Last night the Federal Treasurer, Jim Chalmers, presented Labours first budget with measures primarily aimed at Australian Families – including enhanced subsidies for childcare, improved parental leave, senior health card threshold changes, small business incentives, paid superannuation enhancements. and updates on tax deductions for philanthropy.

A review of the key changes can be found below.

Social security

Cheaper Child Care:

The Albanese government will support childcare with $4.7 billion over 4 years through the following:

• Increase the maximum Child Care Subsidy rate to 90% from a previous rate of 85% for a families first child
• Increase the Child Care Subsidy rate for all families earning less than $530,000 in household income.
• Continue to maintain the current higher Child Care Subsidy rates for multiple child households aged 5 years or under
• Higher Child Care Subsidy to discontinue 26 weeks after the older child’s last session of care, or when the child comes to 6 years of age.

Paid parental leave

From 1 July 2023, the Albanese government will introduce an enhancement to the Paid Parental Leave (PPL) Scheme. Such amendments are as follows:

• Either parent can claim the PPL payments if they meet the necessary criteria.
• Both Parents will be entitled to PPL if they wish to take leave at the same time. 
• From July 2023 parents will be able to take Government-paid leave in blocks as small as a day at a time, with periods of work in between, so parents can use their weeks in a way that works best for them.
• Total amount of leave sole parents can access will be increased progressively from 18 to 26 weeks. 

Lifting the Income Threshold for the Commonwealth Seniors Health Card

The threshold on the Commonwealth Seniors Health Card will increase from $61,284 to $90,000 for singles, and from $98,054 to $144,00 for couples. This is estimated to provide 50,000 additional Australians that will be able to qualify for the Commonwealth Seniors Health Card.

Superannuation

Expanding eligibility for downsizer contributions

The downsizer contribution consists of a one-off after-tax contribution to superannuation up to $300,000 per person based on the sale of a family home. The minimum eligible age has been reduced from 60 to 55. This contribution will not count towards any non-concessional contribution caps in a given financial year. 

Relaxing the residency requirements for SMSFs

The Albanese government, since being voted in, has reviewed and will relax SMSF’s residency requirements for SMSF’s by:

• Extending the central management and control temporary absence period from the current two years up to five years, and
• Removing the active member test.

Personal income tax

There are no changes to the currently legislated personal income tax arrangements to change in the 2024 financial year.

In the lead up to the Federal Budget, there was a lot of speculation about whether it would contain any changes to the ‘stage 3’ tax cuts which were legislated by the former Government and are due to take effect from 1 July 2024. Under the legislated measure, from the 2024-25 income year, the 32.5% marginal tax rate will reduce to 30%. For a resident individual, the tax rate on their taxable income will be as follows:

From 2024-25 income year:

Digital currencies

(e.g. Bitcoin) will not be taxed like foreign currencies but will continue to be taxed as assets (and therefore subject to same capital gains tax assessments).

Other

Powering Australia – Electric Car Discount (previously announced)

The Government will cut taxes on electric cars so that more Australians are able to afford them.

From 1 July 2022, the measure will exempt battery, hydrogen fuel cell and plug-in hybrid electric cars from fringe benefits tax and import tariffs if they have a first retail price below the luxury car tax threshold for fuel-efficient cars ($84,916 in 2022‑23). The car must not have been held or used before 1 July 2022.

Employers will need to include exempt electric car fringe benefits in an employee’s reportable fringe benefits amount.

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