October Federal Budget 2022-23 | Personal Income Tax Updates

October Federal Budget Report 2022-23

No announced changes to personal income tax rates.

Stage 3 tax cuts to commence from 1 July 2024, as previously legislated. The Government will not extend the Low and Middle Income Tax Offset (LMITO) to 2022-23, potentially decreasing 2023 tax refunds by up to $1,500 for low to middle income earners. Low Income Tax Offset (LITO) will continue to apply.

RSM INSIGHT
"The increase in the income threshold for the Commonwealth Senior Health Care Card has created opportunities for many older Australians to qualify for this benefit. This will help them combat the current rising cost of living pressures by reducing their cost of healthcare, utilities and transport. They may also be eligible for ad-hoc Economic Support payments.”

Grace Bacon,
Director, Financial Services

Individual Tax Rates & LMITO - Stage 3 Tax Cuts

The Government did not announce any changes to the previously legislated Stage 3 personal income tax cuts, which are set to commence from 1 July 2024.
As a result, approximately 94% of Australians will face a marginal tax rate of 30% or less and only three personal income tax rates will apply from 1 July 2024.

A summary of the current and legislated tax rates is included below:

Rate	Current	From 1 July 2024
Nil	$0 - $18,200	$0 - $18,200
19%	$18,201 - $45,000	$18,201 - $45,000
30%	N/A	$45,001 - $200,000
32.5%	$45,001 - $120,000	N/A
37%	$120,001 - $180,000	N/A
45%	$180,001 +	$200,001 +

Low and Middle Income Tax Offset (LMITO) and Low Income Tax Offset (LITO)

The Budget did not announce any extension of the LMITO, which means that the offset will no longer be available after the 2021-22 income year. The LMITO provided low and middle income taxpayers (with taxable incomes up to $126,000) with a tax offset of up to $1,500.No extension to the LMITO means individual taxpayer refunds for 2022-2023 may be decreased by up to $1,500 compared to the 2021-22 income year.No change has been made to the existing LITO which will continue to apply for the 2022-23 income years and beyond. The maximum amount of the LITO is $700. The LITO is withdrawn at a rate of 5 cents per dollar between taxable incomes of $37,500 and $45,000 and then at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.

Superannuation

The Federal Budget delivered very few changes for superannuation, providing some comfort to an industry often subjected to Government tinkering.

The Government confirmed its election commitment that the eligibility age to access a downsizer contribution to superannuation will be reduced from age 60 to age 55 to increase the availability of housing for Australian families.

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Lifting of threshold for income test for Commonwealth Seniors Health Card

To support older Australians to combat the current cost of living pressures, it is a relief that the Government has announced the increase to the income threshold for the Commonwealth Senior Health Card (CSHC). Many older Australians will now previously eligible. The CSHCwith reduced costs for healthcare, utilities and transport. They may also be eligible for ad-hoc Economic Support payments.
Additional support for older Australians that rely on income from deemed financial investments for social security purposes such as: The Age Pension, Commonwealth Seniors Health Card or Low-Income Health Care Card, the deeming rate will freeze at the current levels for a further two years until 30 June 2024. This will assist with combating rising cost of living.
The CSHC will provide them with reduced cost of healthcare, utilities and transport. They may also be eligible for ad-hoc Economic Support payments.