“Decent” and “encouraging” were two verdicts from the tax industry on the 2022 budget, with measures to address cost-of-living pressures high on the list. Big-ticket items were left untouched: stage 3 personal tax cuts remain scheduled to start in 2024-25 and the superannuation guarantee rises next year, as planned, to 10.5 per cent.

The chief economist at PwC, Jeremy Thorpe, said the central theme for the budget was security, with expenditure on defence, cyber security, water security, job security and security of living expenses.

“I think there’s a consistency to this budget. And in an election year, I think there could have been a bigger spending outcome. It’s actually quite constrained,” Mr Thorpe said.

The main measures:

Increase in the low to middle income tax offset (LMITO)

Raises the maximum amount by $420 to $1,500 ($3,000 for couples) earning up to $126,000. If someone’s tax liability is less than the LMITO, the excess is not refundable.

Ends: 30 June 2022

The senior manager of tax policy at CPA Australia, Elinor Kasapidis, said most eligible taxpayers would get the boost within a few months, once they had completed their tax return.

“Given everything that’s going on at the moment, it’s a good thing,” she said, but the scheme should not be overextended “because people start to expect it to become permanent,” Ms Kasapidis said.

The chief economist at PwC, Mr Thorpe, said with low unemployment, strong growth and rising inflation “this is not the time you need to be spending more money to stimulate the economy”.

“On the other hand, it’s an election year and there was always going to be that need for support. This is actually quite modest. And it’s time limited,” Mr Thorpe said. 

Halving fuel excise

Cuts the rate from 44.2¢ per litre to 22.1¢ for six months.

Starts: Immediately. Ends: 28 September 2022

The national tax technical leader at BDO, Lance Cunningham, said the immediate reduction to household costs could backfire unless the rise in petrol price is also temporary.

“It’s going to be interesting to see after six months when the discount of half the excise is supposed to come off, but will the world price of fuel have gone down? And if it hasn’t, what are they going to do? Everybody will be paying more for petrol again,” Mr Cunningham said.

And simply extending the measure created problems elsewhere.

“The fuel excise is used to fund infrastructure for the roads, and if they can’t get the money from there, it’s going to come from somewhere else,” Mr Cunningham said.

Cost of living payment $250

Eligible recipients include age pensioners, Jobseekers, those receiving the Carer payment, disability support pension or Youth Allowance. The payment is tax exempt and does not count as income for the purposes of income support.

Paid: April 2022

The senior manager business and investment policy at CPA Australia, Gavan Ord, said some people working and receiving welfare payments could qualify for both the one-off $250 and the extra $420 LMITO.

“The issue is whether that is a little bit too generous and maybe the inflation genie is out of the bottle,” he said. “It will be interesting to see what the RBA says next Tuesday [on interest rates].”

In its commentary, BDO said the government could not afford to ignore the current increases in cost of living.

“Nevertheless, this is only a temporary fix which may not have a long-lasting impact for vulnerable Australians,” it said.

Tax deductibility of COVID test expenses

If a test is required to attend work. Already announced.

Starts: 1 July 2021

Extension of temporary reduction in pension drawdown rates

Halves the minimum percentage payment on eligible pensions for an additional year. A temporary measure, introduced for 2019-20, it now extends to 2022-23.

Nexia Melbourne partner, business advisory and superannuation, Tino Di Battista said with the world economy so turbulent, it was an important move.

“This measure will allow retirees to avoid selling assets purely to satisfy the minimum pension drawdown requirements even where they do not need cash from the superannuation savings,” he said.

“This change does not prevent eligible retirees from withdrawing more than the reduced minimum provided they meet other conditions for access to their super.”

Source: AccountantsDaily

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Prime Minister Scott Morrison said Queenslanders impacted by the unfolding “flooding disaster” can apply for up to $1,000 per eligible adult and $400 per eligible child, as part of the government’s Disaster Recovery Payment (AGDRP), from Monday (28 February).

The payment is a “one-off”, non-means-tested payment and is available to eligible people in impacted local government areas who have suffered a “significant loss”, such as a severely damaged or destroyed home or serious injury.

In a statement Mr Morrison said: “We are closely monitoring the flood emergency and we expect further Commonwealth assistance to be extended to other impacted regions and local government areas as the flood impact is known.

“Australian Defence Force personnel continue to support the emergency response efforts and will do more once the water recedes and the recovery effort starts.”

While the government is yet to announce support for NSW North Coast residents, eligible Queenslanders in Gympie and North Burnett can claim support via myGov.

Mr Morrison said further flood-affected local government areas are expected to be added in coming days, as the damage becomes clear.

Majors offer financial assistance 

All four major banks have launched financial assistance measures for customers impacted by the unfolding flooding events. 

NAB is offering $1,000 grants to Queensland customers who have experienced “significant damage” to their homes, or business and agriculture customers who have suffered damage or losses from the floods. 

NAB financial support on offer includes:

• Immediate access to $1,000 grants to help cover costs such as temporary accommodation, food and clothing (eligibility criteria applies)
• $1,000 business grants to help restart or reopen and cover the cost of damaged property, equipment, fencing – and for loss of stock or livestock
• Credit card and personal loan relief
• Waiving the establishment fee for restructuring business facilities
• ​​​​​​​Concessional loans to customers seeking support to restructure existing facilities to assist in repairs, restocking and re-=opening for business
• Reducing and moratorium on home and personal loan repayments

NAB’s group executive personal banking, Rachel Slade, said: “We know that being there for our impacted customers right now is important, but we also know we have a role to play in the long-term recovery.

“We are also providing NAB colleagues with emergency grants who have experienced damage to their homes, while they continue to support their local customers during these floods.

