Federal Budget

Updated Federal Budget 2022–23

Author: The Tax Institute

Published Date: 26 Sep 2022


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We write regarding our views on the priorities for the updated Federal Budget 2022–23. The Federal Budget plays a pivotal role in determining the economic direction of Australia’s future, impacting the lives of everyone in the community. We are of the view that this process requires input from a diverse range of stakeholders whose views and experiences can guide the Government in addressing the most pertinent issues.

As the leading professional body for the tax community in Australia, we have consulted with our National Technical Committees and broader membership to deliver a submission that outlines the key issues related to the Australian tax, transfer and superannuation systems that should be prioritised by the Government.

Australians and our economy have endured significant challenges and disruptions since late-2019, with a succession of natural disasters and the global pandemic. In particular, the impacts of COVID-19 have been among the most disruptive in Australia’s economic history, requiring significant resources from the Commonwealth Government and State and Territory governments to support individuals and businesses.

A few key COVID-19 and natural disaster related measures have not yet been given legislative effect by Parliament. These include the proposed easing of the residency requirement for self-managed superannuation funds (SMSFs), and proposals targeted at ensuring that working holiday makers (WHM) and participants in the Seasonal Labour Mobility Program (SLMP) are taxed equitably and at the intended rates. We also consider that the Government should take additional steps to ensure that all grants or support payments made to businesses and individuals in response to COVID-19 and the spate of natural disasters are not taxed as assessable income, ensuring recipients receive the full benefit from the amounts received. 

There have also been significant disruptions to the legislative schedule, resulting in an extensive number of announced but unenacted measures (ABUMs) that require a strategic approach by the Government. The Tax Institute’s Incoming Government Brief: June 2022 (Brief) notes these measures and outlines our view on how they should be prioritised given the current needs of Australia’s taxation and superannuation systems. Taxpayers need certainty so they can efficiently manage their taxation affairs. Clarifying the Government’s intention in relation to dozens of ABUMs would facilitate this.

The measures outlined in the Brief that we consider to be the highest priority still require Government’s urgent action and include:

  • addressing the issues associated with the non-arm’s length income (NALI) provisions for superannuation funds;
  • reform of the corporate tax residency rules; and
  • reform of the Division 7A rules for private companies and privately held groups.

In addition to the outstanding measures outlined in the Brief, there are pervasive issues in our current tax system that require the Government’s attention. These include increasing the permanent funding of the Australian Taxation Office (ATO) to better support the administrator in assisting taxpayers and tax practitioners to comply with their legislative requirements, and funding to ensure that the Tax Practitioners Board (TPB) operates fully independently. We consider opportunities also exist to reduce existing complexity in certain areas such as the Fringe Benefits Tax (FBT) regime.

Opportunities also exist for the Government to further examine how the taxation system could be utilised as part of a comprehensive environmental policy to reduce the impacts of climate change.

Our superannuation system requires the Government’s attention to ensure that parties are encouraged to contribute to taxpayers’ superannuation balances, allowing older Australians to better support themselves during their retirement. In particular, we consider that changes are needed to the excessive penalties imposed on employers who are late to make Superannuation Guarantee (SG) contributions. Changes in this regard will encourage them to disclose and make good any historical shortfalls of their employees’ superannuation entitlements. There are opportunities to significantly reduce the compliance and costs burden on superannuation funds by allowing them greater flexibility in the rationalisation of legacy products and underlying trust structures. In addition, rationalisation of the various thresholds that apply to indexation across contributions and pensions is recommended. Complexity could be immediately reduced by replacing the proportional Transfer Balance Cap (TBC) indexation process with a fixed indexation amount that applies to all superannuants universally, irrespective of when they commenced their income stream(s) and whether they have wholly or partly utilised the general TBC. There is a need to ensure that superannuation balances are treated efficiently and provide taxpayers with flexibility upon death. Currently, several issues prevent this from occurring and require legislative fixes by the Government.

Australia’s transfer system plays a key role in complementing the tax system and ensuring Australians are equitably supported. The transfer system can have significant influence over an individual’s monetary habits and ability to participate in the workforce. In particular, the Child Care Subsidy (CCS) should be amended to be more effective in assisting families. This will aid families in an economy with increased costs and living. More targeted support will also allow parents to participate in the workforce, assisting with easing the pressures created by ongoing shortages in skilled staff. 


  • Published By:The Tax Institute
  • Published On:26 Sep 2022

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Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))


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