This is a safe, ballot box friendly Budget as expected with a focus on jobs, cost of living, home ownership, and health.
Key initiatives include:
- A 6 month, 50% reduction in fuel excise with effect from midnight Budget night
- A $420 cost of living tax offset for low and middle-income earners from 1 July 2022
- A one-off $250 economic support payment to some social security payment recipients
But, it is also a Budget that drives digitisation. Not just to support innovation but to streamline compliance, create transparency and more readily identify anomalies. Single touch payroll was the first step, the PAYG instalment system, trust compliance, and payments to contractors are next.
Beyond compliance, there is an opportunity capitalise on the benefits of the Government’s push toward innovation and investment in new technology. Not just the $120 tax deduction for every $100 spent on training employees and digital adoption, but also the expansion of the patent box tax concessions. There are opportunities for those pushing boundaries.
New tax incentives for small businesses
New policies that will directly benefit small businesses include:
- To help small businesses, with a turnover of less than $50 million/year, adopt digital technology and train and upskill employees with the 120% deduction incentive. Until June 2024 for every $100 a small business invests in external training courses for their employees they will get a $120 tax deduction (Skills and Training Boost).
- Until June 2023 for every $100 a small business spends on new digitalising their business (for items such as cloud accounting, online security and eInvoicing software) they will get a $120 tax deduction up to $100,000/year (Technology Investment Boost).
- Great news for an extension of the current wage subsidy programs for apprenticeships, a new streamlined Australian Apprenticeships Incentive System and a new program to help lift youth employment (ReBoot).
- Measures around the PAYG system designed to improve short-term cashflow for small businesses, this will give the ATO more data and enhance the prefill of some income tax returns and activity statements.
- Changes to procurement rules to make it easier for small businesses to win contracts and have government-invoices paid more quickly.
- Additional funding for the Fair Work Commission to establish a dedicated unit to support small businesses, including with unfair dismissal and general protections disputes.
- $480 million to improve wireless NBN access for households and businesses in regional and remote areas.
A big one for small businesses to think of in the coming months is the instant asset depreciation program. This was not extended in the Budget and could end on 30 June 2023.
Download the Comprehensive Guide here.
On the economic front, Australia’s unemployment rate is at 4%: the lowest rate in 48 years with teh rate forecast to reach 3.75% in the September quarter of 2022.
Real GDP is forecast to grow by 4.25% in 2021‑22. And, by 3.5% in 2022‑23 and 2.5% per cent in 2023‑24.
The deficit for 2022‑23 is expected to be $78 billion or 3.4% of GDP. Gross debt as a share of the economy is expected to peak at 44.9% of GDP at 30 June 2025 (5.4% lower and 4 years earlier than projected at MYEFO).