How do changing tax rules affect you? Here’s what you need to know.
12 April 2022 | Agribusiness
Kennas Client Resources
As any Kennas client will tell you, we’re all about keeping you in the loop, and teaching you how to shape your financial success.
Understanding the Federal Budget
The highly-anticipated 2022/23 Federal budget announcement delivered many ‘tweaks’ which, implemented wisely, could make a big difference to your taxable income and bottom line. We’ve summarised them for you – flag any that might impact you, and make sure you talk through them with your accountant at tax time.
Full details are also available from this Fact Sheet on our website.
Read on to the end if you have a family trust, as there’s one more important update you need to know.
The changes you should know about
Changes announced in the Federal Budget on 31 March, and major changes introduced over the last 12 months that affect tax returns for the 2021/22 year and beyond include:
- Low and middle income tax offset – once-off $420 for 2022 financial year only, to ‘offset cost of living increases’. Need to know if you’re eligible? Check our fact sheet.
- Increasing thresholds for the Medicare levy for low income households – for families, the new threshold is $235 higher than the previous 2020/21 tax year.
- Deductible COVID-19 test expenses – if you have to take a test to attend work or work remotely, and if you kept receipts.
- One-off $250 cost of living payments to eligible recipients and concession cardholders, to be made this month.
- Fuel excise halved until 30 September 2022 – from 44.2 to 22.1 cents per litre. That’s a saving of just over $19 for an 80 litre tank.
- SMEs able to deduct additional 20% expenses (between 29 March 2022 and 30 June 2024) incurred for Australian-based external training for staff. The first claim for this will be in the 2023 tax return.
- SMEs able to deduct additional 20% on business expenses and depreciating assets that support the businesses digital adoption, up to annual cap of $100,000, for expenditure between 29 March 2022 and 30 June 2023. This could include portable payment devices, cyber security systems and cloud based services. The first claim for this will be in the 2023 tax return.
- Payments received from Queensland 2021 COVID-19 Business Support Grant will be non-assessable, non-exempt until 30 June 2022.
- Instant Asset write-off for some depreciating assets for eligible businesses extended to 30 June 2023.
- Super Guarantee to remain at 10.5% (legislated in 2021/22 Federal Budget).
Superannuation and SMSF
- Minimum age reduced from 65 to 60 for downsizer contributions, effective 1 July 2022.
- Minimum drawdown for account-based pensions 50% reduction extended to 30 June 2023.
- Work Test removed from 1 July 2022 for voluntary super contributions for 67-74 age group.
Prefer to hear the budget news discussed with the experts? Have a listen to Episode 10 of our 125 Years and Counting podcast for the detailed overview.
Family Trust Distribution – ATO Alert
Another important change, indirectly related to taxation, was issued in February via an ATO alert, about greatly increased scrutiny of Family Trust distribution arrangements.
Section 100a of Division 6 explains how trustees of family trusts should be dealing with distributions to family members and beneficiaries, and describes what ‘ordinary family dealings’ include, according to the ATO’s definitions. The taxpayer alert (TA 2022/1) gives several examples of what could be considered ordinary family dealings, and what might fall outside the definitions. But these are just three examples of literally limitless possibilities, so it’s important not to assume your distribution arrangements are ‘probably okay’.
The final rules are still not clear, but we’re expecting that our clients with trusts will need to review their arrangements, to ensure they’re working within the new guidelines. Your Kennas partners and accountants will contact affected clients in May and June to discuss what it means for you.
We’ve been taxation experts for over 100 years (and not many can say that!) So call on us when you need advice. We’re a phone call away.