The budget has been delivered, and it includes the temporary cost of living assistance measures to help ease inflationary pressures. If you’re constantly on the road, you’ll be pleased to know the government has halved the 44.2¢ per litre fuel excise for six months. Additionally, the Low-and-Middle-Income Tax Offset (LMITO), an end of financial year rebate of up to $1080 for those earning up to $126,000 a year, has been increased by $420 per person. If you’re eligible, when you submit your tax return on 30 June, you will receive a one-off bonus of $1500 (or $3000 for a couple). The LMITO will not be extended past 30 June 2023. Pop the Cork If you’ve found it hard to negotiate a higher hourly rate or contract budget over the past few years, things might be about to turn around. The budget expects wage stagnation to ease and wage growth to rise, hitting 3.25% next year, accounting for a 0.25% actual wage increase. The rise is driven by the incredibly low unemployment rate, which is expected to fall further to 3.75. A cap on migration (maintained at 160,000) will also keep unemployment low. However, net overseas migration, which includes Australians coming and going, will rebound from the negative 89,900 people during the pandemic peak in 2020-21 to 235,000 people in 2025-26. Adding to the good news, the cost of living should ease if forecasts are correct – the government expects inflation to fall from 4.25% this year to 3% next year and 2.27% for the two years after that. All up, it’s a great time to be a contractor asking for an increased rate! Tax Time To help sole traders and small businesses avoid penalties arising from underpaying PAYG, the government has proposed reducing the current 10% GDP ‘uplift’ rate, used to calculate quarterly PAYG instalments and GST instalments, to 2% for the 2022-23 financial year. Subject to legislation being passed to allow the change, this reduced GDP ‘uplift’ rate will put more cash in the hands of small businesses and sole traders that can be used to invest in growth. If earnings exceed the amount calculated, you’ll need to pay the extra tax owed at the end of the financial year. If you’d prefer to pay more along the way, you’ll still be able to manually set instalments with the ATO. Elsewhere in the Budget In other areas, the government allocated: $107 million over five years to promote women in leadership, including $37 million to support women in trades. $346 million has been allocated over five years to improve the flexibility of parental leave for working parents to share as they see fit, and $138.7 million for first home buyers over seven years to allow more first home buyers to find a property with a smaller deposit and without needing to pay mortgage insurance. Make it Work for You. The Ayers Group is here to help you navigate change and grow your wealth. Talk to the Ayers Group today about our contractor services – including contract admin, invoicing, expensing, payroll, and tax management. Let us help you unlock a suite of opportunities to maximise your earnings and quality of life.