On Tuesday 9 May 2023, Treasurer Jim Chalmers handed down the 2023-24 Australian Federal Budget with updates to key economic forecasts.

From personal and business tax to banking, superannuation, infrastructure, health, defence, climate change, and more, the Federal Budget has implications for every corner of the Australian economy and impacts our status on the global stage.

KPMG’s team of experts provides full analysis following the Federal Budget announcement outlining insights and implications for various sectors and businesses. Our analysis is aimed at helping you prepare for any implications that may affect your business.

What does the Federal Budget mean for your business?

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The Budget shows a considerable improvement in the expected underlying cash balance and net debt position for 2022-23. These have improved by $41 billion (resulting in a $4 billion surplus) and $24 billion respectively compared to the 2022-23 October Budget. The forecasts for the period of the forward estimates also show an improved comparative outlook for these statistics. By 2026-27, government net debt is forecast to grow to $703 billion, or 24 percent of GDP.

Concerns about structural deficit remain and have limited the government's ability to act on curbing the increases in the cost of living that are at the forefront of many voters' thinking.

In this context, recipients will welcome the increases to the JobSeeker payment, the extension of eligibility for the Parenting Payment, the electricity subsidies for lower-income households and the increase to Commonwealth rent assistance.

There are a few new revenue-raising measures that were not already included in the 2022-23 October Budget. The most noteworthy of the new measures are the changes to the petroleum resource rent tax and the increase to tobacco excise, which combined expect to raise $5.4 billion over the forward estimates. A GST compliance program is also expected to increase government receipts by $7.6 billion over four years.

The proposals to reduce the tax burden on future build-to-rent developments should support the much-needed expansion of housing supply in Australia.

On the expenditure front, other than cost of living support some of the more significant amounts of newly allocated expenditure include biosecurity and infrastructure for the Brisbane Olympics.

As expected, the Budget does not include any measures relating to structural tax reform. The government had flagged that in this term it would focus on the tax policy measures that it took to the federal election. KPMG looks forward to engaging in the public dialogue about elevating this as a priority for the future.

Overall, this Budget is a measured and balanced response to the challenge of supporting households in an environment of relatively high inflation and government debt.

This Budget presents an improved picture for government finances compared to the 2022-23 October Budget. The challenge for the government has been finding measures to alleviate cost of living pressure without further stoking inflation. Overall, this Budget achieves a reasonable balance.

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Andrew Yates Chief Executive Officer

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The Treasury forecasts contained in the Budget show an economy that is expected to slow over the coming 2 years. The 11 cash rate increases implemented by the RBA in order to tame inflation are weighing on household consumption and investment. Importantly, inflation is expected to decline from 6 percent in 2022-23 to 3.25 percent in 2023-24, broadly in line with the RBA's forecasts. The labour market is anticipated to ease as demand softens - with the unemployment rate forecast to rise from 3.5 percent now to 4.25 percent in June 2024 and 4.5 percent in June 2025.

The government is projecting a fiscal surplus of $4.2 billion for FY23, the first surplus since FY08, with the turnaround driven by stronger personal income tax (PIT) receipts, thanks to strong employment growth and wages growth, and by commodity prices that were significantly higher than expected. The improved outlook for employment in FY23 and FY24 is expected to drive near-term strength in PIT.

The government is also expecting to see upgrades to revenue coming from tax reforms, such as changes to the petroleum resource rent tax (PRRT); increases in tobacco excise; and doubling of the tax on earnings from superannuation holdings with balances above $3 million.

The government has announced a number of new spending initiatives across a range of areas, from cost-of-living support to higher bulkbilling Medicare payments. With household purchasing power taking a hit from high inflation, the $14.6 billion cost-of-living relief package, including $1.5 billion power bill rebates for households and small businesses can help alleviate living cost pressures, notwithstanding concerns that this package could further fuel inflation.

The challenge for the government is to not add to existing inflationary pressures; and ideally, to better align fiscal policy so it works in concert with monetary policy to contain inflation without needing significantly higher interest rates.

The projection of total government spending as a share of GDP is lower than projected in the previous Budget but remains higher than pre-COVID, suggesting that the Budget remains expansionary. However, the inflationary impact of the Budget depends on the amount spent as well as on the composition and nature of the expenditure.

It is likely that inflation peaked at the end of last year, and the drivers of inflation have moved from goods to services - where final prices are more sensitive to wage movements. This Budget is focused on expenditures in the services sector (aged care, health care, training, and education). While the cost-of-living relief is unlikely to add significantly to inflationary pressures in the goods market, the government's demand on the services sector could put upward pressure on services inflation. In the context of tight labour markets, wages support to low paid workers and aged care workers may contribute to wage inflation. In so far as government spending and wage support contribute to inflation, there is a risk that interest rates will need to be higher and that the fight against inflation will be prolonged.

The surplus looks like it is going to be short-lived. Beyond the cyclical windfall in FY23, the budget is projected to be in deficit over the medium term. This is due to long-term spending pressures posed by interest payments on debt, NDIS, aged care, health, and defence, as well as lower productivity growth.

Economic Assumptions

We summarise the assumptions underlying this year's budget in the tables below:

Real GDP growth is expected to slowdown in 2023-24, from 3.25 percent to 1.50 percent, as the economy loses out from the gains in commodity export prices which had sustained exports in 2022-23. The impact of monetary policy tightening is starting to show on household spending, which will lie at the heart of this slowdown, especially as households have been tightening their belts in response to the ongoing cost of living crisis. Thereafter, a recovery in household disposable income following positive wage growth is expected to buoy the economy out of this slump.

