There is nothing terribly unexpected, ground-breaking or new in the 2022/23 Budget handed down on Tuesday night by treasurer Josh Frydenberg.
It is cliché to say that it is an ‘election year budget’ – but that is exactly what it is! A bit of a cash splash to help with the cost of living increases, a temporary reduction in fuel excise, investment in innovation and training and some removal of some red tape (and possibly the addition of some more!) – it is about as pedestrian as we thought it might be.
The government has spent significantly over the last couple of years to keep the economy moving and, on the whole, this appears to have worked quite well.
This budget straddles the line between getting things back on track and keeping voters satisfied leading into the 2022 election.
– PTP Partner, Joe Seccull
So, what do you need to know?
Cost of living tax offset
The low and middle-income tax offset (LMITO) will be increased for the 2021 22 income year. The offset will be paid from 1 July 2022 after you submit your tax returns for the 2021-22 income year. The LMITO will be increased by $420 for the 2021 22 income year. This increases the maximum benefit in 2021 22 to $1,500 for individuals and $3,000 for couples.
COVID 19 Response Package – Making COVID 19 business grants non-assessable non-exempt
The measure which enables payments from certain state and territory COVID-19 business support programs to be made non assessable non exempt (NANE) for income tax purposes will be extended until 30 June 2022. This measure was originally announced on 13 September 2020.
COVID 19 Response Package – tax deductibility of COVID 19 test expenses
The costs of taking a COVID-19 test in order to attend a place of work will be tax deductible from July 1st, 2021. Fringe benefits tax will also not be incurred by businesses who provide COVID-19 tests to their employees for the purpose of attending work.
Modernisation of pay as you go (PAYG) instalment systems
Companies will be able to choose to have their pay as you go (PAYG) instalments calculated based on current financial performance. This information will be extracted from their business accounting software, with some tax adjustments. This will support business cash flow by ensuring instalments reflect current performance.
These systems are anticipated will be in place by 31 December 2023, depending on the capacity of providers. This measure will commence on 1 January 2024.
Skills and training boost
A skills and training boost to support small businesses to train and upskill their employees will be introduced from 29th March, 2022, until 30 June 2024.
Small businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an additional 20 per cent of expenditure incurred on external training courses provided to their employees. Training must be delivered by entities registered in Australia,
Some exclusions will apply, such as for in house or on the job training and expenditure on external training courses for persons other than employees.
The deduction for expenses incurred by 30 June 2022 will be claimed in tax returns for the following income year. The deduction for expenses incurred between 1 July 2022 and 30 June 2024, will be included in the income year in which the expenditure is incurred.
Smarter reporting of Taxable Payments Reporting System data
Businesses will now have the option to report Taxable Payments Reporting System data on the same lodgement cycle as their activity statements.
These systems are anticipated will be in place by 31 December 2023, depending on the capacity of providers. This measure will commence on 1 January 2024.
Extension of the temporary reduction in superannuation minimum drawdown rates
The 50% reduction of the superannuation minimum drawdown requirements for account based pensions has been extended for a further year – to 30 June 2023.
PTP is here to assist you in deciphering what any of these new budget measures mean for your business. Contact us here to make a time to chat.
