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Everything you need to know about the 2023 Budget
The second budget of the Albanese Government is focused on cost of living with a number of packages addressing power bills, medical costs, welfare support and wage rises for those in aged care. In this article, the team at Montara Wealth summarise the budget keys points as well as information about some of the winners & losers from the 2023 budget.
The government will deliver the first budget surplus since 2008 after a surge in revenue off the back of a stronger jobs market and higher commodity prices but deficits will return next year as the budget continues to struggle under a number of structural issues:
- Economic growth will drop from 3.35% this year to 1.5% next year before rebounding to 2.25% the year after
- Unemployment is expected to rise from records lows of 3.5% to 4.25% next year
- Inflation is set to fall from 6% this year to just above 3% next year – that 3% result is just above the RBA’s target range for inflation of between 2-3%
Stage 3 tax cuts
The final stage of the former Coalition Government’s tax cut agenda has remained untouched by the new Labor Government at this stage and they continue to promise not to change them despite pressure from some parts of the community. These tax cuts are set to come into effect on the 1st of July 2024 – we have detailed the difference in tax rates and tax savings below:
|TAX RATE COMPARISON*|
|2023/24 FINANCIAL YEAR||2024/25 FINANCIAL YEAR|
|TAXABLE INCOME||TAX ON THIS INCOME||TAXABLE INCOME||TAX ON THIS INCOME|
|0 – $18,200||NIL||0 – $18,200||NIL|
|$18,201 – $45,000||19%||$18,201 – $45,000||19%|
|$45,001 – $120,000||32.5%||$45,001 – $200,000||30%|
|$120,001 – $180,000||37%|
|$180,001 and over||45%||$200,001 and over||45%|
*does not include Medicare Levy
The 2023 Budget has delivered an increase above other CPI related increases of $40 per fortnight to recipients of support payments including Jobseeker, Youth Allowance and Austudy. Furthermore, single parents will be able to claim the single parenting payment until their youngest child turns 14 from the previous age limit of 8. The higher single Jobseeker payment eligibility will also be reduced to those over age 55 who have been on the payment for more than 9 months.
Doctor’s and their patients
The Albanese Government announced it will spend $3.5b to triple the bulk billing incentive paid to our GPs for a consultation in the hope that there will an increase to the amount of consultations that doctor’s offer to bulk bill.
Aged care workers
$11.3b has been committed to fund a 15% pay rise for aged care workers in light of Fair Work Commission’s November decision to increase the industry’s pay.
Member’s of Parliament
The government have allocated an additional $159m over the next four years to provide them with additional staff to assist them in their electorate offices. The government has said the increase will help Member’s of Parliament “be engaged and responsive to the increased needs of the community”
The Government has committed $64.1m over the next 12 months from July to assist with clearing the backlog of support claims from those who have served our country. The funds will also assist with the demand for complex case management, pharmacy, rehabilitation and health approvals.
Those on medication
The Government will allow people to buy two months’ worth of a number of regular prescriptions for the price of one month – saving consumers $1.6b and freeing up GP appointments that are being taken up for the purpose of writing new scripts. The government is investing $1.2b of the proceeds back into pharmacies by increasing what they can administer (i.e. vaccines) and boosting the regional pharmacy incentive.
Long term renters
The tax rate on trusts which construct build to rent developments will be reduced from 30% to 15% – the depreciation rate applied to these projects will also be increased to 4% p.a. The intention of these changes is to increase supply over several years which should put downwards pressure on rents. This will take several years to flow through the system as properties take some time to get from planning to constructed stage.
$2b will be spent on The Government’s “Hydrogen Headstart” policy designed to support large-scale hydrogen production in the hope more projects get off the ground.
The Defence Force
Close to $20b will be allocated to the Defence Forces to implement the recommendations of the recent Defence Strategic Review – the funds will go towards things such as the new AUKUS submarine program, long range strike capabilities, staff bonusses and defence bases in Australia’s north.
Smokers & Vapers
The tax on tobacco products, called the tobacco excise, will increase by 5% p.a. for the next 3 years aimed at increasing revenue but also to assist in encouraging smokers to quit. They anticipate this tax will raise $3.3b in revenue. A further $250m will be spent on closing down the black market for vapes and rolling out a new anti-smoking campaign.
A national body will be established to fight the increase in online scams and fraud. The body will share scam data between the private sector and government as well as identify and take down phishing websites. Those scammers who prefer to use a text messages to run their scams are also under the spotlight with $10m allocated for an SMS ID registry to stop scammers impersonating industry and government bodies.
If you have any questions about the budget or financial planning questions generally, please don’t hesitate to contact the Montara team.