2022-23 2023-24 2024-25 2025-26 2026-27
Real GDP 3.25% 1.5% 2.25% 2.75% 2.75%

Inflation has reached its peak and inflationary pressures are expected to abate over the forecast period. One of the underlying assumptions of this Budget is a reduction in inflation, which is projected to navigate within the RBA's target range from 2024-25. The government expects that in addition to the sharp increase in the cash rate, the cost-of-living measures announced in the Budget will help keep inflation under control.

2022-23 2023-24 2024-25 2025-26 2026-27
CPI 6% 3.25% 2.75% 2.5% 2.5%

Labour market pressures are expected to ease somewhat over the forecast horizon. The unemployment rate is expected to rise from historical low of 3.5 percent in 2022-23, but remain contained below 4.5 percent until 2026-27. Wages growth is expected to pick up from 3.75 percent in 2022-23 to 4 percent in 2023-24, boosted by the allocations to the Fair Work Commission to support wages for aged care and workers on the Minimum Wage.

2022-23 2023-24 2024-25 2025-26 2026-27
Wages 3.75% 4% 3.25% 3.25% 3.5%

What does it mean for you and your business?

  • The $14.6 billion cost-of-living relief package will help alleviate living cost pressures for the vulnerable without unduly contributing to existing inflation pressures.
  • Most of the new expenditures will hit the services sector, which could put further pressure on services inflation. In the context of tight labour markets, support by the government for higher wages for low paid workers and aged care workers may add upward pressure to wages more generally.
  • The government is projecting fiscal deficits into the medium term. This means that the government will have to consider policies that raise additional revenues and/or reduce expenditures.
Windfall gains lead to massive budget turnaround with surplus now forecasted for FY23. The challenge for the government is to provide cost-of-living relief without further fuelling inflation pressures and to develop policies to address the structural deficits projected into the future.

Key contact

Brendan Rynne Chief Economist

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What the Budget means for different demographics

Demographic Group

2023-2024 Outlook

Jobseeker recipients
Demographic group outlook
  • Unemployment rate to increase from 3.5 percent to over 4 percent, making it more challenging to find employment.
  • A $40 dollar per fortnight increase in JobSeeker and other 'working age payments.'
  • Energy Bill Relief Fund to provide up to $500 in assistance.
  • Cost of living pressures to reduce with CPI falling from 6 percent to 3.25 percent.
Aged pensioners
Demographic group outlook
  • Pensioners can earn up to $11,800 before their pension is reduced, encouraging workforce participation.
  • Energy Bill Relief Fund to provide up to $500 assistance.
Demographic group outlook
  • Wage growth to increase to 4.25% percent in 2023-24.
  • Investment encouraged in built-to-rent housing to increase supply.
  • Increased maximum rate of Commonwealth Rent Assistance, up to $31 per fortnight.
  • Building 30,000 new social and affordable homes.
Recent first home buyers
Demographic group outlook
  • Cost of living pressures to reduce with CPI falling from 6.0 percent to 3.25 percent.
  • The Budget expands the scope of eligibility for Australians applying for the First Home Guarantee and the Regional First Home Buyer Guarantee.
  • Wage growth to increase to 4.25 percent in 2023-24.
ABS Census 2021
Benefit and Payment Recipient Demographics, 2023 (Department of Social Services)
ABS Lending indicators, 2023
ABS Housing Occupancy and Costs, 2019-20

Key contact

Terry Rawnsley National Lead - Demographics & Urban Economics

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What's in the budget?

  • $950.0 million in increased receipts over five years from additional tax on superannuation earnings on balances over $3 million.
  • $474.9 million in extra tax revenue obtained through the Personal Income Tax Compliance Program due to extra funding of $89.6 million provided to the ATO, targeting existing and emerging areas of risk such as short-term rental property deductions.
  • 1 July 2026 is the date from which employers will be required to pay super at the same time as salary and wages.
  • Medicare levy thresholds for singles, families, seniors and pensioners will be increased from 1 July 2022 to account for inflation.
  • $14.6 billion cost of living package designed to help with power bills, bring down out-of-pocket health costs, support vulnerable Australians, create more affordable housing and boost wages.

Concessional superannuation tax rate

From 2025-26, the tax rate applied to future earnings for balances above $3 million will be 30 percent. This is expected to impact around 80,000 individuals (0.5 percent of individuals with a superannuation account).

Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of 15 percent in the fund. This concession will continue for all superannuation accounts on the element of the balance that is below $3 million.

Payday superannuation

From 1 July 2026, employers will be required to pay their employees' superannuation at the same time as their salary and wages.

The changes will require a redesign of the Superannuation Guarantee charge to align with increased payment frequency and the final design will be considered as part of the 2024-25 budget.

To further strengthen the system, the ATO will receive additional resourcing of $40.2 million to help it detect unpaid superannuation payments earlier and the Government will set enhanced targets for the ATO for the recovery of payments.

Extension of the Personal Income Taxation Compliance Program

The Government's focus on addressing non-compliance by individual taxpayers remains, with additional funding allocated to support targeted corrective activities in key areas of non-compliance, and to expand the scope of the program to address emerging areas of risk, such as deductions relating to short-term rental properties to ensure they are genuinely available to rent.

Medicare levy changes

Changes will be made to exempt certain lump sum payments in arrears from the Medicare levy from 1 July 2024.

The Government will also increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners to account for recent CPI increases so these groups can continue to be exempt from paying the Medicare levy.

Personal income tax rates

As with previous Budgets, this year's Budget has again not sought to defer 'Stage 3' tax cuts, originally announced in 2018.

