On March 29, 2022, Treasurer Josh Frydenberg delivered Australia’s 2022-3 federal budget. There were minimal tax changes for businesses in this budget. However, this article details some of the main support measures announced that will interest small & medium-sized business owners.
Small business skills and training boost:
(Small businesses with up to $50m in annual aggregated turnover)
External Training: An eligible business will be able to deduct an additional 20% of the expenditure incurred on external training courses provided to its employees. The training course must be provided to employees in Australia or online and delivered by entities registered in Australia.
Some exclusions will apply, such as for in-house or on-the-job training.
The boost will apply to eligible expenditure incurred from 7:30 pm (AEDT) on March 29 2022, until June 30 2024.
The boost for eligible expenditure incurred by June 30 2022, will be claimed in tax returns for the following income year. The increase for expenses incurred between July 1 2022, and June 30 2024, will be included in the income year in which the cost is incurred.
Apprenticeship incentive scheme: This Scheme will provide up to $15,000 in wage subsidies for employers who take on apprentices and trainees and $5,000 payments to new apprentices and trainees (in priority sectors). This scheme is part of $2.8 Billion in funding for an overhauled apprenticeship incentive scheme to grow the number of qualified tradespeople in Australia.
Small business technology investment boost:
(Small businesses with up to $50m in annual aggregated turnover)
An eligible business will be able to deduct an additional 20% of the cost incurred on business expenses and depreciating assets that support its digital adoption, such as portable payment devices, cyber security systems or subscriptions to cloud-based services.
An annual cap will apply in each qualifying income year to make expenditures up to $100,000 eligible for the boost. The boost will apply to eligible expenditure incurred from 7:30 pm (AEDT) on March 29 2022, until June 30 2023.
The boost for eligible expenditure incurred by June 30 2022, will be claimed in tax returns for the following income year. The boost for eligible expenditure incurred between July 1 2022, and June 30 2023, will be included in the income year in which the expenditure is incurred.
PAYG instalments: option to base on financial performance:
The Budget papers confirm the Treasurer’s earlier announcement that 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).
The commencement date is “subject to advice from software providers about their capacity to deliver”. It is anticipated that systems will be in place by December 31 2023, with the measure to commence on January 1 2024, for application to periods starting on or after that date. There are no details yet as to what tax adjustments will be required (although presumably, this will involve a reverse, modified form of tax effect accounting).
PAYG and GST instalment uplift factor:
The Budget papers confirm the Treasurer’s earlier announcement that the GDP uplift factor for PAYG and GST instalments will be set at 2% for the 2022–2023 income year. The papers state that this uplift factor is lower than the 10% that would have applied under the statutory formula.
The 2% GDP uplift rate will apply to small to medium enterprises eligible to use the relevant instalment methods (up to $10 million annual aggregated turnover for GST instalments and $50 million annual aggregated turnover for PAYG instalments) in respect of instalments that relate to the 2022–2023 income year and fall due after the enabling legislation receives assent.
More COVID-19 business grants designated NANE income:
The Government has extended the measure, which enables payments from specific state and territory COVID-19 business support programs to be made non-assessable, non-exempt (NANE) income for income tax purposes until June 30 2022. This measure was initially announced on September 13 2020.
Consistent with this, the Government has made the following state and territory grant programs eligible for this treatment since the 2021–2022 Mid-Year Economic and Fiscal Outlook:
- New South Wales Accommodation Support Grant
- New South Wales Commercial Landlord Hardship Grant
- New South Wales Performing Arts Relaunch Package
- New South Wales Festival Relaunch Package
- New South Wales 2022 Small Business Support Program
- Queensland 2021 COVID-19 Business Support Grant
- South Australia COVID-19 Tourism and Hospitality Support Grant
- South Australia COVID-19 Business Hardship Grant.
The changes are part of an ongoing series of announcements that will continue to be in effect until June 30 2022.
Need support navigating the latest budget?
Our experts can help you access some of the new schemes available. Please get in contact with us today at enquiries@rm.net.au
**The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
