We’re now less than one week away from the Australian Federal Budget 2022-23 to be released, and given we’re not far away from the Federal Election, we expect this one will be closely watched by many.

This week our team at Ally Wealth Management is exploring what we’re expecting to be contained in this particular Budget, as well as what we’re not expecting to see any mention of, and how both could impact both Australian residents and Australian expats across the globe.

Before we dive in, we will also be hosting two Australian Federal Budget webinars on Tuesday 5th and Wednesday 6th April, that are complimentary to join where we’ll be covering our indepth analysis of what is actually contained in the Budget. The links to register for one or both are below:

Let’s get into the expectations for this year’s Federal Budget

It’s important to recognise first that there are some possible headwinds that have already been highlighted by our Treasurer, Mr Frydenberg. He’s announced previously that the current Russian invasion is “redefining globalisation as we know it” and that the soaring petrol and grocery prices would result in some household pain for many. He has also announced however that with Australia being a net exporter of energy, the higher prices for oil, coal and gas would be beneficiarl for the country, despite the pain felt by many consumers at the petrol station.

Here are some of the expected highlights from the 2022-23 Federal Budget:

  • Cash Rates: Suggestion that the RBA will lift rates sooner than expected from the current record low of 0.1%.
  • Inflation: Expected to remain high given the rising fuel prices due to the Russian invasion of Ukraine.
  • Unemployment: To remain at approximately 4.2%
  • Budget Deficit: To potentially come in lower than the original forecast of $98.9 billion thanks in part to the rise in commodity prices.
  • Fuel Excise Changes: We may see the mounting pressure to cut the fuel excise, given the current petrol price.
  • Low to Middle Income Tax Offset: Lump sum payment of $1,060 likely to continue for another year.
  • Childcare Subsidies: Likely to be brought forward (i.e. ahead of the election) from July 1.
  • Ukraine Support: Naturally, there will likely continue to be financial support for Ukraine, which will be announced.
  • Defence Spending: An expectation that financial support for the recruitment of new soldiers and an overall military expansion will be announced given both Russia and China posing potential threats.
  • Environment: We expect that there will be some funds allocated to the environment, but nothing groundbreaking in terms of tackling climate change head on.
  • Reduced Red Tape: Given the election is just around the corner, and the number of small businesses in Australia, we expect to see an announcement that red tape for businesses will be reduced.
  • Domestic Violence: We expect to see funds allocated to continue to improve prevention.

Outlined below are some of the items that we’re not expecting to see included in this year’s Federal Budget:

  • Tax Residency: We’re not expecting to receive an update on this one for Australian expats in this year’s Budget.
  • Main Residence Exemption: We’re also not expecting to see any amendments to the previous decision to remove the Main Residence Exemption for Australian expats.
  • Tax Rates: We’re not expecting to see a meaningful reduction in the tax rates for Australian expats in terms of taxable Australian income, or Australian residents, in terms of their ongoing income, but we may see alterations to the bands to assist the lower and middle-class earners of Australia.
  • Franking Credits: We’re not expecting any changes to be announced here, particularly given that it is more a Labor policy to remove or amend the franking/imputation credit policy in Australia.

Overall, given that we are heading into an election in the near term, we’re expecting this to largely be a ‘cash splash’ Budget aimed at targeting as many as possible to get voters onside with the current leadership.

If you’d like to listen to our analysis of the contents of the Budget, please do remember to sign up for one of our Australian Federal Budget 2022-23 webinars.

 

 

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.