Taxable income Current tax rates
Up to $18,200 0
$18,201 - $45,000 19 percent
$45,001 - $120,000 32.5 percent
$120,001 - $180,000 37 percent
From $180,001 45 percent
Taxable income Tax rates from 1 July 2024
Up to $18,200 0
$18,201 - $45,000 19 percent
$45,001 - $200,000 30 percent
From $200,001 45 percent

Cost of living measures

A number of targeted cost of living measures were included in the budget including energy bill relief for eligible households and an increase to payments received by single principal carers, Commonwealth Rent Assistance recipients, and recipients of working age payments including JobSeeker recipients.

What does it mean for you and your business?

  • An additional 15% tax on superannuation earnings will be payable within the fund where the superannuation balance is above $3 million.
  • Many employees will receive contributions into their superannuation accounts sooner under the new payday superannuation measure.
Against the backdrop of the previously announced personal income tax cuts, there were limited additional personal tax related measures announced in this Budget. Noteworthy for individuals was the increased taxation of large superannuation balances and cost of living measures.

Key contacts

Hayley Lock Partner, People Services
Ben Travers National Leader, People Services

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What's in the budget?

  • Australia's adoption of the OECD's Pillar Two global minimum tax rules, including a domestic minimum tax, from 2024.
  • Significant expansion of the general anti-avoidance rule.
  • Extension of the clean building managed investment trust withholding tax concession to data centres and warehouses that meet the relevant energy efficiency standard.
  • Four-year extension of the GST compliance program.
  • Amendment of the Petroleum Resource Rent Tax (PRRT) to accelerate the payment of PRRT by participants in offshore LNG projects in Australia.
  • Clarifying the tax treatment of 'exploration' and 'mining, quarrying and prospecting rights'.
  • Payday superannuation and increased super compliance.
  • Increased tobacco excise and excise-equivalent customs.
  • Amended start dates of previously announced measures.

Global and domestic minimum tax

The government will implement the following key aspects of Pillar Two based on the OECD Global Anti-Base Erosion Model Rules:

  • A 15 percent global minimum tax, with the Income Inclusion Rule applying to income years starting on or after 1 January 2024 and the Undertaxed Profits Rule applying to income years starting on or after 1 January 2025 and
  • A 15 percent domestic minimum tax applying to income years starting on or after 1 January 2024.

These rules will apply to large multinationals with annual global revenue of EUR 750 million or more.

Expansion of the general anti-avoidance rule

The scope of the general anti-avoidance rule for income tax (Part IVA of the Income Tax Assessment Act 1936) will be expanded to apply to schemes that:

  • reduce tax paid in Australia by accessing a lower withholding tax rate on income paid to foreign residents or
  • achieve an Australian income tax benefit, even where the dominant purpose was to reduce foreign income tax.

This change applies to income years starting on or after 1 July 2024, even if the scheme was entered into before that date. Businesses should seek advice and review any transactions they have entered into, or propose to enter into, to ensure that they have evidence that commercially supports the tax positions adopted.

Clean building managed investment trust (MIT) withholding

From 1 July 2025, the government will extend the clean building MIT withholding tax concession to data centres and warehouses that meet the relevant energy efficiency standard.

This measure will raise the minimum energy efficiency requirements for existing and new clean buildings to a 6-star rating under both the Green Building Council Australia and the National Australian Built Environment Rating System, and will support investment in energy efficient commercial buildings. The government will also consult on transitional arrangements for existing buildings.

Build-to-rent developments

For eligible new build-to-rent projects where construction commences after 7:30PM (AEST) on 9 May 2023, there will be:

  • An increase in the rate of capital works tax deductions to 4 percent per year (from the existing 2.5 percent) and
  • A reduction to the final withholding tax rate on eligible fund payments from MIT investments from 30 percent to 15 percent, from 1 July 2024.

GST compliance program

The government will provide $588.8 million of funding to the ATO over the next 4 years to continue a range of activities that promote GST compliance. This activity is estimated to increase GST receipts by $3.8 billion, and other tax receipts by $3.8 billion, over 5 years. This funding will also help the ATO develop more sophisticated analytical tools to combat risks to the GST system.

Petroleum Resource Rent Tax (PRRT)

The government will amend certain aspects of the PRRT regime that will have the effect of accelerating the payment of PRRT by participants in offshore LNG projects in Australia. The specific changes include:

  • Introduction of a 'deductions cap' equal to 90 percent of the assessable receipts for any given year. Deductions denied under the cap can be carried forward and uplifted at the long-term bond rate.
  • Modernisation of the 'Gas Transfer Price' rules to reflect tolling arrangements and the use of existing infrastructure.
  • Various other administrative, integrity and transfer pricing updates to align with modern rules and principles.
  • A retrospective clarification to the definition of 'exploration' for PRRT purposes to give effect to the Commissioner's view in Taxation Ruling TR 2014/9, applicable to expenditure incurred from 21 August 2013.

Mining, quarrying and prospecting rights

This measure will clarify that mining, quarrying and prospecting rights cannot be depreciated for income tax purposes until they are used (not merely held) and will limit the circumstances in which the issue of new rights over areas covered by existing rights lead to tax adjustments. These changes apply from 7:30PM (AEST) on 9 May 2023.

Payday superannuation and increased super compliance

In one of the biggest changes since the introduction of the Superannuation Guarantee (SG) in 1992, from 1 July 2026, employers will be required to pay their employees' SG entitlements on the same day that they pay salary and wages (instead of quarterly). The government is also providing $40.2m to the ATO in 2023-24 to invest in improved data matching capabilities and to act on cases of underpayment of superannuation.


The government will:

  • increase tobacco excise and excise-equivalent customs duty by 5 percent per year for 3 years from 1 September 2023
  • progressively lower the 'equivalisation rate' from 0.7 to 0.6 grams starting from 1 September 2023 and
  • expand the compliance activities to address illicit tobacco.

