What does the federal election mean for you?

June 2022

Australia has a new government for the first time in nine years, so what does Labor’s win mean for your finances from a government funding, tax, and wealth management perspective?

GOVERNMENT GRANTS UPDATE

New Funding for Industry Development

The Labor Government has committed $15-billion to implement a National Reconstruction Fund that redevelops Australia’s industrial base. Around half that $15-billion will be allocated to clean energy, with the remaining funding pledged to the Critical Technologies Fund ($1-billion), Advanced Manufacturing Fund ($1.5-billion), Value Adding in Resources Fund ($1-billion) and a $500-million fund for Agriculture, Forestry, Fisheries, Food and Fibre.

The Government’s $3-billion ‘Powering Australia’ sub-fund sees investment in areas including green metals, clean energy component manufacturing, clean fuel technologies, and agriculture methane and waste reduction.

The Labor Government has committed to complement these new funding streams with:

• An increase in government procurement of Australian businesses worth tens-of-billions of dollars.
• Growth of the tech employment sector to 1.2-million tech jobs by 2030.
• A pledge to restore research and development investment to competitive global levels following a decade of decline.

Our dedicated government grants team will keep you informed on these Labor Government funding initiatives as more details become available.

Export Market Development Grant (EMDG) – new round of funding announced

Austrade has released its guidelines for round two of the EMDG with minor changes made to the program since the previous round.

• If you are an eligible SME exporter, you will be able to apply for grants to market eligible products in overseas markets.
• The types of expenses you can claim include:
  • Maintenance of representatives in overseas markets.
  • Engaging consultants to assist with market research or go-to-market strategies.
  • Travel to local or overseas events to market your products.
  • Attendance at trade fairs.
  • Promotional marketing materials.
  • Intellectual property or trade mark protection in overseas markets.
  • Training to develop skills in export marketing.

Applications for round two of the Export Market Development Grant close on July 5, 2022.

For advice and support in applying for EMDGs please contact our EMDG specialists Gary Twomey on 0400 390 741 or Richard Wraith on 0437 899 004.

ACCOUNTING & TAXATION UPDATE

While the new government is yet to lay out its tax policy, there are a number of initiatives announced in the May budget which we believe will apply under a Labor government. NB: at this stage these are announcements only and have not yet been legislated.

Skills & Training Boost

The Skills & Training Boost will apply to eligible businesses (aggregated annual turnover of less than $50 million) for expenditure incurred from 7:30pm (AEDT) on March 29 2022 until June 30 2024. The boost will enable eligible businesses to deduct an additional 20% of expenditure incurred on external employee training courses, delivered in-person or online by registered Australian training providers. Learn more about the skills & training boost.

Technology investment boost

The technology investment boost enables businesses with aggregated annual turnover of less than $50 million to deduct an additional 20% of expenditure incurred on business expenses and depreciating assets that support digital adoption. Under an annual cap, expenditure up to $100,000 will be eligible for the boost in each qualifying income year, representing a maximum additional deduction of $20,000 per eligible year.

The boost will apply to eligible expenditure incurred from 7:30pm (AEDT) on March 29 2022 until June 30 2023. Learn more about the technology investment boost.

Labor’s Electric Car Discount

To encourage car manufacturers to import and supply more affordable electric cars, and to make electric cars more affordable to consumers,  The Government has proposed to exempt many electric cars from fringe benefits tax: a 47% tax on electric cars that are provided through work for private use. These exemptions will be available to all electric cars below the luxury car tax threshold for fuel efficient vehicles ($77,565 in 2020-21).

Increase to low and middle income tax offset (LMITO)

Low and middle-income earners will receive a one-off $420 ‘cost of living tax offset’ for the 2022 income year, provided as an increase to the existing LMITO. Paid from July 1, 2022 (following submission of an income tax return) all eligible will receive the full $420 offset unless it’s not required to reduce their tax liability to zero.  Learn more about the low and middle income tax offset and calculate your LMITO for 2022.

Our Accounting & Taxation Team will keep you updated on the Government’s tax policy as it is announced. For assistance with your accounting and taxation requirements contact Charith Mandadige and his team on on  (03) 9325 6300 or email us.

FINANCIAL PLANNING UPDATE

While the government is yet to announce policy around financial planning and superannuation, the extension to the reduction in minimum superannuation drawdowns was legislated prior to the election.

Extending reduction in minimum superannuation drawdowns

What is the reduction in minimum superannuation drawdowns: The 50% reduction of superannuation minimum drawdown requirements for account-based pensions (‘ABPs’) and similar products will be extended to June 30 2023.

Reduced minimum percentage factors for ABPs (including Transition to Retirement Income Streams (TRISs)

*NB: Note that, for ABPs and TRISs that commence or cease part-way through the 2023 income year, a pro-rated minimum pension payment applies (unless the pension commenced on or after 1 June 2023, in which case, no minimum pension payment is required).*

For advice or support with wealth management and superannuation, contact Christine Brown or a member of her Wealth Management team on  (03) 9325 6300 or email Info@MatSteer.com.au.