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Federal Budget October 2022 - Summary

Corporate Photo Web Version 600x600Tony Sarai
Published by:
Tony Sarai
Published on:
October 26, 2022
Modoras Pty Ltd ABN 86 068 034 908
Modoras Federal Budget 2022 October Summary

The Federal budget announcement on 25 October shows a cautious response to a turbulent global economy – there are clear indicators of slowing global economic growth, continued high inflationary conditions fuelled by an escalating global energy supply crisis, ongoing supply chain challenges with China due to COVID-19 policies and restrictions. While these macro issues play out, local issues such as surging cost of living, labour market shortages, rising interest rates, declining house prices, and a weaker Australian dollar which affects nearly all imported consumer goods pricing, continue to affect everyday Australians.

This budget focusses on relief for parents, homebuyers and social security recipients, maintaining pre-election commitments, and introducing new measures to address housing affordability. The announcements were mainly recommitments from earlier budgets – instead of changes for super or tax, most proposals focused on housing, infrastructure and sector-specific investments. We are likely to see more work towards NDIS sustainability, energy pricing and structural budget repair in future budget announcements.  

Major Budget Initiatives: These are still to be legislated, and commencement dates may change.

Modoras Federal Budget 2022 Summary - October Highlights
Modoras Federal Budget 2022 Summary – October Highlights

Proposals for Superannuation:

  • Eligibility for downsizer contributions to superannuation was expanded by reducing the minimum age from 60 to 55 years of age. This allows individuals to make a one-off post-tax contribution from proceeds of the sale of your main residence to superannuation of up to $300,000 per person.
  • Delay to relaxing of residency requirements for SMSFs from 1 July 2022

Proposals for Social Security:

  • Work Bonus: Pensioners who want to work more hours can do so without having their payments cut – this is a one-off credit of $4000 per annum from $7,800 to $11,800.
  • Increased income threshold for Commonwealth Seniors Health Card from $61,284 to $90,000 for singles; and from $98,054 to $144,000 for couples.
  • Pensioner assets test exemption, when the proceeds from selling a home is used for purchasing or building another home, will be extended to a maximum of 24 months

Proposed support for families:

  • Government has allocated additional $4.7b over four years to deliver childcare relief to families and encourage increased workforce participation, increasing the income threshold for childcare subsidies up to $530k per household, per annum
  • The maximum childcare subsidy will increase from 85% to 90% for eligible recipients
  • Expansion of paid parental initiative to the tune of $531m over the next four years: eligibility for the scheme will be expanded to include couples on a combined income of up to $350k; From 1 July 2024 the initiative will increase by two weeks per year until it reaches 26 weeks in 2025

Legislated tax cuts:

  • Stage 3 tax cuts, which were legislated to come into effect from 2024-2025 income year, will not be changed by the budget announced last night, although there are likely two further budgets prior to the commencement of these tax cuts.

Proposals to address Housing affordability:

  • Announcement of the National Housing Accord, with the aim of building one million new, well-located homes, over five years from 2024, to address the supply and affordability of housing. The aim of the accord is to align all levels of government and the construction and investment sectors to address rising supply and affordability challenges.

Proposals for Aged Care:

  • A significant election commitment was honored with the announcement of increased support for Aged Care residents and workers under Labour’s response to the Royal Commission into Aged Care quality and Safety, with most of the funding increase of $2.5b over the coming four years allocated towards paying additional staff and increase daily minutes of care per resident from October 2024.

Proposals for Renewables and Climate Change:

  • $2.4b of funding was announced in yesterday’s announcement across energy, emission reduction, renewable energy resilience, and infrastructure expenditure to secure the energy supply for both households and businesses.

Proposals for Health:

  • Maximum co-payments for medicines on the PBS will be reduced, contributing to medication for about 3 million people per year
  • Increase in Medicare funding for bulk-billed telehealth for psychiatry services

Education initiatives:

  • Free education for 180,000 TAFE and university places from 2023 in areas of skills shortages (including teaching and aged care) as a response to the national skills shortage.
  • A post-pandemic “student wellbeing boost” has been announced to enable schools to deliver mental health support, excursions, sporting and social activities
  • $271m was allocated to public school refurbishments, including improvements to ventilation and air quality

Interested to learn how this budget might affect your business or personal circumstances? Book an appointment with our financial experts in our Brisbane, Gold Coast, Melbourne or Sydney offices today!

IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (Number 233209). The information and opinions contained in this presentation is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. Any individual making any investment or borrowing decisions should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to borrow funds or purchase, sell or hold any particular investment. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of, credit contract entered into or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog may change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

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