Amended start dates of previously announced measures

The government will amend the start dates of measures announced by the former government as follows:

  • Franked distributions funded by capital raisings (announced in the 2016-17 MYEFO) from 19 December 2016 to 15 September 2022 and
  • Components on measures to streamline excise administration for fuel and alcohol (announced in the 2022-23 March Budget) from 1 July 2023 to 1 July 2025.

What does it mean for you and your business?

  • The Budget has continued to focus on multinational tax integrity. With confirmed start dates for Australia's adoption of Pillar Two and a domestic minimum tax, affected groups need to start assessing impacts and planning for implementation now.
  • The expansion of the general anti-avoidance rule will increase the importance of assessing the evidence available and carefully documenting commercial reasons for cross-border arrangements and restructures. It is critical to note that the general anti-avoidance rule will no longer be limited to schemes with an Australian tax avoidance purpose and that it may apply to transactions that have already been implemented.
  • The PRRT changes are significant for the LNG industry and may have a substantial impact on cashflows, earnings and broader tax accounting positions. Whilst the changes to the 'gas transfer price' rules appear to provide clarity in respect of the PRRT treatment of tolling and backfill arrangements, the specific project fact patterns and application may still be complex in practice.
The Budget, aimed at achieving a surplus, includes a range of measures focussed on tax collections from multinational and large businesses.

Key contacts

Alia Lum Tax Policy and Regulatory Engagement Lead
Justin Davis National Leader, Corporate, Deals & International Tax
Angelina Lagana ASPAC Lead Partner, Tax Dispute Resolution & Controversy

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What's in the budget?

  • Instant asset write-off - up to $20,000 per asset in 2024 for businesses with less than $10 million turnover.
  • Energy Incentive - additional 20 percent depreciation deduction for assets supporting electrification and more efficient energy use for businesses below $50 million turnover, with total expenditure to be capped at $100,000.
  • ATO Debt Recovery - targeting recovery of larger and older tax debts.
  • ATO independent review process - trial of expansion of review process for small businesses subject to ATO audit.
  • Other measures
    • Capital works deductions for new build-to-rent projects increasing to 4 percent.
    • Eligible plug-in hybrid cars continue to be FBT exempt up to 31 March 2025.
    • Growth rate for PAYG and GST instalments to be halved for eligible businesses.

ATO Compliance Programs

The government has allocated significant funding to GST compliance via analytical tools, targeting recording, remittance of GST and processing of GST refunds.

The Budget also includes programs to improve Superannuation Guarantee compliance through data-matching plus a targeting of personal tax compliance, including a focus on short term property rentals.

The income tax general anti-avoidance rule will be expanded to counter schemes to access lower withholding tax rates.

Compliance is further encouraged by providing a temporary amnesty from failure to lodge penalties for eligible small businesses.

Superannuation Changes

From 1 July 2025, an additional 15 percent will be proportionately levied on 'earnings' corresponding to superannuation balances over $3 million.

From 1 July 2026, employers will need to pay Superannuation Guarantee entitlements on the same day they pay salary and wages.

What does it mean for you and your business?

  • Additional ATO compliance means the mid-market should proactively invest in their tax compliance function.
  • Small and medium family business will welcome measures to boost cash flow and encourage investment.
  • Significant change for taxpayers with larger superannuation balances.
This budget carefully balances government debt and inflationary pressures without tax increases and with some targeted measures for small and medium businesses and family groups.

Key contacts

Clive Bird National Tax Leader, KPMG Enterprise
Robyn Langsford Partner-in-charge, Family Business and Private, KPMG Enterprise

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What's in the budget?

  • $392.4 million to establish the Industry Growth Program, supporting SMEs and startups to commercialise ideas and grow.
  • $3.4 billion for the Advanced Strategic Capabilities Accelerator to drive defence innovation and translation.
  • $116 million for critical technologies development, including funding for quantum computing projects and AI adoption for SMEs.
  • $1 billion to strengthen Australia's biosecurity system, deliver modern digital systems and continue the Indigenous Ranger Biosecurity Program.
  • Key features of Powering the Regions Fund include: $450 million for decarbonisation of trade-exposed industries, $400 million for regional industry to reduce emissions, and $400 million for capability essential to the development of clean energy industries.

The government has introduced an Industry Growth Program (IGP) to support businesses to commercialise their ideas. The IGP will replace the Entrepreneurs' Programme, including the Accelerating Commercialisation program that closed on 9 May 2023. There is also confirmation that the National Reconstruction Fund will open in the 2023-24 year. The government has decided to not proceed with the proposed patent box measures.

Pleasingly, the Budget retains the R&D Tax Incentive in its current form. As such, the program remains a prime means of encouraging business expenditure on R&D.

Broader commitments to enabling the regions include $100 million to the Murray-Darling Basin Authority, $355.1 million to Commonwealth National Parks and marine reserves, and $150.0 million for the National Water Grid Fund to improve water security for remote First Nations communities.

What does it mean for you and your business?

  • R&D Tax Incentive remains a major source of support for business expenditure on R&D
  • National Reconstruction Fund will open in 2023-24
  • Industry Growth Fund will open shortly and applicants should start considering eligibility and competitiveness
A budget with strong support for businesses including key initiatives for sustainability, innovation, AI and enabling the regions.

Key contacts

Georgie Aley Partner, National Sector Lead, Consumer Goods & Agribusiness
Alex Demetriou Partner in Charge, Accelerating Business Growth
Georgia King-Siem Partner, Accelerating Business Growth, Enterprise

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What's in the budget?

