Personal Taxes

Federal Finances 2022-23: Private tax

The Government has increased the low and middle-income tax offset and increased the Medicare Levy for low-income thresholds for seniors and pensioners, families and singles. A one-off $250 payment will also be made to eligible welfare recipients. In addition, the number of guarantees under the Home Guarantee Scheme has been expanded.

Cost of living tax offset

The Government will increase the low and middle-income tax offset (LMITO). The offset is targeted at low and middle‑income earners that are most susceptible to cost of living pressures in Australia.

The increased LMITO will be paid from 1 July 2022 when Australians submit their tax returns for the 2021‑22 income year. This proposal will increase the LMITO by $420 for the 2021‑22 income year. This increases the maximum LMITO benefit in 2021‑22 to $1,500 for individuals and $3,000 for couples.

Other than those that do not require the full offset to reduce their tax liability to zero, all LMITO recipients will benefit from the full $420 increase. All other features of the current LMITO remain unchanged. Consistent with the current LMITO, taxpayers with incomes of $126,000 or more will not receive the additional $420.

Increasing the medicare levy low-income thresholds

The Government will increase the Medicare levy low‑income thresholds for seniors and pensioners, families and singles from 1 July 2021. The increase in thresholds takes account of recent movements in the consumer price index so that low‑income individuals continue to be exempt from paying the levy.

Cost of living payment

The Government will provide a one-off $250 economic support payment to ease higher cost of living pressures. The payments will be made in April 2022 to eligible welfare recipients and concession card holders that are Australian residents. The payment will be exempt from taxation and will not count as income support for the purposes of any income support payment.

Affordable housing and home ownership

The Government will increase the number of guarantees under the Home Guarantee Scheme to 50,000 per year for 3 years from 2022-23 to support homebuyers to purchase a home with a lower deposit.

Extension of the temporary reduction in superannuation minimum drawdown rates

The Government has extended the 50% reduction in the superannuation minimum drawdown requirements for account-based pensions for a further year to 30 June 2023. The minimum drawdown requirements determine the minimum amount of a pension that a retiree has to draw from their superannuation to qualify for tax concessions.

Related Articles