We’ve broken it down into key points and opportunities for business owners and individuals. Our experts are up to date with everything Budget related and ready to help you understand what it means for you.
Tax cuts for small businesses
- Reduction in the company tax rate for small businesses from 30% in 2013-14 to 25% from 2021-22.
- Unincorporated small business tax discount rate lifted from 5% in 2015-16 to 16% from 2021-22 (with a cap of $1,000).
Encouraging business investment and supporting cash flow
- Reduction in the Gross Domestic Product (GDP) uplift rate for 2022-23, delivering $1.85 billion in cash flow support for 2.3 million taxpayers, including small businesses.
- Introduction of rules that will allow businesses with an annual turnover or total income of less than $5 billion to instantly write off assets to strengthen business investment. These rules have been extended to 30 June 2023.
- Companies with an annual turnover of less than $5 billion will be able to offset losses against previously taxed profits to generate a refund, and this was extended to include 2022-23.
Technology Investment Boost
- Small businesses with less than $50 million annual turnover will be able to access a new bonus of 20% deduction for the cost of expenses and depreciating assets that support digital uptake, up to $100,000 per year.
- This boost is available from Budget night (29 March 2022) until 30 June 2023.
- Investment in digital capabilities through the Digital Economy Strategy. This strategy is designed to provide support for businesses to boost productivity, become more globally competitive and generate high-paying jobs.
- It will allow a 120% tax deduction for expenses and depreciating assets to support digital adoption including cyber security systems, cloud-based services subscriptions and portable payment devices, capped at $100,000 per year of eligible expenditure.
- This is effective from Budget night until 30 June 2023 for expenditure in the 2022 financial year, and the deduction will be included in the 2023 tax year.
If digitising your accounting to make life easier sounds appealing, then please get in touch. We can help you navigate this, and get your systems working efficiently.
Continued focus on streamlining business interactions with the Government
- Known as the ‘Deregulation Agenda’, the Government is introducing a range of measures to reduce compliance costs, streamline reporting requirements and improve cash flow for small and medium businesses.
- Already introduced are changes with Single Touch Payroll (STP) Phase 2 reporting which you can learn more about here.
Floods assistance package
To support households, businesses, primary products, not-for-profit organisations and councils there is:
- $2.2 billion to households for income support, temporary accommodation and social services.
- $665 million to businesses and farmers for repairs, new equipment and support services.
- $589 million for community clean-up and recovery, including $300 million from the Emergency Response Fund for recovery and post-disaster resilience initiatives.
Skills and Training Boost
- Access to a new bonus 20% deduction for the cost of external training courses delivered to employees by providers registered in Australia for small businesses with an annual turnover of less than $50 million.
- Some exclusions will apply, for example, in-house or on-the-job training and expenditure on external training courses for persons other than employees.
- This boost will apply to eligible expenditures incurred from Budget night until 30 June 2024.
- For eligible expenditure incurred by 30 June 2022, the boost will be claimed in tax returns for the following income year.
- For eligible expenditure incurred between 1 July 2022 and 30 June 2023, the boost will be claimed in the income year the expenditure was incurred.
Extension of the Boosting Apprenticeship Commencements and Completing Apprenticeship Commencements Program
- Subsides the wages of apprentices including future tradies, plumbers, tilers and chefs.
- The $365.3 million investment will support an extra 35,000 apprentices and trainees looking for work.
Australian Apprenticeships Incentive System
- A new system designed to provide support to employers and apprentices.
- $2.8 billion investment over 5 years from 2021-22 to upskill apprentices.
- Strengthening of the skills pipeline by supporting more apprentices through their training.
- An additional 2,500 in‑training support places for eligible young apprentices.
- Expanding access to trade support loans to all priority occupations including aged care trainees.
Super Guarantee Rate Change
- From 1 July 2022, the amount of super that business owners need to contribute for employees (including yourself) increases from 10% of salary and wages paid to 10.5% of salary and wages.
- This means if your employment agreements are written as wages + super, you will be increasing your overall employee costs by an extra 0.5% for the year.
- The super rate will continue to increase by 0.5% every year until it hits 12% in 2026.
