What is in the Federal Budget that affects you?

On Tuesday, 29 March 2022, Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget. The Treasurer announced a range of cost-of-living measures, here are a few of our highlights.

Deductibility of COVID-19 tests

The government announced on 7 February 2022 that they will ensure COVID-19 testing expenses are tax deductible for testing taken to attend a place of work. If you have incurred expenses for COVID-19 tests, you should keep a record of those expenses. This also means fringe benefits tax will not be incurred by employers if they provide COVID-19 tests to their employees for this purpose.

The $250 cost-of-living payment

If you’re on a government payment, you could be eligible for a one-off “cost-of-living payment” worth $250. You don’t have to apply or do anything to get it if you’re eligible, it will be paid automatically in April 2022.  Eligible recipients of the following schemes and concession card holders will get one payment even if you’re eligible under two or more categories:

• Age Pension
• Disability Support Pension
• Parenting Payment
• Carer Payment
• Carer Allowance (if not in receipt of a primary income support payment)
• Jobseeker Payment
• Youth Allowance
• Austudy and Abstudy Living Allowance
• Double Orphan Pension
• Special Benefit
• Farm Household Allowance
• Pensioner Concession Card (PCC) holders
• Commonwealth Seniors Health Card holders

Low & Middle Income Tax Offset increase

The announcement of the 2022 Federal Budget will see the government increase the Low and Middle Income Tax Offset by $420, meaning Australians earning less than $126,000 will be able to access between $675 and $1,500 when they file their tax returns for the 2022 financial year. A breakdown of the offset can be seen below:

The tax offset is deducted from your tax liability, lowering tax bill, and cannot be used to generate a tax refund, or pay your Medicare levy. There is no need to apply for this offset, it will be automatically applied by the ATO if eligible.

Fuel excise reduction

In the latest budget the treasurer, Josh Frydenberg confirmed that fuel excise would be halved for six months. The measure was designed to help offset rising costs of living, with inflation running at 3.5% in the December quarter. From midnight on 29th March 2021 the petrol excise will halve from 44.2 cents a litre of petrol or diesel to 22.1 cents, at a net cost of $3bn to the budget. This fuel tax relief expires automatically after six months, on 28 September. In his speech, Frydenberg said the measure would “flow through to the bowser over the next two weeks” and the Australian Competition and Consumer Commission “will monitor retailers to make sure these savings are passed on in full”.

More information on the 2022 budget can be found here