Fast Facts: The 2023 Federal Budget Explained

The 2023 federal budget is out and here’s what’s going on. Whether you are interested in the Individual or Business side of things (or if you just want to know what the budget did not mention), Tailored Accounts has prepared a quick cheat sheet to summarise everything you need to know.

Individuals

Businesses

Missing

Parents

Single Parenting Payment
- Will be extended to when their youngest turns 14 years old.
- Parents will also now be able to earn up to $227.20 per fortnight while receiving the full payment of $922.10.
First child subsidy – For families earning less than $80,000, the subsidy will climb to 90%.
Child Care Subsidy announced in October’s 2022 Budget begins 1 July – Families earning up to $530,000 per annum will be eligible.
Previously announced changes to the Paid Parental Leave Scheme gives a $0.5bn boost for families.

Super

Super account balances above $3m – The Budget confirmed the Government's intention to apply an additional 15% tax on total superannuation balances above $3 million from 1 July 2025.
Payday Super – Employers will be required to pay their employees' super at the same time as their salary and wages from 1 July 2026.
Superfund NALI – Capped at twice the general expense under NALE rules.

Health

Dispensing rules changes – Pharmacies will now allow people to buy 2 months’ worth of medicine for the price of a single prescription.
Medication costs halved – Medications listed on the Pharmaceutical Benefits Scheme will have their costs effectively halved.
Bulk billing – GPs will be paid 3 times as much to bulk bill concession cardholders, families with young children and pensioners.

Energy

Energy bill relief – Eligible households will get up to $500.
Up to $350 in rebates are available for Western Australia, the Northern Territory, and the ACT. Up to $500 for the other states.
Household Energy Upgrades Fund – $1.3bn to offer low-interest loans for homeowners to make their homes more energy efficient.

Housing & Welfare

Commonwealth Rent Assistance – Will receive an additional $31 per fortnight.
First-home buyer schemes
- Extended eligibility from 1 July to include any two borrowers, beyond the current scope of spouse or de facto couples.
- Non-first-home buyers who have not owned a property for 10 years will also be able to access the scheme
JobSeeker payments, Austudy and Youth Allowance – Will increase by $40 per fortnight
Higher JobSeeker base rate – Will expand to people over 55 years old, providing recipients with an extra $92.10/fortnight

Electric Vehicles

FBT rules for electric vehicles (EVs) – The eligibility of plug-in hybrid electric cars will sunset from 1 April 2025

General

Temporary full expensing – Ending on 30 June 2023.
Instant asset write-off – Threshold temporarily increased to $20,000 for 2023-24.
PAYG and GST instalment uplift factor – 6% for 2022-23.
Confirmation on no more loss carried back from FY 2024.

SMEs

3 years to move into paying super on payday.
Small business lodgment penalty amnesty – For small businesses (turnover less than $10m) to encourage them to re-engage with the tax system. Warning: ATO will be more likely to penalise late lodgements after the amnesty period.
Small business unpaid tax and super – Additional funding from 1 July 2023 to assist taxpayers who have high-value debts over $100,000 or aged debts older than 2 years.
Businesses with a turnover of up to $50 million
- One-off payment of $650 off their power bills.
- A 20% deduction to electrify cooling and heating systems, install new batteries and heat pumps, and replace ageing tools (up to $20,000).
- Businesses will also be able to deduct the cost of these assets from their tax bills for the first year in which it is installed or used.
GDP Uplift Factor – SMEs (up to $10M Turnover for GST instalments & up to $50M for PAYG instalments) will have their statutory rate reduced to 6%.

Industry-Specific

Eligible new build-to-rent projects – Increase the rate for the capital works tax deduction (depreciation) to 4% per year & reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments to 15%.
Gas Industry – Deductions under the Petroleum Rent Resource Tax (PRRT) for gas and LNG will be limited to up to 90% of the PRRT income from each project starting from July 2023.
Aged Care – Wages for a registered nurse in aged care will rise by more than $10,000 a year. More than $7,500 for an enrolled nurse.
Truckies – The heavy vehicle road user charge is being raised by 6% a year for the next three years from 27.2 cents per litre of diesel to 32.4 cents by 2025-26.
Agriculture – A much-requested strengthening of Australia's biosecurity measures has been confirmed in the federal budget.
Defence – The federal government has added north of $11bn more to the defence spend over the next 4 years.
Disaster responders – The federal government has promised to establish a National Messaging System to deliver instant emergency warnings to all mobile devices in a geographic area.
Community Services – Mental health, disability, domestic violence and homelessness services will receive $4 billion in additional funding in the next 4 years.
Emission Emitters – $450 million will go towards helping the country's largest industrial emitters make investments that help them reduce their emissions.

While the budget does seem comprehensive, it is far from all-encompassing. Here is everything that the budget failed to address:

Relaxing residency requirements for SMSFs.
An amnesty to allow those with so-called legacy pensions to escape.
No mention of continuing the current 50% reduction in minimum pension payments beyond 1 July 2023.
Individual income tax system is still not indexing with inflation. For low-income earners where real wage growth isn’t catching up with inflation, they are paying higher taxes.
Innovation & supporting R&D.
Manufacture funding to support local producers & makers.
Export funding to utilise the low Australian Dollar.
Tax revenue structure reform to diversify from individual tax revenue which is currently sitting at 50%.
Lifting limited working hours for international students, currently only students working in aged care get relief (temporarily).
Immigration reform to bring more investment & business to regional Australia and sectors that need more resources like Aged Care, Health, Education etc.
Training & education to retrain parts of the workforce to be ready for higher unemployment rates prediction in coming years.
National disaster funding to protect high-risk sectors: Construction, Banking & individuals who are losing money due to failing businesses in those sectors.
A serious strategy to fight inflation, including aligning fiscal policy with the RBA’s cash rate policy.

Navigating the complexities of the budget can be challenging. This article aims to provide a brief snapshot of the budget’s key points, giving you a clear understanding of possible impacts and helping you start asking the right questions.

For more detailed inquiries on specific topics, we’ve listed some resources below that we found valuable while creating this article:

Source: Tailored Accounts

Fast Facts: The 2023 Federal Budget Explained

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