Australian Federal Budget 2022: Australian Expat Summary

With an election around the corner in Australia, the 2022 Federal Budget, like many pre-election budgets, had one eye on the election, focusing on spending and addressing concerns around cost-of-living pressures while balancing the post-pandemic economic recovery. Some of the key announcements targeting cost of living relief included:

  • Cut to fuel excise for the next six months, which is projected to save motorists 22 cents per litre.
  • A $250 cost of living payment for eligible Australians.
  • For eligible Australians, the Low and Middle-Income Tax Offset (LMITO) is proposed to increase to a maximum of $1,500 for 21/22, meaning the amount of tax offset will increase by $420.

Other proposals announced in the budget are targeted at expanding the home guarantee scheme for first home buyers, jobs, skills development and small business incentives, support for parents through the expansion of the paid parental leave scheme, and $2.1 billion committed toward Women’s safety, economic security, and health and wellbeing. Along with the above proposals, we take a closer look at the key announcements that will impact Australian Expats.  

Any updates on the proposed Tax Residency rules?

In the lead-up to the Budget, many Australian Expats were eagerly awaiting an update on the proposed changes to the Australian Tax Residency rules, which were tabled in the 2021 Federal Budget. With no mention of the proposal in this year’s Budget and a Federal Election expected to be called within weeks, Australian expats and Australians considering a move overseas for employment will have at least another 12 months to prepare for the proposed changes in tax residency rules. What the final proposal will look like is still uncertain, and the possibility that the proposed 45-day test may be increased. We look forward to further clarification and guidance from the Government before the proposal becomes law.  

Superannuation Measures

Announcements around Superannuation were minimal in this Budget, with the main proposal relating to account-based pensions. The existing arrangement of the 50% reduction in minimum income drawdowns on account-based pensions will be extended for 12 months. Despite no significant announcements, several key changes from last year’s Budget will take effect from 1 July 2022.

  • In line with existing legislation, the superannuation guarantee will increase to 10.5%
  • Downsizer contributions – eligibility age reduced to age 60 (from 65).
  • Ability to make contributions without the need to meet the work test for those aged 67 to 75.


Announcements to attract and retain talented Australian employees

Spending on small businesses in both skills and training and technology investment, along with the expansion of the employee share scheme are announcements that may interest Australians looking to return home. The reduction in red tape and expanded access to employee share schemes for unlisted companies will allow eligible employees to invest up to:

  • $30,000 per participant per year, accruable for unexercised options for up to 5 years, plus 70 percent of dividends and cash bonuses; or
  • Any amount, if it would allow them to immediately take advantage of a planned sale or listing of the company to sell their purchased interests at a profit.


Wrapping up

While the most anticipated topic of tax residency wasn’t addressed for Australian expats, the 2022 Australian Federal Budget showed an overall stronger economy as a result of a faster than anticipated economic recovery combined with higher commodity prices, which have helped to deliver improvements to the budget bottom line. It’s important to remember that the announcements in the budget are still proposals and need to pass through Senate and receive Royal Assent before becoming law. Please get in touch with your Financial Adviser if you would like to know more about any of the budget announcements and how the changes may impact you.  


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