Removal of the $450 threshold amount for super contributions
- Currently, if an employee earns less than $450 per month then the employer isn’t required to contribute to super for them. This changes from 1 July 2022 and everyone over 18 will be paid super on every dollar earned.
Whether you want to know how to tap into the incentives for training your staff or need help with the changes to super, our team of specialists can help. All you need to do is get in touch!
‘Patent Box’ scheme expanded to also include agriculture and low emissions technology
- Announced in last year’s Budget, the ‘Patent Box’ scheme includes a concessional tax rate of 17% (rather than the normal tax rates of 25% or 30%). This legislation is currently still before Parliament.
- This is now being extended to patents linked to agriculture and low emissions technology.
- Research and development (R&D) of the innovation must take place in Australia.
- Dates listed by the Government include:
- Agriculture and low emissions tech – patents granted after 29 March 2022 and for income years starting on or after 1 July 2023.
- Medical and biotech patents granted after 11 May 2021.
Export Market Development Grant
- Designed to support export-ready Australian businesses as they establish themselves in international markets.
- Received an additional $80 million in funding over 4 years.
Investment in collaboration and innovation in the university research sector
- $2.2 billion investment to bring universities and industry together to develop the next generation of Australian companies and products.
- $1.6 billion to kickstart Australia’s Economic Accelerator, a competitive funding program to support research projects with high commercial opportunities.
- $150 million to expand CSIRO’s Main Sequence Ventures which will make venture capital investments in companies linked to Australian research and development.
- $243 million to support select universities to boost priority research and development.
There is a lot of potential for innovative businesses through the R&D tax incentive and other business grants but knowing what you are eligible for and how to apply can be tricky. Our team of specialists have their finger on the pulse with all things Government grants so get in touch to get started.
One-off Cost of Living Tax Offset
- From 1 July 2022, individuals who earn under $126,000 may receive a once-off $420 cost of living tax offset paid through their 2021-22 tax return.
- This once-off offset is combined with the Low and Middle Income Tax Offset (LMITO), meaning eligible low- and middle-income earners will receive up to $1,500 for a single income (or up to $3,000 for a couple) for the 2021-22 income year.
- This Cost of Living Tax Offset has been clearly labelled as a once-off, and the LMITO is set to end this year.
Temporary fuel excise relief
- Reduction of the fuel excise by 50% for 6 months to ease the pressure on motorists from the rising fuel costs.
- The excise on petrol and diesel will be cut from 44.2 cents per litre to 22.1 cents per litre and is expected to kick in in the coming weeks.
Assistance for home buyers
- The Home Guarantee Scheme helps Australians enter the property market sooner with a smaller deposit. For eligible home buyers, the deposit is as low as 5% for first-time buyers or 2% for single parents.
- The spots on the Scheme have been increased to 50,000.
- 35,000 guarantees to support first home buyers with a deposit as low as 5%.
- 10,000 guarantees to support first home buyers in regional areas with a 5% deposit.
- 5,000 guarantees to help eligible single partners with children buy their first home or re-enter the market with a deposit of as little as 2%.
- The First Home Super Saver Scheme has also been expanded, increasing the maximum amount of voluntary contributions that can be released from $30,000 to $50,000.
- Changes to the Works Test were introduced in last year’s Budget but come into effect from 1 July 2022.
- Currently, if you’re between ages 67 and 75, you need to do 40 hours over 30 consecutive days before you can make extra contributions to your super. However, from 1 July 2022 everyone up to age 74 can have employer contributions made to their super.
- From 1 July 2022, if you want to make personal tax-deductible contributions then the Works Test still applies.
Downsizer contributions age minimum lowering
- Another one from last year’s budget for super that starts from 1 July 2022.
- From 1 July 2022, if you’re over 60 and you sell your home you have the option of making a contribution of up to $300,000 per person into your super. At the moment it’s only an option if you’re over 65.
Have questions or want help to tap into any of these for your business?
Our experts were glued to their screens when the Budget was announced and have thoroughly studied it so that you don’t need to. Get in touch with our team of accountants, bookkeepers, payroll specialists, finance brokers, financial planners or grant specialists to get started!