Federal Budget 2022

On Tuesday 29 March, Treasurer Josh Frydenberg handed down the 2022 Federal Budget, which was eagerly awaited given
the impact it could have on the forthcoming election outcome.
The Treasurer detailed the current state of the ecnomy, a plan to help Australia move past a difficult two-year period
following the COVID-19 pandemic and a number or measures to improve cost of living pressures.

The numbers
Some of the key numbers announced include:
► A deficit of $79.8 billion for 2021-22
► Net debt of $631.5 billion for 2021-22, which is expected to peak $864.7 billion in 2025-26.
► Wages growth of 2.75% for 2021-22, expected to reach 3.5% in 2024-25.
► Wages growth of 2.75% for 2021-22, expected to reach 3.5% in 2024-25.
► Inflation of 4.25% for 2021-22, expected to fall to 2.75% in 2023-2024.
► The unemployment rate is expected to fall to 3.75% in 2022-2023

Superannuation
The Government has extended the 50% reduction of the superannuation minimum drawdown requirements for
account-based pensions and similar products for a further year to 30 June 2023.
The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their
superannuation in order to qualify for tax concessions. Given ongoing volatility, this change will allow retirees to avoid selling
assets in order to satisfy the minimum drawdown requirements.

Easing cost of living pressures
From 1 July this year, over 10 million individuals will receive a one-off $420 cost of living tax offset. When combined with the
low and middle income tax offset (LMITO), eligible low and middle-income earners will receive up to $1,500 for a single
income household, or up to $3,000 for a dual income household. LMITO will however end in the 2022 financial year. The
LMITO was a one-off tax offset worth up to $1,080 available to those earning from $48,000 to $126,000 a year.
To help some Australians meet cost of living pressures, the government is providing a one off, income tax-exempt payment of
$250.This payment will help 6 million people, more than half of which are pensioners, at a cost of $1.5 billion.

Temporary fuel excise relief
With recent fuel prices rising to record levels, adding to cost of living pressures faced by families and the cost of doing
business for small businesses, the fuel excise is being cut by 50% for the next six months. This will see excise on petrol and
diesel cut from 44.2 cents per litre to 22.1 cents per litre with an average price reduction of around $15 per tank expected to
flow through to the majority of service stations and Australian consumers within a few weeks.

Major infrastructure projects
The government is providing a further $7.4 billion for new and expanded dam projects intended to increase water security,
build drought resilience for the future and promote regional economic development.
This includes $6.6 billion for water infrastructure in Queensland to facilitate the development of a new food bowl in Australia’s
north and unlock new agricultural export opportunities.
Small business
$2.8 billion has been committed to increase take up of apprentices, with up to $15,000 wage subsidies for employers who
take on a new apprentice. $3.7 billion is being invested on skills reform to support an additional 800,000 trade places.
Small businesses with annual turnover of less than $50 million will have access to a new bonus 20% deduction for the cost
of external training courses delivered to their employees by providers registered in Australia. The boost will apply to eligible
expenditure incurred from Budget night until 30 June 2024, such as a cyber security course delivered by a registered training
provider. This initiative will provide $550 million in tax relief for small businesses.