Posted on June 2023 By Judy Cole
Do you like me, have a short attention span to sifting through the relevant information in the budget? If so, then this quick read is for you.
I sat down with Speller’s very own Accountant Cameron for his thoughts.
Cameron Watson has 30 years’ experience in the accounting profession and is a director of Paul Money Partners https://www.paulmoney.com.au/– a boutique accounting and wealth advisory firm with offices in Collingwood and Greensborough.
When not watching his football team Carlton regularly lose, he is forecasting when the rate of GST will go up and when Australia will run out of electric cars.
What are the key takeaways from this year’s federal budget?
I think you can read more into what was not said rather than what was. If you look beyond the numbers there is no real appetite for any meaningful tax reform in Australia – just more tinkering around the edges. We could for example raise the GST rate to a more internationally comparable rate (UK 20%, NZ 15%), reduce personal income tax and simplify the burden on business to comply with our over the top tax system which keeps accountants like me busy but, that’s not happening (yet).
Who are the winners (if any)?
The real winners will be those earning between $120,000-$200,000 who will pay no more than 30% tax from July 2024. These are the “Stage 3” tax cuts legislated by the previous government that Labor has not reversed. Low and middle income families will also benefit from cheaper medicine, bulk billing and cheaper energy initiatives.
Who are the losers (if any)?
The losers will be those people with large superannuation balances (I’m talking balances over $3 million) – there will be an additional tax imposed on these balances. Labor have indicated that superannuation has moved away from providing a “dignified income in retirement” to an inter-generational wealth creation vehicle – they don’t like this.
What does this mean for big business’ (likely SAP customers) across Australia and can you see this impacting their hiring needs (contract or permanent?)
I’d say they would see it as fairly benign. Of more concern to big business will be the recent Victorian state budget announcement of the increase in payroll tax of 0.5% on national payrolls over $10 million and 1% over $100 million.
Are there any impacts to Independent contractors?
Not that I can see – although the continuation of the Stage 3 tax cuts which lowers individual tax rates may result in more contractors not seeing the need to incorporate (I know, I know personal services income rules not withstanding!) with a reduced gap between personal and company tax rates.
Do you think the budget will assist in lowering inflation and/or cost of living?
The cost-of-living initiatives (medicine, doctors, energy) will reduce measured inflation but this may boost spending so, I’ll have a $1 each way on the outcome here!
Is there anything else you would like to add that is important or maybe a good little tax benefit people may not be aware of?
I can’t believe this isn’t headline news and I’ll save the best to last. Did you know you can salary package an electric vehicle with a value of up to $84,000 through your employer and it’s not subject to FBT?! A quick calc if you earn $150,000 pa – salary sacrifice $25,000 pa in lease payments and running costs – you could be approx. $10,000 better off than if you funded the car out of your after tax salary! Get out there and buy one now!
Thanks Cam! So, there we have it, the budget in 5 questions.
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