  • $950 million over five years will be raised in receipts as a result of the Government's reduction to the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025.
  • Further information has been provided on measures to increase Super Guarantee payment frequency (pay day super) and compliance.
  • Amendment to NALI rules for large funds - exempting large funds from the NALI provisions for both general and specific expenses of the fund.
  • Amendment to non-arm's length expense (NALE) / NALI rules for self-managed super funds (SMSFs) and small APRA funds - limiting the income subject to tax as NALI to twice the general expense.
  • $4.3 million in 2023-24 to enhance ASIC's investigation and enforcement capabilities in combatting greenwashing by market participants and other sustainable finance misconduct.

Industry was very concerned about the potential disproportionate impact of the NALE/NALI rules where a general expense was deemed to be non-arm's length. For large funds, the exemption from these rules for both general expenses and specific expenses is most welcome.

For SMSFs, government now proposes to limit income of SMSFs and small APRA regulated funds that are taxable as NALI to twice the level of a general expense, as well as to exclude contributions and expenditure incurred prior to the 2018-19 income year.

As foreshadowed, the government intends to proceed with its plans to reduce the tax concessions on investment earnings for those members with total superannuation balances exceeding $3 million. As previously announced, there will be no change to how tax is levied at a fund level. The proposed change is levied on individuals. However, due to the difficulties in allocating taxable income to individual members, earnings are used as a proxy for this, which means taxing unrealised gains and losing the one-third capital gains tax (CGT) discount. Treasury plans to continue with consultation in relation to this measure.

The Budget includes further details regarding pay day super reforms announced on 2 May 2023. From 1 July 2026, superannuation guarantee (SG) payments must be made the same day as salary and wages. To enable this reform, changes to the design of the SG will be required and subject to further consultation with government before being considered as part of the 2024-25 Budget. The government is also committing $40 million for the ATO to target enforcement of unpaid super via investments in data matching capabilities, and has provided additional funding to enforce SG compliance.

What does it mean for you and your business?

  • Reduction in tax concessions for those with super balances over $3 million has been confirmed in the budget. No indexation of the threshold was announced, and commensurate treatment will also be applied to interests in defined benefit schemes.
  • Pay day super will bring forward SG contributions for members and their super funds but will require system and process changes for employers and payroll providers.
The extension of the exemption to the non-arm's length income (NALI) rules to specific expenses incurred by large superannuation funds is welcomed.

Key contacts

Julie Dolan Partner, Head of SMSFs and Estate Planning, Enterprise
Linda Elkins National Sector Leader, Asset & Wealth Management
Natalie Raju Financial Services Tax Leader
Damian Ryan Tax National Sector Leader, Asset & Wealth Management

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What's in the budget?

  • Visa application charge revenues will increase $665 million over five years from 2022-23. A 6 percent increase for visa applications, 15 percent for select visitor and temporary visa subclasses, and 40 percent for business innovation and investment visas.
  • $75.8 million over two years from 2023-24, extending the surge in visa processing resources for more enforcement and compliance activities.
  • Uncapped working hours for international students employed in the aged care sector, extended until 31 December 2023 to assist with increased demand.
  • $72.4 million over five years to retain and recruit more early childhood educators through re-prioritisation.
  • $54.3 million over five years to refocus apprenticeship supports aimed at improving completion rates, particularly for women.

This was a holding budget for skills and workforce, pending the outcomes of numerous significant reviews and negotiations. These include the National University Accord, the inquiry into the perceptions and status of vocational education and training, and the National Skills Agreement, indicated to start from 1 January 2024.

Skilled migration is the exception. A range of measures have been announced and a review of the migration system completed. More reforms and initiatives are expected once government has considered the findings.

There are signals of a stronger role for Jobs and Skills Australia. This would be to support broader skilling and labour market needs, including support of initial announcements and the recent commissioning of a Green Energy Capacity Study.

What does it mean for you and your business?

  • As announced previously, the government appears to remain strongly committed to prioritising the public provider (TAFE) in the training system.
  • While it's a shift towards a simplification of the migration system, employers will see an increase in visa application charges.
  • Net overseas migration is forecast to hit 400,000 for 2022/23, therefore employers can expect greater access to a skilled workforce.
  • There's deliberate and targeted funding that employers can access to actively support women to train and work in traditionally male dominated industries.
This budget reinforced the government's commitment to pivot Australia's immigration program to a focus on skills and employability.

Key contacts

Jemma Horsley National Skills Lead
Jane Gunn Partner in Charge, People & Change
Morgan McCullough National Sector Leader, Education
Mark Wright Principal Director, Immigration Leader

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Energy & emissions

What's in the budget?

  • A new Hydrogen Headstart program, with $2 billion to support renewable hydrogen production
  • Powering the Region Fund (PRF), an existing $1.9 billion program, allocated $600 million to support investments directed at trade-exposed industrial emissions, $400 million to support decarbonisation of manufacturing facilities producing critical inputs, and $400 million focused on clean energy development in regional Australia.
  • A Capacity Investment Scheme (amounts not disclosed) will underwrite investment in clean energy generation and storage.
  • A Guarantee of Origin Certificate scheme ($38.2 million over 4 years) to track and verify emissions associated with hydrogen and renewable energy.
  • An Energy Bill Relief Fund worth $1.5 billion over 2 years to deliver relief to 5 million households and 1 million businesses provided as a credit directly to energy bills.
  • A Households Energy Upgrades Fund worth $1.3 billion to support home upgrades that improve energy efficiency.
  • Small Business Energy Incentive ($314 million over 3 years) to provide SMEs with an additional 20 percent deduction on spending that supports electrification and more efficient use of energy.

The Budget contains very significant support for industrial and energy decarbonisation. There is major new funding to support hydrogen, through competitive production contracts, in the context of intensifying global competition for clean energy. There will also be a review in 2023 on further actions to ensure Australia remains a competitive investment destination.

Significant funding for decarbonisation of industrial emissions is available through the PRF allocations.

