Treasurer Josh Frydenberg delivered the 2022-23 Federal Budget on 29 March 2022. The Australian Government has delivered a budget that provides some good news in an election year when businesses are weathering another period of economic uncertainty. The budget focuses on specific measures to encourage targeted business investment and provides some cash flow relief through various incentives and tax relief measures.  

Some key highlights are outlined below but bear in mind these proposals could change as legislation passes through parliament.

Individuals

Low & Middle Income Tax Offset (LMITO) Increase:
The Government has announced a one-off $420 cost of living tax offset for the 2022 financial year, which will come in the form of an increase in the existing low and middle-income tax offset. This increase will raise the maximum LMITO benefit to $1,500 for individuals and $3,000 for couples and will be automatically applied from 1 July 2022 when you lodge your tax return for the 2022 financial year.

Increasing the Medicare Levy Low-Income Thresholds: 
The Federal Government has made small increases to the Medicare levy low-income thresholds for seniors, families and singles from 1 July 2021.

Tax Deductibility of Covid-19 Test Expenses: 
The Federal Government will ensure that the costs of taking a Covid-19 test to attend a workplace are tax-deductible for individuals from 1 July 2021.

  Business

Modernising the PAYG Instalment System: 
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). This change will support business cash flow by ensuring instalments reflect current performance.

Taxable Payments Data Reporting Option: 
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.

Expanding Access to Employee Share Schemes (ESS): 
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 (increased from $5,000). This change is designed to reduce red tape further so that employees of all levels can directly share in the business growth they help to generate.

Varying the GDP Uplift Factor for Tax Instalments:
The Government has decided to set the GDP uplift factor for PAYG and GST instalments at 2% for the 2023 income year. This uplift factor is lower than the 10% that would have applied under the statutory formula.

Technology investment boost to support digital adoption and skills training by SMEs

Small and medium-sized businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of the expenditure incurred on eligible external training courses and digital technology.

This includes business expenses and depreciating assets that support 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. This equates to a maximum additional deduction of $20,000 per eligible year. 

The 20% boost will apply to eligible expenditure incurred from 7.30 pm on 29 March 2022 until 30 June 2024 (for skills training) and 30 June 2023 (for digital adoption).

For eligible expenditure incurred by 30 June 2022, businesses will claim the boost in tax returns for the following income year. For eligible expenditure incurred between 1 July 2022 and 30 June 2023, businesses will claim the boost in the income year in which the expenditure is incurred.

For any questions on how to best take advantage of this boost, please contact Ashfords Digital Director, Trevor Schoenmaekers on 03 9551 2822.

 Other:

Temporary Reduction in Fuel Excise:
From 30 March 2022, the Government will halve the excise and excise-equivalent customs duty rate that applies to petrol and diesel and all other fuel and petroleum-based products for six months. Which means your petrol will cost less at the pump, which is welcome news for everyone.

$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 cardholders.

Super Pension Drawdown 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.

Of course, many other items came out of the Federal Budget,  which will undergo further debate in the coming weeks. 

If you require more information on the 2022-23 budget or further clarification around what relates to your business, please do not hesitate to contact your Ashfords advisor on 03 9551 2822

Please note: the information contained in our articles is general in nature and does not address the circumstances of any particular individual or entity. We endeavour to provide accurate and timely information; however, we cannot guarantee that it will continue to be accurate in the future. Always obtain appropriate professional advice for your circumstances. For more information or tailored advice, don't hesitate to contact your Ashfords advisor.