2022-23 Budget 2.0 – A Guide

There is nothing in this Budget that would create a UK-style crisis. The stage 3 tax cuts legislated to commence on 1 July 2024 are not mentioned, and most funding initiatives appear to be a reallocation of previous Government initiatives. And, the commodity-driven $54.4 billion improvement in tax receipts has largely been banked, not spent.

With seven months before the 2023-24 Budget released in May 2023, the 2022-23 Budget is a shuffling of the deck not a new set of cards. And to continue the pun, we need to play the hand we have been dealt, buffeted by externalities – war, floods, and global uncertainty.

Cost of living pressures will continue. While some initiatives such as the increase in childcare subsidies will help, the Budget flags some fairly bracing economic expectations:

• Inflation is expected to peak at 7.75% in the December quarter and will persist at higher rates for longer than expected before easing to 3.5% by June 2024.
• Real GDP is forecast to grow to 3.25% in 2022-23 then retract to 1.5% in 2023-24.
• Electricity prices are expected to increase nationally by an average of 20% in late 2022, with retail electricity prices expected to rise by a further 30% in 2023-24.
• The deficit sits at $36.9bn, while this is better than originally estimated, the deficit will expand to $49.5bn by 2025-26.

Tight labour market conditions are expected to see annual wage growth pick up to 3.75% by June 2023. Even so, high inflation is expected to see real wages fall over 2022-23 before rising slightly over 2023-24. That is, your wages might increase but the gains will be eaten away by the increasing cost of living.

The ATO gets an extra $80m to extend its personal income tax compliance program, with $674m anticipated in increased receipts and over $80m in increased payments as a result. Tax deductions will be looked at closely.

As expected, multinationals are a target. New measures will limit opportunities to shift taxable profits offshore. And, the ATO’s Tax Avoidance Taskforce is expected to deliver a whopping $2.8bn in additional tax receipts and $1.1bn in payments over the 4 year period.

If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please let us know.

For a deeper dive please download our PDF analysis here: Budget 2022-23.

Please contact us if you would like further information or advice.