The Capacity Investment Scheme will support efforts to reach the Government's goal of 82 percent renewable generation by 2030 through underwriting new renewables and storage via auctions in South Australia and Victoria. The Federal Government will work to deliver these new auctions in partnership with the existing similar approach being taken in NSW.

Significant energy bill relief will be provided directly to reduce eligible consumer bills, delivered via energy retailers. This complements measures governments took last year to limit the spike in wholesale energy costs through temporary caps on domestic gas and coal prices. There is additional funding for regulators to monitor energy markets.

This short-term relief has been complemented by measures to bring down household and small business energy costs over the medium term, through support for energy efficiency and electrification investments.

What does it mean for you and your business?

  • Significant support for new hydrogen production, industrial decarbonisation, and clean energy investments
  • New assistance for households and small business to improve energy efficiency and electrify
  • Opportunities for underwriting of new renewable generation and storage investment in South Australia and Victoria
The Budget delivers significant funding and underwriting to advance key Government energy and climate policy objectives

Climate & nature

What's in the budget?

  • A Sustainable Finance Agenda ($14.2 million over four years) to establish a sovereign green bond program, develop sustainable financing taxonomy, and provide ASIC with further funding to address greenwashing.
  • Implementation of priority reforms from the Independent Review of Carbon Credits ($18.1 million over 2 years)
  • A Nature Positive Plan with $214.1 million over four years to support the establishment of Environment Protection Australia and to continue developing the foundation of the Nature Repair Market.
  • A National Climate Adaptation and Risk Program ($28 million over two years) to develop Australia's first National Climate Risk Assessment and a National Adaptation Plan.
  • A National Net Zero Authority ($83.2 million over four years) to ensure an orderly and positive economic transformation associated with decarbonisation in regional areas, including support for impacted workers.

These measures reflect a further maturation of Australia's sustainable finance framework. The establishment of a sovereign green bond program will support a deepening in the green capital market. The development of an Australian sustainable financing taxonomy will reinforce this, by identifying economic activity according to sustainability outcomes. This will be complemented by further efforts to crack down on 'Greenwashing' and other sustainable finance misconduct.

The implementation of priority reforms to the Australian Carbon Credit Unit (ACCU) market will similarly underpin its integrity and transparency, supporting investment as demand increases as a result of the reforms to the Safeguard Mechanism. Key measures include the establishment of the Carbon Abatement Integrity Committee to ensure method integrity for ACCUs, audits of human induced regeneration projects, and upgraded information systems.

The Nature Positive plan, supports the Australian Government commitment to protect 30 per cent of Australia's land and seas by 2030. The establishment of EPA will lift enforcement of environmental laws and nature repair markets will increase capacity for nature protection on private land.

Australia will develop its first National Climate Risk Assessment and National Adaptation Plan. This will lift understanding of the risks to Australia from climate change and assist planning to adapt to those risks.

The National Net Zero Authority is a major new institution which will coordinate the actions of business and governments, including some of the programs outlined above, to ensure support for communities and affected workers.

What does it mean for you and your business?

  • Ensure corporate ESG disclosures are transparent and authentic to better access green capital
  • Understand exposures to natural capital risk and market opportunities
The Budget underscores the need for corporate Australia to develop credible transition plans, including to build access to green finance, and to work closely with workforces and affected communities to ensure a positive economic transformation

Key contacts

Adrian King Partner in Charge, Climate Change & Sustainability
Barry Sterland Partner, Energy Transition Leader
Sally Torgoman Partner, Commercial Advisory & Transactions

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What's in the budget?

  • Independent strategic review of the $120 billion Infrastructure Investment Program (IIP).
  • $3.4 billion over 10 years to support venue infrastructure for 2032 Brisbane Olympic and Paralympic Games.
  • $1.8 billion over 10 years for infrastructure priorities to support productivity and jobs.
  • Heavy Vehicle Road User Charge will be increased which will decrease fuel tax credit expenditure by $1.1 billion over four years.
  • $687 million over six years for a national approach to sustainable urban development.

The government will undertake an independent strategic review of the Infrastructure Investment Program (IIP) to ensure the $120 billion pipeline over 10 years is fit for purpose and the government's investment is focused on projects which improve long-term productivity, supply chains and economic growth in our cities and regions.

Updated IIP project schedules will be finalised following the review, with government working with states and territories to determine priorities.

The Government will also provide up to $3.4 billion over 10 years to support venue infrastructure for the 2032 Brisbane Olympic and Paralympic Games including a capped investment of up to:

  • $2.5 billion for the development of Brisbane Arena
  • $935 million investment towards 16 new or upgraded venues as part of the Minor Venues Program.

The Government will also provide $687.4 million for a national approach to sustainable urban development including:

  • $305.0 million for the Macquarie Point Precinct and University of Tasmania Stadium
  • $211.7 million to establish the Thriving Suburbs Program
  • $159.7 million to establish the Urban Precincts and Partnerships Program.

What does it mean for you and your business?

  • Increased uncertainty for the infrastructure sector until the government's review of the IIP is completed and the Government works with States and Territories to determine priorities.
  • Heavy Vehicle Road User Charge will increase by 6 percent per year over three years to 32.4 cents per litre resulting in higher transportation costs which will likely flow through to consumers.
The government's independent review of the $120 billion Infrastructure Investment Program has a prudent objective of ensuring the investment is focused on projects which improve long-term productivity, supply chains and economic growth. However, this may create uncertainty for the infrastructure sector until the review is completed and the government works with states and territories to determine priorities.

Key contact

Paul Foxlee Partner, National Sector Leader, Transport & Infrastructure

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What's in the budget?

