What wasn’t announced in the budget is just as important

There were few surprises in the federal budget, with many of the measures and the slim surplus already announced prior to Tuesday night.

Treasurer Jim Chalmers outlined a number of key cost-of-living measures in his budget speech and warned that the return to black is only temporary.

The Treasurer also confirmed that gross debt to GDP is now expected to peak lower and earlier at 36.5 per cent of GDP in 2025–26, where it will be $154 billion less than was expected in March 2022.

“And because we are returning most of the welcome improvement in revenue to the budget, debt will be almost $300 billion lower by the end of the medium term, saving $83 billion in interest costs over the next 12 years,” he said.

Speaking on a webinar on Wednesday morning, BT head of financial literacy and advocacy Bryan Ashenden drew attention to “non-announcements” that will have an impact on advisers and their clients.  

“One of those non-announcements, as expected, the government made no comments around the stage three tax cuts,” Mr Ashenden said.

“They haven’t done any re-forecasting at this point about what the potential impact of the budget is … but certainly, the government has not announced that they’re going to wind back these changes. I think that’s a positive for a lot of people to know.”

Also receiving no updates was the previously announced change to the way superannuation balances will be taxed, with balances over $3 million to see their tax rate double to 30 per cent from 2025–26.

There have been numerous submissions to government about the implementation of the changes, particularly around possible unintended consequences and implementing indexation to ensure the equity of the system is maintained over time. Despite this, there were no updates about the implementation of the measure, with it so far proceeding as originally announced.

“The government has remained committed to introducing its tax on super balances in excess of $3 million, at this point in time, they have not announced any changes to the way that that measure is due to work,” Mr Ashenden said.

“Some of [the question] may well be addressed in final legislation when it does go through parliament, but at the moment, they remain committed to introducing it based on the initial scenario,” he added.

The low and middle income tax offset, which ceased on 30 June 2022, also didn’t receive an update.

“Clients are still getting that benefit now as they finalise and close off their 2022 tax returns, but it’s not in play for this year. And there was no announcement to keep it in play for this financial year,” Mr Ashenden said.

The government also didn’t include much sought-after measures that would have eased business processes for advisers considerably, such as extending the freeze on the Australian Securities and Investments Commission (ASIC) levy for another year and granting financial advice tax-deductible status.

However, an unexpected increase to the instant asset write-off threshold is a measure that will benefit small advice businesses.

Small businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.

“However, under that $20,000 instant asset write off figure, there is no limit to the number of assets that you could have,” Mr Ashenden added.

He concluded: “It’s largely those measures where there was no announcement that take effect from the first of July this year that probably create the most opportunities for you to engage with your clients.”