10 May Australian Budget 2023 – Winners, Losers and Australian Expats
The Australian Federal Budget for 2023 was delivered on Tuesday 9th May, which delivered the first surplus in 15 years, which came as no surprise to anybody.
The Budget surplus was driven by commodity prices, particularly iron ore being significantly higher than Treasury’s forecast of US$55, record low unemployment rates, and general bracket creep resulting in higher than expected tax receipts. To put it in perspective, the current Government is expected to bank a further $22 billion in additional revenue from the record coal and iron ore prices we are currently seeing.
It’s important to note that the surplus will be short-lived, and we’ll undoubtedly be back in the red by the time that the next Budget is delivered.
At a time when many Australian households are struggling with their bills due to high levels of inflation, this was a Budget that was aimed at delivering cost-of-living reliefs, without putting further upward pressure on inflation. An admirable goal, and one that is unlikely to be achieved from the announcements in this year’s Budget.
Let’s have a closer look at the key announcements, and who will be the winners, who are the losers, and whether there’s really anything in this year’s Budget for us Australian expats.
Winners
Aged Care Workers
Whilst many will argue that it is far from being enough, aged care workers can expect a 15% pay increase, which will cost the Government $11.3 billion across the industry.
Jobless & Single Parents
The cost-of-living reliefs have largely been aimed at those searching for work and single parents across the country in Australia. These measures include a $500 energy rebate for 5.5 million households, additional childcare subsidies, and sole parent payments being extended until the children turn 14. Those on Jobseeker are set to receive an additional $40 per fortnight.
To put it in perspective, below is an outline of the amounts spent on each of the measures between FY23 and FY27.
GPs & Medical
Those under 16, concession card holders and pensions are set to benefit from the additional $3.5 billion that the Government is investing in GPs to provide more free, bulk-billed consultations.
Renters
The Commonwealth Rent Assistance is set to be increase by $31 per fortnight for those renting in the private market and community housing. Whilst a step in the right direction, this is unlikely to have a material impact on many of these households struggling due to the lack of supply.
Middle to High Income Earners
Those in Australia earning more than $50,000 per annum will benefit from the Stage 3 tax cuts that are still outlined to be introduced from 2024. The higher income earners, those earning more than $200,000 per annum, are set to be the biggest beneficiaries in dollar terms, seeing a $9,075 reduction in their overall tax bill each year. Of course, the Government can still slam this door shut and not proceed with these tax cuts if they find that they will be too costly.
Losers
Superannuation
The contentious super tax which is aimed at doubling tax on superannuation balances above $3 million from 15% to 30% is set to come into effect. This means that someone in retirement with a superannuation balance of $5 million, would have the following overall splits:
- $1.7M at 0% tax
- $1.3M at 15% tax
- $2.0M at 30% tax
This may not sound like a major issue today, however keep in mind that this $3 million is not expected to index, so we’d expect anybody in their 20’s, 30’s and even 40’s would be reviewing their superannuation plans going forward.
Smokers
Tobacco tax is set to continue to increase 5% each year for the next 3 years. It won’t be long before you’re taking out a reverse mortgage on your home to afford a packet of cigarettes. Given the overall reduction in cigarette use in Australia, we don’t see this as a major drawback and a sensible source of revenue for the Australian Government.
Oil & Gas Giants
The Petroleum Resource Rent Tax (PRRT) is set to increase which the Government expects will generate a further $2.4 billion. This is good news for the Government in increasing revenues, however the real losers here will be the end users, as the energy providers will simply pass the cost onto consumers
Australian Expats
Sadly, many Australian expats, including myself, tuned in to the Budget for an update on the Tax Residency changes impacting thousands of Australians across the globe, but were left with nothing. This lack of clarity certainly makes it more challenging for Australian expats, particularly those living in countries that don’t have a Double Tax Agreement with Australia.
We’re hopeful that we’ll see more of an update on the tax residency soon. Subscribe to my YouTube channel for the latest tax residency updates at the link below:
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If you have any questions at all, reach out to me at jarrad.brown@gfcadvice.com or book in a complimentary meeting here.
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Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
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*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.