  • 15 percent increase in the maximum Commonwealth Rent Assistance (CRA) payment rates, at a cost of $2.7 billion over 5 years.
  • $2 billion increase in the National Housing Finance and Investment Corporation's (NHFIC) liability cap.
  • A reduction from 30 to 15 percent in the withholding tax rate applied to newly constructed BTR projects for Managed Investment Trusts (MIT).
  • An increase from 2.5 to 4 percent in the annual capital works depreciation rate applied to eligible new BTR projects.
  • Expanding the scope of eligibility for Australians applying for the First Home Guarantee and the Regional First Home Buyer Guarantee.
  • MIT clean building measure widened to data centres and warehouses and increased sustainability thresholds for qualifying investments.

Budget initiatives are firmly focused on addressing housing affordability challenges and cost of living pressures by driving new supply in social, affordable and private markets. The range of announcements include:

  • Relief for low-income renters through increased CRA payments
  • Increasing NHFIC's borrowing capacity to provide Community Housing Providers (CHPs) with low-cost loans to support the delivery of social and affordable housing
  • Lowering the barriers to entry for many first home buyers and
  • Tax reforms to attract institutional investment in new BTR developments.

These announcements complement a package of legislation that is currently before the Commonwealth Parliament which would (amongst other things) facilitate the establishment of the Housing Australia Future Fund (HAFF), a dedicated investment vehicle to provide an additional funding source to support the delivery of social and affordable housing projects.

What does it mean for you and your business?

  • The announced taxation concessions for BTR projects will support qualifying projects with 50 or more apartments, which retain ownership for 10 years and offer lease terms of 3 years. The eligibility criteria are subject to further consultation including around the minimum portion of affordable housing.
  • The increase to the NHFIC liability cap complements the planned establishment of the HAFF and enhances NHFIC capacity to provide low-cost finance to CHPs for the delivery of social and affordable housing.
  • The increased CRA will provide additional income for CHPs enhancing their ability to investment in new and existing social housing projects.
  • MIT Clean Building Concession will require buildings to achieve a 6-star Green Building and National Australian Built Environment Rating System (NABERS) rating and extend to newly constructed data centres and warehouses.
The Budget aims to increase the supply of social, affordable and private market housing by incentivising investment into the Build-to-Rent (BTR) sector and introducing measures that, along with the Housing Australia Future Fund, support the community housing sector to deliver new and better housing.

Key contacts

Paul Morris Partner, Sector Lead, Real Estate & Precincts
Scott Farrell Partner, Corporate Tax
Dan Jefferson Partner, Health, Ageing & Human Services

Get in touch and we'll help you prepare for any implications that may affect your business.

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What's in the budget?

  • $5.7 billion over five years to strengthen Medicare.
  • $2.2 billion over five years to increase access to medicines via the Pharmaceutical Benefits Scheme.
  • $556.2 million over five years in mental health and suicide prevention to support people living with mental illness, eating disorders and trauma.
  • $363.1 million over four years to improve health and wellbeing outcomes for Aboriginal and Torres Strait Islander people.
  • $511.1 million over four years for vaping regulation reform, smoking cessation support and a new lung cancer screening program.
  • $11.3 billion over five years to fund a 15 percent pay increase for more than 250,000 aged care workers across Australia.

The government has put forward tangible initiatives to deliver on its commitment to strengthen Medicare and build a health care system for the future, including measures to support the most vulnerable in our community.

This package of initiatives has the potential to make better use of the health workforce through multi-disciplinary care and new scope of practice initiatives along with a boost to nursing capacity.

Access will be improved for all Australians through:

  • tripling of the bulk billing incentives for Concession card holders and patients under 16 years
  • the introduction of MyMedicare
  • expanded telehealth and after hours care
  • investment in digital health to improve care integration
  • reducing out-of-pocket costs for medicines for people with common chronic illnesses.

Effort and cooperation across many different funding and services providers will be required. Demonstrating value for patients, communities and health care workers soon will be important for these initiatives to gain traction and be sustained.

The aged care wage increase demonstrates the government's commitment to address the workforce shortages in the sector, however, immediate workforce challenges remain that still need to be addressed.

What does it mean for you and your business?

  • Reforms to Medicare represent significant systemic and cultural change, with the potential to fundamentally change how and where we consume healthcare. Translating these ideas into tangible improvements will be hard in an environment of strong vested interests as we have seen play out in recent weeks.
  • Investment in workforce capability and capacity is overdue and will take time to have an impact. Continued investment in healthcare enabling technology and data is needed to support workforce effort.
The government is building a health care system for the future, strengthening Medicare through enhanced primary care and building important capability and capacity in the health and aged care workforce.

Key contacts

Sarah Abbott Partner, Public Health Lead
Nicki Doyle Partner, Aged Care, National Aged Care Sub-Sector Lead

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What's in the budget?

  • $4.9 billion to increase working age and student payment rates by $40 per fortnight.
  • $2.7 billion to increase maximum rates of Commonwealth Rent Assistance by 15 percent to help with rental affordability.
  • $1.9 billion to extend eligibility for parenting payment until the youngest child turns 14, up from 8 years of age.
  • $732.9 million investment in the National Disability Insurance Agency's capability, capacity and systems, and participant outcomes.
  • $589.3 million for women's safety, including dedicated funding for First Nations initiatives.
  • $199.8 million to address entrenched community disadvantage, including through place-based approaches and social impact investment.

As anticipated, this Budget contains increases to social security for people of working age, including the parenting payment and jobseeker payments. These changes will provide some relief to vulnerable members of the community, especially women, to meet the cost of living.

Funding announced will deliver on the government's six-point plan to create a secure, reliable, and sustainable NDIS. Further funding will be required once the findings of the NDIS Review and Disability Royal Commission are announced later this year. In the meantime, $57 million will support the evolution of supported employment, and $142.6 million will fund the NDIS Commission to carry out its role in quality and safeguarding NDIS participants.

