Federal Treasurer, Josh Frydenberg, handed down the 2022 Federal Budget last night in Canberra.
We’ve been working through the details and have compiled a concise summary of the headline announcements that we think will have the biggest impact for our clients.
Business Taxation
Deduction boost for small businesses – skills & training
Eligible businesses will receive an additional 20% tax deduction on costs incurred on external training courses provided to employees. Applies from 7.30pm on 29 March 2022 until 30 June 2024
Deduction boost for small businesses – digital adoption
Eligible businesses will receive an additional 20% tax deduction on costs incurred that support digital adoption, such as cyber security, portable payment solutions and subscriptions to cloud-based services. A maximum of $100,000 of costs in each qualifying financial year will be eligible for the boost. Applies from 7.30pm on 29 March 2022 until 30 June 2023
Modernisation of the PAYG Instalment system
The PAYG instalment system will be modernised to allow PAYG instalments to be calculated based on current financial performance extracted from accounting software (with some tax adjustments). Applies from 1 January 2024 subject to the ability of software providers to be ready for the change.
Taxable Payments Reporting (TPAR) Streamlining
Businesses will have the option to provide Taxable Payments Reporting on the same reporting cycle as their activity statements and via their accounting software. Applies from 1 January 2024 subject to the ability of software providers to be ready for the change.
Single Touch Payroll (STP) Data to be shared with States and Territories
The extent to which STP data collected by the ATO will be shared with other government agencies has been confirmed in the Budget papers with the government saying that it intends for State and Territory Revenue Offices (which manage the likes of Land Tax, Payroll Tax & Stamp Duty) to receive access to this data. No date has been slated for this.
PAYG & GST Instalment Uplift Factor
GST and PAYG instalments are presently subject to a GDP uplift factor each year. For the 2022/23 financial year, this uplift factor will be 2% when it would otherwise have been 10%. While both PAYG & GST instalments are capable of being varied, this may reduce the need to do so in some instances.
Expansion of COVID-19 Grants
The government has extended until 30 June 2022 the measure which enables payments from certain State & Territory COVID-19 business support programs to be classed as non-assessable non-exempt (NANE) for income tax purposes. The benefit of these payments being classed as NANE is that they do not attract income tax and nor do they absorb carried forward tax losses.
Expansion of access to employee share schemes
The government confirmed its intention to make employee share ownership in unlisted companies more accessible. The intent is to remove red tape and create better pathways for employees to directly share in the fruits of a business that they contribute to the growth of.
COVID-19 Tests
The Government will ensure that COVID-19 testing provided by employers to employees to attend a place of work will not be subject to fringe benefits tax. Applies from 1 July 2021.
Small Business Support
A range of funding measures were foreshadowed to deliver support to small business including the Payment Times Reporting Portal & Register (to improve efficiency and reporting), the Australian Small Business and Family Enterprise Ombudsman (to improve financial capability), the New Access for Small Business Owners program (to improve mental health outcomes) and the Small Business Debt Helpline program (to provide tailored financial counselling).
Apprentice wage subsidy support
The Boosting Apprenticeship Commencement (BAC) and Completing Apprenticeship Commencements (CAC) wage subsidies will be extended by 3 months to 30 June 2022.
Superannuation
Superannuation pension drawdown relief extended
The option for the minimum annual payment required for superannuation pensions and annuities to be reduced by 50% has been extended by a further year to 30 June 2023. This provides retirees with greater flexibility and may mean they are not forced into selling assets during a period of volatility in order to satisfy minimum drawdown requirements.
Superannuation guarantee rate increase
The superannuation guarantee (SG) rate was already slated to increase from 10% to 10.5% on 1 July 2022, and due to their being no announcements to contrary in the Budget, it can be assumed this increase will go ahead as planned.
Individuals
Cost of Living Payment
A one-off $250 cost of living payment will be made to eligible recipients in April 2022. Eligibility will be based on whether a person receives a specified government support payment or is a specified concession cardholder. The payment will not be subject to income tax.
Increase in Low and Medium Income Tax Offset (LMITO)
The LMITO will be increased by $420 for the 2021/22 financial year. Previously, eligible individuals could receive up to a maximum of $1,080 under the LMITO. This will now increase to $1,500.
Fuel excise relief
The excise and excise-equivalent customs duty rate that applies to petrol and diesel will be reduced by 50% for a period of six months, commencing on 30 March 2022.
COVID-19 Tests
The Government will ensure that the costs of a COVID-19 test being taken to attend a place of work will be deductible for individuals. Applies from 1 July 2021
