Learn what the 2022-23 Federal Budget means for small to medium businesses
On Tuesday, 29 March 2022, Treasurer Josh Frydenberg handed down the 2022-23 Federal Budget, his 4th Budget.
In an election Budget, the Treasurer announced a range of cost of living measures, including a one-off
- $420 cost of living tax offset for low and middle income earners,
- and a $250 payment for pensioners and welfare recipients.
- The fuel excise will also be reduced by 50% for 6 months, starting from midnight on Budget night.
For small businesses,
- a Skills and Training Boost will provide a new 20% bonus deduction for eligible external training courses for upskilling employees from Budget night.
- In addition, businesses will receive a similar 20% bonus deduction for expenditure on digital technologies (eg cloud computing, eInvoicing, cyber security and web design) for investments of up to $100,000 per year.
The Treasurer said a strong economic recovery is well underway, notwithstanding the COVID-19 pandemic and new shocks, such as the recent floods and the Russian invasion of Ukraine.
Mr Frydenberg said economic growth forecasts have been revised upwards, driven by stronger-than-expected momentum in the labour market and consumer spending. The unemployment rate has also fallen to 4%, and is expected to reach 3.75% in the September 2022 quarter.
Key tax-related, superannuation-related, and other measures
- LMITO increased by $420 for 2021-22 – a one-off $420 cost of living tax offset for the 2021-22 income year will see the low and middle income tax offset (LMITO) increased up to a maximum of $1,500 for 2021-22 only (up from $1,080). Importantly, the Government did not announce an extension of the LMITO beyond 2021-22 when it is legislated to cease.
- Personal tax rates – no changes were made to the personal tax rates for 2022-23. The Stage 3 personal income tax cuts remain unchanged and will commence in 2024-25 as already legislated.
- Small business 20% deduction boost: skills training and digital adoption – businesses with turnover less than $50m will receive a 20% uplift on deductions for eligible expenditure on external training courses and digital technology. The 20% boost will apply to eligible expenditure incurred from 7:30pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption).
- Patent box income extended – the concessional tax treatment for eligible corporate income associated with new patents in the medical and biotechnology sectors will be extended to corporate taxpayers who commercialise their: (i) eligible patents linked to agricultural and veterinary chemical products; and (ii) patented technologies which have the potential to lower
- Employee share schemes – for company law purposes, the investment thresholds for unlisted companies will be changed so that ESS participants can invest up to $30,000 per participant per year (accruable for unexercised options for up to 5 years), plus 70% of dividends and cash bonuses. Participants will also be able to invest any amount if it would allow them to immediately take advantage of a planned sale or listing of the company.
- Carbon credit and biodiversity certificate income – the proceeds from the sale of Australian Carbon Credit Units (ACCUs) and biodiversity certificates generated from on-farm activities will be treated as primary production income for the purposes of the Farm Management Deposits (FMD) scheme and the tax averaging provisions from 1 July 2022.
- Digitalising trust income – all trust tax return filers will be given the option to lodge income tax returns electronically, increasing pre-filling and automating ATO assurance processes. The measure is proposed to apply from 1 July 2024 (subject to advice from software providers).
- PAYG instalments option – from 1 January 2024, companies will be allowed to choose to have their PAYG instalments calculated based on current financial performance, extracted from business accounting software (with some tax adjustments).
- Taxable payments data reporting – from 1 January 2024, businesses will be provided with the option to report Taxable Payments Reporting System data on the same lodgment cycle as their activity statements, via accounting software.
- Super pension drawdowns – 50% reduction extended to 2022-23 – the temporary 50% reduction in minimum annual payment amounts for superannuation pensions and annuities will be extended by a further year to the 2022-23 income year.
- Super Guarantee rate – the Budget did not contain any change to the legislated Super Guarantee rate rise from 10% to 10.5% for 2022-23. – from 1 January 2024, businesses will be provided with the option to report Taxable Payments Reporting System data on the same lodgment cycle as their activity statements, via accounting software.
- Fuel excise temporary reduction – the fuel excise will be reduced by 50% for 6 months, starting from midnight on Budget night.
- $250 cost of living payment – the Government will make a $250 one-off cost of living payment in April 2022 to eligible pensioners, welfare recipients, veterans and concession card holders.
- Apprentice wage subsidy extension – the Budget confirmed the extension of the Boosting Apprenticeship Commencement (BAC) and Completing Apprenticeship Commencements (CAC) wage subsidies by 3 months to 30 June 2022.
- – the Budget did not contain any change to the legislated Super Guarantee rate rise from 10% to 10.5% for 2022-23. – from 1 January 2024, businesses will be provided with the option to report Taxable Payments Reporting System data on the same lodgment cycle as their activity statements, via accounting software.
What Happens Next?
Remember, these are proposed measures, and they could change as legislation passes through parliament.
You can access the 2022-23 Budget Papers here:
Get in touch if you’d like to find out more about how these tax concessions and changes may impact your business.
Give us a call on 07 5649 7650.
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