The government has continued to make significant investment towards women's safety. Notably, this includes $194 million to support the dedicated Aboriginal and Torres Strait Islander Action Plan and implementation of community-led approaches.

The government has also committed to tackling community level disadvantage, including through a new $100 million outcomes fund that is designed to promote local partnership - and a degree of innovation and risk sharing - with states and territories and service providers. The growing number of providers seeking to leverage social impact investment will also be supported through a new $11.6 million investment in their capital raising capability.

What does it mean for you and your business?

  • For community-based service providers and state and local government, there is an increased emphasis on, and investment in, place-based, community-led and partnership approaches to address disadvantage and improve safety.
  • This Budget primarily tackles participant experience and NDIS sustainability, with focus on NDIS providers being limited to supporting alternative funding approaches in remote and First Nations communities.
The Budget represents the government's first steps towards addressing challenges in the NDIS, strengthens national commitments to women's safety, delivers additional financial support to jobseekers and single parents, and introduces welcome new measures to support community level action on disadvantage.

Key contacts

Dan Jefferson Partner, Human Services
Danielle Woolley Partner, Human Services

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What's in the budget?

  • $4.2 billion over 10 years for the establishment and operation of the Australian Submarine Agency.
  • $3.4 billion over 10 years reallocated to the Advanced Strategic Capabilities Accelerator, a new entity that expands the Defence Innovation Hub and Next Generation Technologies Fund to drive rapid adaptation of capability with Australian industry.
  • $1.9 billion to expand Australia's relationship building in the Pacific, with the Pacific now representing 82 percent of Defence Cooperation Program commitments.
  • $397.4 million for a Continuation Bonus pilot for Australian Defence Force (ADF) members committing to greater than their initial four-year period and a housing feasibility review as part of workforce retention initiatives.
  • $318.2 million additional investment for the Department of Veterans' Affairs for claims processing and modernisation and sustainment of ICT systems.

With the Defence Strategic Review (DSR) publicly released just prior to ANZAC Day, the key question coming into this Budget was whether new funding would be provided. This Budget confirms Defence will need to make hard decisions to reprioritise its investments to address the DSR finding that the ADF is “not fully fit for purpose” against increasing threats.

Veterans will benefit from a further investment; including $64.1m to retain frontline services and reduce the Veterans' Affairs claims backlog, and $254.1m to modernise and sustain ageing ICT systems.

The importance of partnerships such as AUKUS and the implications of nuclear-powered submarines for jobs, skills, the manufacturing base and regulators are key themes in the Budget, with complementary investments extending well beyond the Defence portfolio.

Government has reaffirmed its commitment to ownership of CEA Technologies Pty Limited and its critical sovereign capabilities, over a phased acquisition.

There will be an ongoing review of capability and funding priorities in response to a more frequent strategy process, notably the biennial National Defence Strategy announced as part of the DSR.

What does it mean for you and your business?

  • Stay abreast of the numerous reviews triggered by the DSR and expect further capability choices to be made as the full implications of a more 'focused' force are explored by Defence.
  • Speed to capability remains the unequivocal priority for Defence capability acquisition and Defence Industry will benefit from the bolstered innovation and engagement functions.
This Budget delivers a small uplift of GDP across the outyears and cements the expectation of hard capability choices and further reform.

Key contacts

Melissa McClusky Defence Account Lead Partner
Peter Robinson Lead Partner, Defence & Defence Industry Sector

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What's in the budget?

  • $101.6 million over 5 years from 2022-23 to support and uplift cyber in Australia (including small business cyber wardens program), critical infrastructure protection and resilience of Commonwealth entities.
  • $86.5 million to combat scams and online fraud, including funding for the National Anti-Scam Centre and other agencies.
  • $50 million over 4 years from 2023-24 for additional enforcement and compliance activities to maintain the integrity of the migration system.
  • $468.8 million over 4 years from 2023-24 (and $185.6 million per year ongoing) to modernise the Australian Secret Intelligence Service.
  • $1.9 billion over 5 years from 2022-23 to expand Australia's engagement with Pacific Island countries.

Investment across national security continues to be a priority for the Australian Government. Specific support has been provided to business to uplift cyber capability and combat online scams to protect Australians.

With the 2023-30 Cyber Security Strategy public consultation process closing less than a month ago, we expect it will be a little longer before we see more substantial cyber announcements (we'll be watching at MYEFO).

To protect Australia's interest overseas, the government has committed to modernise our Australian Secret Intelligence Service.

The commitment to building connections in the Pacific continues to receive significant investment to ensure peaceful, prosperous regions equipped to respond to the challenges of our time.

What does it mean for you and your business?

  • Strengthening cultural and people-to-people ties with the Pacific region and the promotion of shared values builds on Australia's longstanding security cooperation with the Pacific.
  • The cyber wardens program, funding of the Coordinator for Cyber Security and ongoing commitment to the security of critical infrastructure reforms demonstrate continued focus on cyber security ahead of the upcoming Cyber Security Strategy 2023-30.
Investment in national security is strategically focused on capabilities that will ensure we continue to have a prosperous and peaceful Australia.

Key contacts

Anthony Court Sector Lead Partner, National Security & Justice
Claire McGuinness Partner, National Security & Justice
Greg Miller Partner, Cyber Security and Critical Infrastructure
Monique Sheehan Partner, National Security & Justice

Get in touch and we'll help you prepare for any implications that may affect your business.

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Listen: Tax Now 2023 Federal Budget podcast

KPMG partners Alia Lum and Clive Bird discuss the tax measures announced in the Australian Government’s 2023 Budget and what they mean for corporate and mid-market business.

Watch: 2023 Federal Budget Breakfast videos

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