The Australian Government handed down the 2022-23 Federal Budget on 29 March.
The pre-election budget included a number of measures to address the increased cost of living, including a temporary cut to fuel excise, help for home buyers and extended relief for retirees, as well as a one-off cost of living payment to millions of Australians.
Here are some of the other key measures announced that could affect you and your business.
The Government announced that it will provide a cost of living tax offset, by increasing the Low and Middle Income tax offset (LMITO) for the 2021–22 income year by $420.
This will increase the maximum LMITO benefit to $1,500 for individuals and $3,000 for couples. It’ll be paid from 1 July 2022, when people submit their tax returns for the 2022 income year.
The LMITO is not a refundable tax offset. This means that if you don’t have an income tax liability, you aren’t entitled to the LMITO.
If your tax liability is less than the LMITO, the excess of the LMITO over your tax liability isn’t refundable.
The costs of taking a COVID-19 test to attend a place of work are tax deductible for individuals from 1 July 2021.
If you provide COVID-19 tests to your employees for this purpose, you won’t incur Fringe Benefit Tax (FBT).
Small businesses will have access to a new bonus 20 per cent deduction for the cost of external training courses delivered to their employees by providers registered in Australia.
The training must be provided to employees in Australia or online, and delivered by entities registered in Australia. It doesn’t include in-house or on-the-job training, or external training for non-employees.
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 2024, the boost will be claimed in the income year in which the expenditure is incurred.
The temporary increased deduction will be available to eligible businesses with an aggregated turnover of less than $50 million for eligible expenditure incurred between 7:30pm (AEDT) on 29 March 2022 and 30 June 2024.
The Government will introduce a technology investment boost to support digital adoption by small and medium-sized businesses.
Small and medium-sized businesses (with aggregated annual turnover of less than $50 million) will be able to deduct an extra 20% (allowing them to claim 120%) of the cost of the expenditure incurred on
business expenses and depreciating assets that support the business’ digital adoption. These include portable payment devices, cyber security systems or subscriptions to cloud based services.
The temporary increased deduction will be available to small businesses with an aggregated turnover of less than $50 million for eligible expenditure incurred between 7:30pm (AEDT) on 29 March 2022 and 30 June 2023.
An annual cap will apply in each qualifying income year so that expenditure up to $100,000 will be eligible for the boost. This equates to a maximum additional deduction of $20,000 per eligible year.
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 in which the expenditure is incurred.
The Government will allow companies to choose to have their PAYG instalments calculated based on current financial performance. The objective of this measure is to support business cash flows by aligning PAYG instalment liabilities and business profitability.
The calculation of the PAYG instalments will be extracted from business accounting software, with some tax adjustments.
Subject to advice from software providers about their capacity to deliver, it’s expected that systems will be in place by 31 December 2023.
The measure is expected to commence on 1 January 2024 with the application period of the enabling legislation commencing on or after that date.
The Government proposes to extend the temporary reduction in the minimum pension drawdown rates required for account-based pensions and annuities, allocated pensions and annuities and market-linked pensions and annuities by 50% for a further 12 months to 30 June 2023.
The objective of this measure is to assist retirees, whose account balances of their superannuation pensions and annuities have been negatively affected by the significant losses in financial markets as a result of the COVID-19 pandemic.
For more information, contact us to make an appointment to speak to our team, or read the Budget documents on the Treasury website.