Key takeaways from the 2023 Australian Federal Budget | Individuals:
Will receive energy bill relief under the government’s cost-of-living relief.
Provided to the ATO to extend the Personal Income Tax Compliance Program for two more years.
Medicare levy low-income thresholds
Effective from 1 July 2022, the Medicare levy low-income thresholds will increase for singles, families, seniors and pensioners to take into account recent movements in the CPI.
The new thresholds are listed below:
|Single seniors and pensioners||$36,925||$38,365|
|Family seniors and pensioners||$51,401||$53,406|
For each dependent child or student, the family income thresholds will increase by a further $3,760, a boost from the previous amount of $3,619.
Lump sum payments in arrears exempted from Medicare Levy
Effective from 1 July 2024, eligible lump sum payments in arrears will be exempt from the Medicare Levy.
To qualify, taxpayers must be eligible for a reduction in the Medicare levy in the two most recent years from when the lump sum accrues. Taxpayers must also satisfy the existing eligibility requirements for the existing lump sum payment in arrears tax offset, including that the lump sum must be ten per cent or more of the taxpayer’s income in the year of receipt.
Extending the personal income tax compliance program
The Government will provide $89.6 million to the ATO and $1.2 million to Treasury to extend the personal income tax compliance program for a two-year period starting 1 July 2025.
It is expected that the extension would enable the ATO to scrutinise key areas of non-tax compliance and better manage emerging risks by continuing to deliver a range of proactive, preventative and corrective activities to encourage tax compliance.
The measures are expected to increase receipts and payments by $474.9 million and $90.8 million respectively over a period of five years from 2022-23.
Energy price relief plan
The Government has announced $1.5 billion over five years from 2022–23 (and $2.7 million per year ongoing) to reduce the impact of rising energy prices on Australian households and businesses by providing targeted energy bill relief and progressing gas market reforms.
The initiative, includes $1.5 billion over two years from 2023–24 to establish the Energy Bill Relief Fund to support targeted energy bill relief to eligible households and small business customers, including pensioners, Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and small business customers of electricity retailers.
The announcement also includes funding for both the Australian Competition and Consumer Commission and the Australian Energy Regulator.
Household energy upgrades fund – establishment
In order to support home upgrades that improve energy performance and save energy, the Government will provide $1.3 billion in funding to establish the Household Energy Upgrades Fund.
The initiative includes $1 billion in funding to the Clean Energy Finance Corporation to provide low-cost finance and mortgages in partnership with private financial institutions for home upgrades that save energy. Also, $300 million over four years from 2023–24 will be held within a Contingency Reserve to support upgrades to social housing, in collaboration with states and territories, that save energy.
Existing reductions in tax rates – stage 3
No changes were announced in this Budget regarding the legislated Personal Income Tax Plan (PITP). The PITP is still set to continue, delivering further tax relief in future years.
Stage 3 of the PITP will commence from 1 July 2024, with 95% of all individual taxpayers be assessed at a marginal rate of 30% or less. The tax rates will be as follows:
|Taxable Income||Tax||% on excess|
Cessation of low to medium income tax offset
The Low and Middle Income Tax Offset (LMITO) of up to $1,500 ceased on 30 June 2022. The cessation was announced in the March 2022 Federal Budget by the previous Coalition Government. The Budget did nothing to reinstate the offset.
The LMITO was a measure introduced in response to COVID-19 global pandemic. The LMITO was available to individuals with taxable incomes between $48,000 and $126,000.