On 25 October 2022, the Albanese Government handed down an updated 2022-23 Federal Budget outlining the new Government’s key priorities.
There are several areas that may be of interest to you, and we’ve summarised these for you.
Electric vehicles
Dr Jim Chalmers, the Federal Treasurer, reinforced the Government’s commitment to drive uptake of electric vehicles. Plug-in hybrid electric vehicles, along with battery and hydrogen fuel cell electric vehicles, are included in the proposed fringe benefits tax (FBT) exemption from 1 July 2022. The benefit from salary packaging these vehicles will therefore increase.
Employers will need to include FBT exempt electric car fringe benefits in an employee’s fringe benefits amount. If the electric vehicle’s first retail price is below the luxury car tax threshold for fuel-efficient cars, exemption from import tariffs will also apply. For both exemptions, the electric vehicle must not have been held or used before 1 July 2022.
The above is yet to be legislated and is expected to be discussed in the Senate this week.
“Low Income” and “Low and Middle Income” tax offsets
These tax offsets have been available to taxpayers in recent years.
“Low Income” tax offsets
The “low income tax offset” (LITO) is unchanged.
“Middle Income” tax offsets
The planned removal of the “low and middle-income tax offset” (LMITO) after the 2021-2022 income year, will proceed, reducing the take-home pay of over 10 million taxpayers earning between $48,000 and $126,000 p.a. by $1,500. This may mean that salary packaged benefits become more tax effective for some employees.
This is a good time for employees to review their salary packaging arrangements for the remainder of this income year. Our salary packaging calculator can help your employees maximise their salary packaging benefits here.
We hope this summary has been helpful. If you have any questions, please contact us.