October Federal Budget for 2022-23 handed down
The 2022-23 October Federal Budget was handed down last night [Tues 25 October 2022]. The Budget estimates an underlying cash deficit of $36.9 billion for 2022-23 (and $44 billion for 2023-24).
The tax-related measures announced in the Budget included the following:
- Intangible assets depreciation – reversal of previously announced option to self-assess effective life for certain intangible assets (eg intellectual property and in-house software), and instead will continue to be set by statute;
- Digital currencies not a foreign currency – legislation will be introduced to clarify that digital currencies (such as Bitcoin) continue to be excluded from the Australian income tax treatment of foreign currency;
- Denial of deductions for payments by “significant global entities” for intangibles – an anti-avoidance rule will be introduced to prevent significant global entities (entities with global revenue of at least $1 billion) from claiming tax deductions for payments made directly or indirectly to related parties in relation to intangibles held in low- or no-tax jurisdictions (ie with a tax rate of less than 15% or “a tax preferential patent box regime without sufficient economic substance”);
- Off-market share buy-backs – the tax treatment of off-market share buy-backs undertaken by listed public companies will be aligned with the treatment of on-market share buy-backs;
- COVID grants treated as NANE – the Budget contain a listing of further State and Territory COVID-19 grant programs eligible for non-assessable, non-exempt treatment; and
- Penalty unit increase – the amount of the Commonwealth penalty unit will increase from $222 to $275 from 1 January 2023.
- The Government announced that it will abandon 8 measures (including superannuation measures) announced by the previous Government, and defer the start date of 3 others.
The superannuation measures announced in the Budget include:
- SMSF residency changes – the proposal to extend the CM&C test safe harbour from 2 to 5 years, and remove the active member test, will now start from the income year commencing on or after assent to the enabling legislation (previously 1 July 2022);
- SMSF audits every 3 years – the Government will not proceed with the former government’s proposal to allow a 3-yearly audit cycle for SMSFs with a good compliance history; and
- retirement income products – the Government will not proceed with the proposal to report standardised metrics in product disclosure statements.
The 2022-23 October Budget Papers can be found, here.
ATO: Record keeping reminder and tips
The ATO has released information and tips to help businesses to avoid record-keeping errors. The ATO also emphasised that proper record-keeping helps businesses avoid penalties that may apply. Among other things, the ATO advises businesses to: keep track of your income and stock levels; what expenses have bene incurred; make informed business decisions; and prepare for your business activity statements and tax returns.
