesses and individuals who are eligible to use the relevant instalment methods (up to $10 million aggregated annual turnover for GST instalments and $50 million annual aggregate turnover for PAYG instalments) in respect of instalments that relate to the 2023–24 income year and fall due after the enabling legislation receives assent.
From 2022–23 funding of $87.8 million over 5 years (including $53.1 million in capital funding, and $2.0 million per year ongoing) will be provided to improve the administration of student loans and enhance the security and privacy of data holdings.
The funding will include:
$42.2 million over 4 years from 2023–24 for the Department of Employment and Workplace Relations to implement a new digital solution to support the efficient and effective administration of the VET Student Loans program
$36.9 million over 5 years from 2022–23 (and $2 million per year ongoing) for the Department of Education to optimise the Tertiary Collection of Student Information system to improve data quality, analytic support and the security of tertiary student loan records
$8.7 million over 2 years from 2023–24 for the Commonwealth Ombudsman and the Department of Employment and Workplace Relations to extend the VET FEE-HELP student redress measures by one year to 31 December 2023.
Additionally, from 2022–23, the government will forgo $5.4 million in receipts over 5 years (and $15.5 million over 2 years to 2033–34) to support students affected by a delay in the transfer of some historical tertiary education loan records to the ATO. This will mean waiving the following debts for affected loans, as determined at the date of transfer to the ATO:
historical indexation, as well as indexation that will be applied on 1 June 2023 on loans issued prior to 1 July 2022 under the Higher Education Loan Program, the VET Student Loans program, the Trade Support Loans program and on loans issued in 2017 and 2018 under the VET FEE-HELP program, and
outstanding debt for VET FEE-HELP loans issued from 2009 to 2016.
Funding will be provided over 4 years from 1 July 2023 to enable the ATO to engage more effectively with businesses to address the growth of tax and superannuation liabilities.
The additional funding will facilitate ATO engagement with taxpayers who have high-value debts over $100,000 and aged debts older than 2 years where those taxpayers are either public and multinational groups with an aggregated turnover of greater than $10 million, or privately owned groups or individuals controlling over $5 million of net wealth.
A lodgment penalty amnesty program is being provided for small businesses with aggregate turnover of less than $10 million to encourage them to re-engage with the tax system. The amnesty will remit failure-to-lodge penalties for outstanding tax statements lodged in the period from 1 June 2023 to 31 December 2023 that were originally due during the period from 1 December 2019 to 29 February 2022.
The Personal Income Tax Compliance Program will be extended for 2 years from 1 July 2025 and its scope expanded from 1 July 2023.
This extension will enable the ATO to continue to deliver a combination of proactive, preventative and corrective activities in key areas of non-compliance, and to expand the scope of the program to address emerging areas of risk, such as deductions relating to short-term rental properties to ensure they are genuinely available to rent.
Nearly $600 million will be allocated, over an additional 4 years, to GST compliance. This is estimated to generate additional GST receipts of $3.8 billion and the same amount again in other taxes over the 5 years from 2022-23.
This funding extension will support the development of more sophisticated analytical tools to address emerging risks to GST revenue.
The Heavy Vehicle Road User Charge rate will be increased from 27.2 cents per litre of diesel fuel, by 6% per year for 3 years, to 32.4 cents. The first year of the increase will be the 2023–24 income year.
Refunds of indirect tax (including GST, fuel and alcohol taxes) have been extended under the Indirect Tax Concession Scheme (ITCS). New access to refunds has been provided for construction and renovation arrangements for North Macedonia and Latvia relating to their current and future diplomatic missions and consular posts. Saudi Arabia will also have ITCS access upgraded for its Embassy and current and future Consulate-General.
These concessions are provided in accordance with Australia’s international obligations in relation to diplomatic missions and consular posts and will establish reciprocal entitlements for Australian diplomatic missions in these countries.
The start date for some components of the Coalition government’s 2022–23 Budget measure: Streamlining excise administration for fuel and alcohol package will be amended from 1 July 2023 to 1 July 2024. The changed start date applies to the measures that:
remove overlapping Australian Border Force and ATO systems
streamline license application and renewal requirements
remove regulatory barriers for excise and excise equivalent customs goods (including lubricants, bunker fuels for commercial shipping industries, and vapour recovery units).
Further, the ATO will publish on its website a public register of entities that hold excise licences to store or manufacture excise and excise equivalent customs goods, from 1 July 2024.
Tobacco excise and excise-equivalent customs duty will be increased by 5% per year for 3 years from 1 September 2023, in addition to ordinary indexation, to encourage smokers to quit.
The government will also align the tax treatment of tobacco products subject to the per kilogram excise and excise-equivalent customs duty (such as roll-your-own tobacco) with the manufactured per-stick rate, by progressively lowering the “equivalisation weight” from 0.7 to 0.6 grams. These progressive decreases will occur on 1 September each year from 2023, with the new weight coming fully into effect from 1 September 2026. This will raise the per kilogram duty accordingly.
The government will expand compliance activity to address illicit tobacco and work with relevant agencies and state and territory governments to develop an appropriate multi-jurisdictional approach.
These changes to tobacco excise are part of the government’s response to the National Tobacco Strategy and related initiatives on vaping and smoking prevention and cessation, and an enhanced regulatory approach to vaping.