“Many of our branches have also been impacted and we encourage customers in impacted areas to call NAB Assist.”

ANZ is encouraging customers in Queensland and parts of northern NSW to contact their bank to access relief packages, including a short-term payment relief on home loans, credit cards and personal loans.

ANZ’s relief package measures on offer include: 

• Short-term payment relief on home loans, credit cards, personal loans and some business loans (they may still charge interest during this period)
• Waiving fees for restructuring business loans
• Waiving fees for accessing term deposits early

ANZ general manager Queensland, Jacqueline Auf der Maur said: “We urge everyone in the affected areas to stay safe and look after each other, including all the brave emergency services personnel, as it seems we are unfortunately not yet through this event.

“When the time is right, ANZ will be there to help and we encourage customers to contact us when they are ready so we can provide some support through this devastating time.”

The Commonwealth Bank said as part of its “emergency assistance”, customers in Queensland and northern NSW can access a range of support services, including: 

• Customised payment arrangements for home loan, credit card, personal loan and some business loans
• Waiving fees and charges
• Temporary overdrafts, additional loans or emergency credit limit increases (subject to credit approval)
• Waiving fees and notice periods for early access to term deposits
• For CommInsure customers, assistance with emergency accommodation, if their home has been damaged
• Loan restructuring for business customers and existing loans
• Waiving fees for temporary and damaged merchant EFTPOS terminals, as well as support with merchant terminal rental fees
• We can also expedite claims to CommInsure for customers seeking help through their home and contents insurance

The Commonwealth Bank’s retail banking services group executive, Angus Sullivan said: “Our thoughts are with everyone impacted by the major flooding in communities across South-East Queensland and New South Wales.

“Dangerous conditions like this can cause a lot of distress and we want to alleviate some of that worry by offering a range of support measures to impacted customers.”

Finally, Westpac’s emergency support package for customers includes home and business loan deferrals and emergency credit card relief.

Westpac and St.George customers affected by floods could be able to access:

• Deferred repayments on home loans for up to three months
• Deferred repayments on credit cards, where they can apply to defer repayments to their card for up to 90 days
• Personal loans at a discounted interest rate with no establishment fee, for those wishing to purchase replacement goods
• Waived interest rate adjustments for those wishing to withdraw term deposits
• A halt on all interest accrual on unsecured credit products for a period of up to three months
• Defer repayments on business loans for up to three months
• Loan restructuring for existing business loans without incurring the usual bank establishment fees
• Assistance for affected business customers with merchant facilities, including monthly terminal access fee waivers for up to three months

Ross Miller, chief customer engagement officer at Westpac commented Westpac and St.George said while safety should be everyone’s first priority, we want our customers to know that when they need financial support, we have our customer teams standing by ready to respond.

Source: MortgageBusiness

The post URGENT: Federal Government Offers Grants, as ‘Flooding Disaster’ Escalates appeared first on Mark Accountants.

The federal government has teased the possibility of extending its popular tax offset ahead of the next election.

In a recent interview with The Herald Sun, Prime Minister Scott Morrison played coy when asked whether the current federal government would consider extending the low and middle-income tax offset (LMITO).

Introduced as part of the federal government’s tax cut agenda in 2018, the measure gives eligible Australians a tax benefit of up to $1,080 when they lodge their return on time. It was originally due to expire in 2020 but was extended in the wake of the COVID-19 pandemic.

The low and middle-income tax offset is currently slated to expire on 20 June 2022.

While the Prime Minister refused to commit to extending the tax-saving measure, he didn’t rule it out either.

Mr Morrison insisted that a decision about the offset would be made at “an appropriate time” but emphasised the current government’s track record for delivering tax cuts.“If you really want people and business to get on and do things, you can’t keep more of what they earn; it has to go back the other way,” he said.

Speaking to Accountants Daily, CPA Australia senior manager for tax policy Elinor Kasapidis said while it’s only speculation at present, the professional accounting body would back the extension should it occur.

“We would support extending the LMITO for the 2022-23 income year to help lower income earners who are still struggling financially because of the pandemic,” Ms Kasapidis said.

“The last time the LMITO was extended, it formed part of the 2020-21 budget announcement. This time around it may become an election issue, making it likely that an announcement would precede the budget.

“It’s inaccurate to compare removing the LMITO with a tax rise, as it has already been incorporated into the Phase 2 tax cuts.

“The LMITO was designed as a temporary fix to deal with bracket creep, with Phase 2 tax cuts being the permanent solution. Phase 2 tax cuts were brought forward from 2022-23 to the 2020-21 income year. Meanwhile, the LMITO, which was due to expire in mid-2020, was extended because of the pandemic. Now that we have both, there’s an element of double dipping from a taxation point of view.

“However, that doesn’t mean we should go all Scrooge McDuck and get rid of the LMITO immediately. Tax relief boosts the economy and consumer confidence. At this stage of Australia’s economic recovery there’s a case to be made for continuing measures like this a bit longer.

“On the other hand, the longer this off-set is extended, the more this or successive governments will potentially paint themselves into a corner. It only takes a couple of years before measures which were once temporary become an expectation in the eyes of the public. They can become very difficult politically to unwind once that occurs.”

Going forward, Ms Kasapidis noted that if the LMITO is extended for another year, low and middle-income earners will continue to receive an additional tax reduction in their 2022-23 income tax returns worth up to $1,080.

“As many small businesses are unincorporated, they would also receive a direct benefit if the LMITO was extended,” she clarified.

“The ATO applies this offset directly to the returns of eligible taxpayers, meaning there’s no need for action from accountants on behalf of their clients.”

Source: AccountantsDaily

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